POSTED: 01:30 a.m. HST, Jul 06, 2011
LAST UPDATED: 02:26 p.m. HST, Aug 05, 2011
Hawaii hotels experienced scant occupancy growth in May due to falling arrivals from Japan.
However, hoteliers say that the near double-digit room rate growth bodes well for their industry.
Statewide occupancy increased 1.4 percentage points to 66.7 percent in May from the year-ago period, according to a hotel flash report released today by Hospitality Advisors LLC. Although that gain was the lowest in 18 straight months of increases, the statewide average daily rate, or ADR, went up 9.6 percent to $175.92, the report said. Revenue per available room, or RevPAR, considered by many to be the best measure of hotel performance, increased 12 percent to $117.34.
"This shoulder month would have been strong if not for the downturn in the Japan market," said Joseph Toy, president and chief executive of Hospitality Advisors LLC. "The Japanese market, which saw its arrivals fall about 17 percent in May, had a tremendous impact on our recovery."
While some might take the occupancy numbers at face value and forecast a possible slowdown in the pace of recovery for Hawaii's lodging industry, Toy said the pullback is more representative of what happens to shoulder seasons in periods of downturn.
"During robust markets, shoulder months tend to fill out," he said. "However, during a down market, visitors may trade up into the busy season, causing further softening."
Regardless, results across the isles were mixed, he said. Oahu hotels saw the highest occupancy, while Maui hotels experienced the highest rate, Toy said.
"The market, at least on Oahu, has turned the corner from an occupancy-driven recovery to a rate-driven recovery," said Ben Rafter, president and CEO of Aqua Hotels & Resorts. "I think most of us are pretty happy about that. It bodes well for our future."
May's American Psychiatric Association annual meeting filled Oahu rooms, said Barry Wallace, executive vice president of hospitality services for Outrigger Enterprises.
"It helped a great deal to fill the void left by the diminished travel from Japan," Wallace said.
Certain sectors of the Oahu <t$>and Maui markets saw May hotel occupancy approach or surpass 78 percent, the benchmark that typically precedes true rate growth, Toy said.
"When occupancy stays consistently high, hoteliers become more confident and more likely to hold or grow rates," he said.
As a result, many Oahu hoteliers were able to keep rate integrity even after the March 11 magnitude-9.0 earthquake and tsunami in Japan, Rafter said.
"Hoteliers did a reasonably good job at trying to hold rates," he said.
Still, hoteliers will finish the year below 2008's peak ADR levels, Toy said. In May 2008, statewide ADR was $190.66, he said.
"This market is still recovering," Toy said.
While some oceanfront and large group hotels, which had higher percentages of Japan business, were forced to discount in May, most have been able to hold the line, said Shari Chang, senior vice president of marketing, sales and revenue management for Aston Hotels & Resorts.
"The good thing is that they aren't discounting like crazy like they were the year before," Chang said.
As travelers come back into the market this summer, Rafter said that hoteliers should see improved occupancy. Greater room demand will help hoteliers push rates higher, he said.
Travelers are booking far in advance for many of Aston's condominium units, Chang said.
"People are booking early for special units, and they are more confident in buying," she said.
Still, Toy said occupancies on Hawaii island and Kauai remained challenged.
"Recovery is still going to be a bit spotty," he said. "We've seen better recovery in the Big Island and Kauai, but these islands are still fairly anemic compared to Oahu and Maui."