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Oahu stays in demand

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  • STAR-ADVERTISER / FEB. 27, 2010
    Hawaii's occupancy rate ranks fourth at 71.2 percent on Hospitality Advisors' list of international destinations, behind Singapore, South Korea and Australia. Oahu, meanwhile, is No. 1 in occupancy ratings at 78.3 percent in the top 10 island destinations. Maui is fifth, behind Guam, Bali and Puerto Rico. Above, hotels in Waikiki.

Hawaii hotels held their own against other island and international destinations for the first three quarters of the year, according to a report released yesterday by hotel consultancy Hospitality Advisors LLC.

Hawaii’s occupancy rate, which was just below that of Singapore, South Korea and Australia on Hospitality Advisors’ top 10 list of international competitors, rose to 71.2 percent during the first nine months of the year, up 6 percentage points from the same period a year ago. Similarly, a 6.2 percentage point gain pushed Oahu’s occupancy rate to 78.3 percent, making it the island destination with the most hotel demand. Maui’s occupancy, which gained 5 percentage points to top out at 68.9 percent, and Kauai’s, which jumped 2.1 percentage points to 61 percent, also made the top 10 list.

"While Hawaii as a destination continues to recover from the decrease in demand precipitated by the recent recession, its position relative to its primary global competitors remains strong," said Joseph Toy, Hospitality Advisors’ president and chief executive officer.

Hawaii’s average daily rate (ADR) placed second on the list of competitive international destinations, and the ADR for Maui, Kauai, the Big Island and Oahu earned them the No. 4, 6, 7 and 10 spots respectively among isle competitors. However, Hawaii hoteliers still report that average room rates attained during the first nine months of the year have not rebounded from the steep recessionary discounting that took them down to 2004 levels.

During the first nine months of this year as compared with last year, Hawaii’s ADR dropped 3 percent to $172.71.

"If occupancy goes up but the rate goes down, the profit margins are continuing to decline," said David Carey, president and chief executive officer of Outrigger Enterprises Group.

"As occupancy goes up so do our costs," Carey said. "We have to have more staff to check more people in, and they’ll need more amenities like soap and housekeeping services."

Hawaii’s revenue per available room (RevPAR), considered by many in hospitality to be the industry’s best measure of performance, rose 6 percent to $122.97 during the first nine months of this year, making it the second best attained among the international destinations considered by Toy. Hawaii’s top four islands also made Toy’s top 10 RevPAR list for isle competitors.

Maui, which earned the second-best RevPAR among competitive island destinations, saw its profitability percentage go up 7.7 percent to $155.29 per night. Oahu hoteliers saw their RevPAR grow 6.8 percent to $115.39, while Kauai’s RevPAR rose .6 percent to $112.24 and the Big Islands RevPAR climbed 2.1 percent to $102.64.

"While occupancy growth helps retailers and keeps hotel employees working, it would be best if RevPAR growth was the result of rate growth," Carey said.

Rising medical, energy and labor costs will be in excess of what Hawaii hoteliers will get out of their average rates, he said.

Recovery remains profitless for Hawaii’s hotel industry, Toy said.

"Sure, we are seeing demand come back a bit, but it was such a long, steep downturn that it will take a while for profit to come back," he said.

"It’s one thing to have occupancy recover and another to have room rates climb back from steep discounting and to see real growth after inflation."

Toy said it could take Waikiki hotels another four years to come back from the most recent tourism downturn. Hotels in other parts of the state could take longer still, he said.

TOP 10 COMPETITIVE ISLAND DESTINATIONS

OCCUPANCY

  YEAR TO DATE
SEPTEMBER 2010
1. Oahu 78.3%
2. Guam 76.6%
3. Bali 74.9%
4. Puerto Rico 70.0%
5. Maui 68.9%
6. Jamaica 66.3%
7. Maldives 62.6%
8. Aruba 62.3%
9. Phuket 61.7%
10. Kauai 61.0%

ROOM RATE

  YEAR TO DATE
SEPTEMBER 2010
1. Maldives $529.00
2. French Polynesia $292.45
3. Bahamas $272.94
4. Maui $225.47
5. Aruba $203.55
6. Kauai $183.96
7. Big Island $181.67
8. Puerto Rico $165.06
9. Jamaica $159.82
10. Oahu $174.32

NINE COMPARABLE INTERNATIONAL DESTINATIONS

OCCUPANCY

  YEAR TO DATE
SEPTEMBER 2010
1. Singapore 82.5%
2. South Korea 75.8%
3. Australia 73.6%
4. Hawaii 71.2%
5. New Zealand 70.0%
6. Caribbean 63.1%
7. China 60.3%
8. Mexico 55.2%
9. Thailand 52.7%

Source: Smith Travel Research

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