More visitors came to Hawaii and stayed longer in May to help boost the hotel industry’s performance for the third consecutive month.
The best hotel performance measure, RevPAR, or revenue per available room, grew 3.6 percent in May to $104.67, according to a report released today by Hospitality Advisors LLC. Occupancy rose 4.4 percentage points to 65.4 percent; however, the statewide average daily room rate (ADR) fell 3.4 percent to $160.05 per night as Hawaii hoteliers continued to discount hotel rooms even on the cusp of their peak summer travel season.
Budget properties posted a 75.1 percent occupancy rate, the highest of any hotel category.
"So far, demand is coming back at a faster pace than room rates," said Joseph Toy, Hospitality Advisors’ president and chief executive officer.
While increased occupancy suggests the hotel industry decline may have bottomed out, hoteliers continue to struggle, said David Carey, president and CEO of Outrigger Enterprises Group.
"If occupancy rises and rates decline, we get a margin squeeze," Carey said.
Since higher occupancies incur greater operational costs, it’s more beneficial to the industry if hoteliers realize gains through room-rate growth, he said.
On a more positive note, Carey said summer demand at some Hawaii hotels has allowed hoteliers to yield higher room rates during popular periods.
At the height of the downturn, when larger hotels lost most of their group bookings, the price gap between Hawaii’s more expensive hotels and bargain hotels narrowed and many consumers traded up. Now it appears that fewer are going that route.
Occupancy rates at Hawaii hotels in May and the same month last year:
Source: Hospitality Advisors LLC
While Hawaii’s hotel industry is seeing some positive signs, growth is still way behind the peak years, Carey said. Even with May’s occupancy momentum, RevPAR at some hotels is still 20 percent off the peak 2006 and 2007 years, he said.
"It was a fairly steep hole, so it will be a long climb out," said Toy, adding that he expects Oahu to rebound by 2014 with other islands following behind.
May’s hotel results were aligned with a 6.5 percent increase in May visitor arrivals and a 25.4 percent increase in international visitors, Toy said. The gain in arrivals, combined with a longer length of stay, helped push the daily visitor census 7.1 percent higher to 157,990 daily visitors in May, he said.
In May the length of stay for all visitors rose 0.5 percent to 8.95 days, said David Uchiyama, vice president of brand management for the Hawaii Tourism Authority.
"Because of the values that are out there, people are taking advantage and staying longer," Uchiyama said.
Ease of travel access as carriers have added more direct flights and new routes has also encouraged travelers to extend their Hawaii vacations, he said.