Isle hotels set revenue records despite flat occupancy

The pace of Hawaii tourism might be slowing, but February was a month to love for Hawaii’s hotel industry, which achieved its best revenue per available room (RevPAR) of any month and set three monthly performance records.

RevPAR for Hawaii hotels shot up 5.3 percent to $212.96 in February even though arrivals dropped 4.3 percent from February 2013 to 646,759 visitors and total visitor spending came in at a flat $1.2 billion.

A strong RevPAR, which is calculated by multiplying the hotel’s average daily rate (ADR) by occupancy, is important because it signifies that Hawaii’s hoteliers and investors are generating good earning power on hotel rooms regardless of whether they are occupied, said Joe Toy, president of Hospitality Advisors LLC, which was scheduled to release the hotel data publicly Wednesday in conjunction with Smith Travel Research.

"RevPAR records are being set throughout Asia and the mainland," Toy said. "The good news is that Hawaii is among the top five RevPAR markets in the U.S. We’re generally the No. 2 market behind New York City, so we’re getting lots of attention."

While February hotel occupancy was mostly flat across the isles, Toy said it was generally high enough for hoteliers to leverage rates, realizing better revenues and RevPAR. He said Chinese New Year, Presidents Day, Valentine’s Day and a strong meetings and incentive presence helped fill hotels.

"When you get occupancies that are consistently above 78 percent, hoteliers are able to get better yields," Toy said.

While statewide occupancy in February dipped a scant 0.09 percentage points to 87.2 percent, average daily rates climbed 6.4 percent to $251.13, a monthly record. Rooms in Hawaii’s economy class averaged $125.65 per nightly rental, while the state’s luxury properties rented their rooms for $461.18 per night. Room rates were highest in Wai­lea, Maui, where visitors spent an average of $482.20 per night.

The results helped set monthly records for room revenues, which hit $320 million, and total hotel revenue, which rose to $472 million. These measures of hotel performance helped fuel the industry’s benchmark RevPAR, which was 5.3 percent higher than the previous record of $202.33 set in February 2013.

The hotel industry in February was strong across all islands. While Waikiki’s February occupancy was flat year-over-year, the state’s top destination continued to fill an average of 90.8 percent of its rooms despite a 6.6 percent rise in ADR to $222.99. At the same time, Waikiki RevPAR rose nearly 6.4 percent to $202.47.

Occupancy on Maui, the state’s second-best-performing market, dipped 1.7 percentage points to 80.6 percent. However, ADR on Maui increased 8.3 percent to $331.02, a new February high. RevPAR also grew 6.1 percent to a new single-month record of $266.80.

Kauai, the third-best-performing island for the state’s hotel industry, saw occupancy decline 2.2 percentage points to 79.6 percent. However, Kauai hotel room rates rose 3.9 percent to $237.87, a new February record. As a result, RevPAR grew 1.1 percent to $189.34, a new all-time high on Kauai for any given month.

Occupancy in the state’s worst-performing hotel market, Hawaii island, dropped 1.8 percentage points to 76.5 percent in February. However, Hawaii island room rates grew 5.6 percent to a new February high of $245.19.

RevPAR also grew 3.2 percent to set a new all-time high of $187.57.

Now what? While February was generally perceived to be a strong month in a bumpy first quarter for Hawaii hoteliers, they say the second quarter is not meeting expectations.

"The off-season valley is a little deeper than they expected," Toy said. "We are still following 2013’s tail wind in 2014, but we are seeing some movement in exchange rates begin to impact international travel to Hawaii."

Even so, for now market fundamentals remain relatively strong, said Kelly Sanders, area managing director-Waikiki for Starwood Hotels and Resorts.

"2013 was a substantially great year for travel," Sanders said. "We are still ahead of 2012. We aren’t sitting where we were in 2013. Even so, it’s still a great market."