Isle hotels log records in revenue, room rates

Add Hawaii’s hotel industry revenue to the tourism records set in 2012.

Strong momentum in December pushed revenue to $4.81 billion, an annual high. The 13.8 percent gain pushed hotel revenue beyond the previous peak of $4.62 billion in 2006.

This record establishes 2012 as a trifecta year for Hawaii’s tourism economy.

Earlier this year the Hawaii Tourism Authority announced new records for visitor arrivals and spending. Slightly fewer than 8 million tourists came to the state in 2012, topping the high of 7.6 million in 2006. Total visitors in 2012 were up 9.6 percent from 7.3 million in 2011. When adjusted for inflation, total tourist expenditures in 2012 were 3.3 percent less than the peak spending of 2005; however, actual visitor spending for the year hit $14.3 billion, surpassing the previous actual peak of $12.8 billion in 2007.

Gains in airlift, the tourism boom on Oahu, rebounding arrivals from Japan and the growth of developing markets like China and Korea made a difference last year for the hotel industry, said Joe Toy, president and CEO of Hospitality Advisors LLC, which was scheduled to release the hotel report today.

Last year, statewide occupancy rose 3.7 percentage points to 76.9 percent, while the average daily rate (ADR) for a hotel room climbed 7.5 percent to a new high of $204.15 and revenue per available room (revPAR) set a new record with a 13 percent gain to $156.99. In December, occupancy rose 2.5 percentage points to 75.1 percent, ADR increased by 7.2 percent to $236.06, and revPAR jumped 10.6 percent to $177.28.

The gains elevated Hawaii to Smith Travel Research’s second-best hotel market for ADR and revPAR behind New York and its third best for occupancy following New York and San Francisco/San Mateo.

"We made up lost ground," Toy said.

The momentum seen at year end is expected to continue into this year, Toy said.

"I think we’ll set some additional records in 2013," Toy said. "Still, I don’t think that we’ll see an even distribution of occupancy and revPAR until 2014. The Big Island has to come back first." 

Oahu led all islands in 2012 occupancy, which rose 4 percentage points to 84.7 percent, just shy of the 2005 record of 85.3 percent. While Maui’s occupancy strengthened in 2012 and Kauai’s is firming up now, Hawaii island still has a way to go, Toy said.

"The Big Island leads the downturn and lags in recovery," he said. "Its occupancy peak was 76 percent in about 2006."

However, strong leisure demand for Oahu and the return of Hawaii’s group market is expected to send business to lagging markets, Toy said.

Waikiki hoteliers already this year have seen consistent 85 percent occupancy, he said.

"When that happens even your shoulders (slow times of year) begin filling up," Toy said.

That explains why staff members at the Royal Hawaiian were scurrying Thursday to make repairs so they could fill all 528 rooms.

"We’re going to run 100 percent tonight," said Royal Hawaiian General Manager Kelly Hoen. "We are unbelievably busy. We have visitors from the U.S. mainland, Japan, China, Australia, Korea and Canada. All of our markets are really strong." 

While it’s unusual to see full occupancy during what is typically off-season, more hoteliers across the state have begun to join the exclusive no-vacancy club.

Jerry Gibson, area vice president for Hilton Hawaii, said group business and citywide conferences have filled some of the chain’s hotels to capacity in Hono­lulu and the neighbor islands.

"We did have a great year in 2012, and we are expecting an excellent year in 2013 barring any unforeseen difficulties," Gibson said. "We are getting both group and transient pickup in Maui and the Big Island. It’s a very good sign that we are seeing it early on." 

He said forward bookings for 2013 "look pretty good, and group business is filling in" for 2014.

However, Gibson cautioned that hoteliers must watch expenses and taxes.

"From a profit picture, if we adjusted for inflation we are probably about 20 percent behind 2006 or 2007," he said. "Our expenses — energy, labor and benefits — have gone up in a huge way."

Gov. Neil Abercrombie’s proposal to increase the transient accommodation tax (TAT) also could hurt the tourism economy, Gibsons said.

"An 11.25 percent TAT will keep people home," said Gibson.

He favors rolling the TAT back to 7.25 percent or, if it stays at the current 9.25 percent, increasing the percentage of the fund that the visitor industry gets for marketing.