Tuesday, October 6, 2015         

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Occupancy up but rates down

Hotel deals might continue for travelers as the industry's recovery remains slow

By Allison Schaefers


Statewide hotel occupancy in June improved 9.6 percentage points to 71.4 percent, according to data released today by Hospitality Advisors LLC. However, the average daily room rate paid by a visitor in June dropped to $169.68, a 1.5 percent decline from the same time period last year.

The numbers suggest fall is going to be a traveler's market.

Tourists might have had trouble booking last-minute rooms at their preferred Hawaii hotels in early summer, but chances are they got great rates as properties continued discounting. The same trends will prevail in September, October and November when Hawaii's visitor industry typically experiences the back-to-school, back-to-work lull.

The June results pushed statewide occupancy up 4.8 percentage points to 69 percent for the first six months of the year. It also helped keep the statewide average daily room rate, which averaged $171.78 during the first six months of the year, from falling more than 5.2 percent.

"The market improvement during the first half of 2010 is certainly welcomed news, and summer bookings for Oahu and Maui are strong," said Joseph Toy, Hospitality Advisors' president and chief executive officer. "However, given the depth of the market losses in 2009, we are still far below our market peaks of three years ago."

Higher hotel occupancy more than offset the rate discounts and helped Hawaii's hotel room revenue grow 3.1 percent to $1.21 billion during the first six months of the year, Toy said. But, it's minimal growth on top of the 21.7 percent decline that occurred during the same period last year.

"The pace of recovery remains slow and uneven, which is indicative of the early stage of the long recovery cycle that the market is currently in," he said.

While modest growth might be so-so to good news for Hawaii hoteliers, typically it's great news for vacationers because it means they can continue to play let's make a deal. Hawaii visitors could see even better hotel offers when the softer fall months come than they did this summer, said Ben Rafter, chief executive officer and president of Aqua Hotels & Resorts, a midpriced hotel chain.

"Getting people to come stay has not been difficult," Rafter said. "Getting rate has been another story. The hotels are full, which is great, but now we have a long road ahead to rebuild."

Group and incentive businesses, in particular, need to come back for Hawaii's hotel industry to recover, he said.

The prospect of empty rooms at Hawaii's larger, higher-end chains, which have lost significant group business in the aftermath of the recession, has forced them to keep rates low, exerting greater pressure on off-beach and lower-category hotels, Toy said.

"The upper end of the market is seeing a lot of trading up in travel given the attractive pricing," he said.

Back in 2007 the spread between luxury and midpriced properties was at least $100; now it's around $20, Rafter said.

"Competition is still fierce," he said.

A quick check on Travelocity revealed that 25 out of 78 Hawaii hotels were offering to add free nights to bookings made during the second week of September. Rates ranged from $51 a night at the one-star Continental Surf Hotel to $355 at the Kahala Hotel & Resort, a 4.5-star property. Rates at the Hyatt Regency Waikiki Beach Resort & Spa were $299 including free daily breakfast and were as low as $229 at the Hilton Hawaiian Village and $179 at the Outrigger Reef on the Beach. And, travelers who were willing to leave their hotel choice to chance could book four- and five-star properties for as low as $101.

Even the Hale Koa, a hotel for military, National Guard and reservists, is offering 25 percent off of September rates.

As a result, room rates at midpriced properties like Aqua are about as low as they can go, Rafter said.

"Our two-stars are running anywhere from $59 to $79 a night depending on the season," he said, adding that room rates could slowly begin to creep up in 2011 as group and incentive business improve bringing more continuity to the market.

Hotel occupancy

Occupancy rates at Hawaii hotels in June and the same month last year:
By Island

  2010 2009
Oahu 78.8% 67.0%
Kauai 70.1% 57.1%
Maui 65.7% 59.0%
Big Island 56.9% 51.3%

  2010 2009
Totals 71.4% 61.8%
Source: Hospitality Advisors LLC

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