More than a year into the recovery of Hawaii’s tourism sector, some hotel owners are finally gaining the leverage needed to raise room rates significantly, according to an industry consultants’ report released yesterday.
The average daily rate for a hotel room went up 3.9 percent to $168.81 in November from the same month a year earlier, the biggest increase in nearly three years, the report from Hospitality Advisers and Smith Travel Research said.
The rate increase was paired with a sharp rise in November’s occupancy rate to 67.8 percent from 61.1 percent the same month a year earlier.
ROOM AT THE INNS
Occupancy rates at Hawaii hotels in November and the same month last year:
Source: Hospitality Advisors LLC
November’s increase in average room rates was concentrated on Oahu and Maui. Rates declined on Hawaii island and were unchanged on Kauai.
"We’re seeming some strength in Waikiki, and momentum is building on Maui," said Joseph Toy, president and chief executive officer of Hospitality Advisers. "But the recovery has been uneven. They’re still fairly far behind on Kauai and the Big Island," he said.
While visitor arrivals and hotel occupancy have been trending higher since the start of the year, much of it has been the result of hotels discounting their rooms. Even with the increase in November, rates are still well below the average of $201 in 2008, the height of the market, Toy said.
"To get back to where we were will be a long process, particularly for room rates," Toy said.
For Oahu and Maui that could be three to four years; on Hawaii island and Kauai, as long as five years, he said.
Part of the problem is that some hotels are locked into wholesale contracts with "heavily discounted rates. They’re stuck with what they agreed to in 2009," Toy said.
Some of the contracts are in effect until summer, but their expiration "will help build momentum going forward," he said.
Another key for the hotel industry will be the eventual return of convention and group business, which "evaporated" over the past 21/2 years, Toy said.
"That will create a price base for the hotel business that will make it much easier for them to sell into the leisure market."
The Pro Bowl in January and Asia Pacific Economic Cooperation conference next fall will also help, Toy said.