Isle hoteliers give thanks for filled rooms, revenue

With Oahu in the lead, Hawaii hotels held their own against other island and international destinations for the first three quarters of the year, according to a report to be released today by hotel consultancy Hospitality Advisors LLC.

"Hawaii’s strong recovery, and in particular the record pace in hotel revenue, have helped strengthen each island’s performance among … the island and sun destinations," said Joseph Toy, Hospitality Advisors’ president and CEO. "The recovery in Hawaii has been remarkable given where we were two years ago."

Through the first nine months of the year, Oahu continued to rank first in hotel occupancy among global island and sun destinations in its competitive set, which included the neighbor islands and places like Puerto Rico; Phuket, Thailand; Bali, Indonesia; Aruba; the Bahamas; and the Maldives. Oahu’s occupancy through September averaged 85.6 percent, a 4.7 percentage point gain from the previous year. Its strong performance helped Hawaii’s occupancy rate inch into second place just behind Singapore from fourth place in September 2010, the last time that Hospitality Advisors released a similar report.

Hawaii’s occupancy through September rose to 77.8 percent, up 4.1 percentage points from the same period a year ago. It beat competitive international destinations including South Korea, Australia, New Zealand, Caribbean, Thailand, China and Mexico.

Maui’s occupancy, which gained 2.1 percentage points to top out at 73.3 percent, and Kauai’s, which jumped 5.9 percentage points to 70.5 percent, also made the top-10 list this year. Hawaii island, which was not on the list last year, took the 10th spot this year after realizing a 3.7 percentage point gain to 62.2 percent occupancy.

"There’s no question that occupancy is at an all-time high," said Jack Richards, president and CEO of Pleasant Holidays LLC, Hawaii’s largest tour wholesaler. "This August was the first time that we have had problems getting inventory in seven years."

Higher prices and less availability in Hawaii have caused some Pleasant customers to choose French Polynesia, the Caribbean and Mexico, Richards said. However, overall demand for Hawaii, especially the isle’s luxury segments, is strong, he said.

"Customers are asking for places like the Royal Hawaiian Hotel, the Kahala, the Halekulani, the Hyatt, Trump or the Aulani," Richards said.

Hawaii hotel room’s average daily rate (ADR) maintained its second-place status on the list of competitive international destinations, and the ADR for Maui, Kauai, Hawaii island and Oahu earned them the No. 3, 6, 7 and 8 spots respectively among isle competitors.

During the first nine months of this year as compared with last year, Hawaii’s ADR rose 7.8 percent to $202.90. During the same period, Oahu’s ADR rose 11.9 percent to $181.50, Maui’s increased by 5 percent to $259.07, Kauai’s grew by 4.4 percent to $212.23 and Hawaii island posted a 3.4 percent gain to $190.18.

"The people of Oahu should be very proud to be at the top of this list of world-class destinations," said Jerry Gibson, area vice president of Hilton Hawaii and managing director of Hilton Hawaiian Village. "For Oahu, as well as Maui and Kauai, to be among the likes of Bali, Phuket and Puerto Rico is a credit to the hotels and their marketing partners including Hawaii Tourism Authority, Hawaii Visitors and Convention Bureau, and all the island visitors bureaus."

While the average daily rate increases have been good for the hotel business, Richards warned that demand could level off, even from affluent travelers, if prices keep rising.

"While Oahu’s occupancy is back to 2007 levels, hotel rates are still not keeping up with the cost of doing business," said Jerry Westenhaver, general manager of the Hyatt Regency Waikiki Beach Resort and Spa.

The large volume of wholesale business in Waikiki keeps prices down, Westenhaver said.

Still, Hawaii’s revenue per available room, or RevPAR, considered by many in hospitality to be the industry’s best measure of performance, rose 13.8 percent to $157.86 during the first nine months of this year, making it the second best attained among the international destinations Toy considered.

Maui, which earned the third-best RevPAR among competitive island destinations, saw its profitability percentage go up 8.1 percent to $189.90 per night. Oahu hoteliers saw their RevPAR grow 18.4 percent to $155.36, while Kauai’s rose 14 percent to $149.62 and Hawaii isle’s climbed 10 percent to $118.29.

With the gains in isle ADRs, RevPAR is finally balanced between occupancy and price gains, making for a healthier market, Toy said.

"Right now, 48 percent of RevPAR is driven by occupancy and 52 percent by rate," he said.

The outlook for most Hawaii hoteliers is positive, Westenhaver said.

"Demand is strong, especially up and down the Waikiki strip," he said. "Our occupancies are running at 90 percent."

Hyatt has unusually solid Thanksgiving traffic, Westenhaver said. There isn’t much discounting and travelers are buying up, he said.

"Our exclusive club rooms are sold out just about every night, and there are lots more requests for suites and view rooms," Westenhaver said. "We’re feeling pretty confident into the first quarter of next year."