Hotels relish $4B revenue rise so far this year

Hotel revenue through the third quarter rose above $4 billion for the first time ever, putting Hawaii’s hotel industry on track to set an annual revenue record, according to a hotel flash report set for release today by Hospitality Advisors LLC.

The hotel industry established records in September for room revenue, revenue per available room (RevPAR) and average daily rate (ADR), said Joe Toy, Hospitality Advisors’ president and CEO.

September occupancy statewide dipped 0.2 percentage points to 73.5 percent in keeping with a 1.1 percent decline in visitor arrivals. However, on average, hotel visitors that month paid 10.3 percent more for a room, which averaged $206.49 across the state. September RevPAR, or occupancy times the average daily rate, also climbed 10 percent to $151.77. As a result, room revenue rose a healthy 10.2 percent to $261 million.

"It’s been an incredible year for revenue for the state’s hotel industry," Toy said. "Through summer, the gains were driven by increasing sales and prices. During the last few months, we’ve still been gaining on the price side." 

The strong monthly results pushed the year-to-date hotel revenue — which is calculated using revenue from rooms, food and beverage, retail, parking and other sources — up 10.8 percent to $4.04 billion.

"That should easily top the $4.81 billion year-end benchmark set in 2012," Toy said.

Year-to-date results mirrored the monthly results with statewide occupancy declining 0.1 percentage point to 77.6 percent. Through September the average daily rate rose 11.3 percent to $227.05, and RevPAR increased 11.1 percent to $176.19. The year-to-date results earned the industry second place behind New York for having the nation’s highest ADR and RevPAR through the third quarter. During the same period, the state also was ranked the nation’s fifth-best hotel market for occupancy behind New York, San Francisco/San Mateo, Los Angeles/Long Beach and Miami/Hia­leah.

"As we head into the tail end of the year, we expect to see more room revenue gain; however, we are seeing some softening related to a lessening in U.S. consumer confidence and a weakening in the yen, which impacts our visitors from Japan," Toy said.

Outrigger Hotels and Resorts had a record September, but the company saw "some of the wind come out of the sails" in October and November, said Barry Wallace, executive vice president of hospitality services for Outrigger Enterprises.

"We think November will be the worst month of the year," Wallace said.

Even so, Wallace agrees with Toy’s analysis that 2013 is likely to break the hotel revenue record.

"November softness isn’t catastrophic, and while December is tough for the first 15 to 16 days, after that it gets pretty strong," Wallace said.

The largest travel wholesaler in Hawaii, Pleasant Holidays LLC, is expecting a robust Christmas season, said Jack Richards, Pleasant’s president and CEO.

"We are looking better than the same time last year. We’ve even got a few hotels sold out on Oahu," Richards said. "We think 2014 will be a very good year for Hawaii tourism."