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Visitor spending up 18%

Hotel occupancy rose by more than 10 percentage points in July

By Allison Schaefers


Hawaii hoteliers saw a key measure of profitability go up more than 18 percent in July as they capitalized on the best month for visitor performance that Hawaii had seen in five years.

The rise in visitor arrivals helped contribute to a 10.7 percentage-point jump in statewide hotel occupancy for July, according to the latest hotel flash report released today by Hospitality Advisors LLC. Visitors and kamaaina filled 79.5 percent of Hawaii's hotel rooms in July, while the statewide average daily room rate (ADR) rose by 2.3 percent to $180.98, Hospitality Advisors reported.

The increase in arrivals and hotel room rates boosted revenue per available room (RevPAR) to $143.88, up 18.2 percent from the previous year, causing some hoteliers like Ward Almeida, general manger of the Lotus at Diamond Head, to call July the best month ever.

"We had quite a few days that were sold out," Almeida said, adding that the hotel saw its occupancy levels reach 90 percent for part of the month.

But, while the gain in RevPAR was welcome news for Hawaii's hotels, the industry still has not fully recovered, said Joseph Toy, president and chief executive officer of Hospitality Advisors LLC. July's RevPAR was still 16.2 percent lower than the peak $171.74 RevPAR achieved in July 2006, Toy said.

"It will take us at least three to four years to come back to where we were prior to the downturn," he said. "It's one thing to have occupancy recover and another to have room rates climb back from the steep discounting and to see real growth after inflation."

Oahu and Maui have already gained some ground as travelers take advantage of the deals and push the statewide numbers higher, Toy said.

"There's recovery on the demand side. Some properties have begun to close the 15 to 30 percent drops that they sustained after 2007, but it will take a few years to see rates really start to improve," he said.

While July demand helped hoteliers increase rates, the start of school and lagging group business have already begun to soften fall's market, said Ben Rafter, president and chief executive officer of Aqua Hotels & Resorts.

"Fall should be better than last year, but it will be more like last year than the fall of 2006 and 2007," he said. "Tourism demand still needs to pick up along with consumer confidence."

David Carey, president and chief executive officer of Outrigger Enterprises Group, said he will become more confident when there are more signs of strength in Hawaii's core visitor markets, the U.S. West and Japan.

"It's my belief that a lot of market activity is price and value oriented," Carey said. "I won't feel more positive until we start to see big job growth and GDP growth."

Still, there's some cause for hoteliers to be optimistic about the positive impact that the return of the Pro Bowl and group and incentive business will have on 2011, Rafter said.

"As demand rises, we think ADR could go up by about 5 or 6 percent," he said, adding that better placement of weekends and separate Presidents Day and Valentine's Day holidays also will create more opportunities for hoteliers to increase rates.

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