Hospitality trade shows strong performance

Hawaii’s hotel and time-share industries are on pace for a strong finish in 2014 that should continue into 2015, according to the latest statistics from hotel consultancy Hospitality Advisors LLC.

Preliminary results through July showed that while occupancy for Hawaii’s hotel sector stayed flat at 77.9 percent, the industry enjoyed the best average daily rate (ADR), revenue-per-available room (RevPAR) and hotel and room revenue that it had ever attained during a seven-month period. The numbers, which were presented by Hospitality Advisors and STR during the Hawaii Tourism Conference last month, showed Hawaii’s statewide average daily rate grew 5.2 percent to $243 through July. Statewide revPAR, considered by many to be the best indicator of hotel performance because it calculates the revenue that a property generates on each room regardless of occupancy, increased 4.8 percent to $189. Likewise, room revenue and total hotel revenue both climbed 4.6 percent to hit $2.15 billion and $3.17 billion, respectively.

"Hawaii’s market dynamics continue to remain strong," said Joseph Toy, president and chief executive officer of Hospitality Advisors. "The acquisition cycle is still ongoing with new development coming closer to the tipping point for new developments."

To be sure, statewide renovations and transactions through July already had reached $1.15 billion, which is more than half the $1.97 billion record hit in 2013.

Hawaii’s popularity among tourists did not surprise Melissa and Heath Clark of Sydney, Australia, who had just arrived on Tuesday for a 10-day vacation at the Hilton Hawaiian Village Waikiki Beach Resort.

"We know heaps of people who are coming to Hawaii — another couple that we know is coming next week. It’s really family friendly and the shopping is so fantastic compared to Sydney, where it’s really expensive to buy American brands," said Melissa Clark, who was playing with her 9-year-old daughter Holly and 7-year-old son Jack in the pool attached to the Grand Waikikian Suites by Hilton Grand Vacations.

Alexandra Howell of Las Vegas said she likes coming to Hawaii as much as Hawaii residents like flying to the desert.

"This is my fourth trip," said the mom of 21-month-old twins, Connor and Jaxson. "There is always plenty of fun stuff to do like hiking and it’s so relaxing. Hawaii comes to the desert and we go to the beach."

Hawaii’s time shares also have benefited from the popularity of the destination and market dynamics, which have supported growth in alternate accommodations. Hospitality Advisors, which conducts a quarterly time-share review for the Hawaii Tourism Authority, reported 8.7 percent of all visitors to Hawaii who came during the first quarter stayed in time shares, which had an average occupancy of 93 percent. Interval owners accounted for 67.6 percent of the occupied room nights and exchangers were responsible for filling 11.3 percent of them, according to Toy.

"The time-share market was primarily driven by strong performance on Oahu and in Maui County," he said. However, the results show that the entire state benefited from time shares, which through March generated $16.2 million in taxes, including real property tax, conveyance tax, general excise tax, transient occupancy tax and transient accommodations tax.

Time shares also were good for the job market, Toy said. Hospitality Advisors reported that time shares also created 2 percent more jobs in resort operations and 5.4 percent more jobs in sales and marketing during the first three months of the year, he said. As a result, time-share payroll expenses topped $25.1 million for resort operations and $30.1 million for jobs in sales and marketing.

While visitors to Hawaii are still choosing to stay in hotels more frequently than other types of accommodations, the number of hotel units is declining while time shares and vacation rental units are increasing, Toy said. From 2000 to 2013, the statewide hotel room count dropped from 50,681 to 42,390. Toy said the shift took hotel rooms from 71 percent of the accommodation’s market to just 47 percent. At the same time, time shares grew from 4,276, or 6 percent of total accommodations, to 10,729, or 12 percent of total accommodations. Similarly other vacation inventory went from 4,178 rooms, or 6 percent of the accommodations market, to 8,597, or 12 percent of the market.

There are an estimated 3,698 new time-share units in Hawaii’s development pipeline, with projects planned for every island but Lanai, said Henry Perez, chairman of the American Resort Development Association.

The recent hotel and time-share growth is bolstering business throughout Hawaii’s visitor industry, said Mike Murray, senior vice president and chief operating officer for Waikiki Beach Activities.

"Based on our 2014 results year to date, we think the last three years in business will be our best ever and we’ve served as a concessionaire at Hilton Hawaiian Village for more than 20 years," Murray said.

DAILY HOTEL USE THROUGH JUNE

Hawaii’s core U.S. West and U.S. East markets accounted for more than half of the hotel demand through June: 

* Includes developing markets such as all Asian nations outside of Japan as well as regions like Oceania, Latin America and Europe.

** Percent of that market taking up hotel space.

Source: Hospitality Advisors LLC