Foreign visitors perk up recovering hotel industry

More international visitor arrivals boosted occupancy and room rates on Oahu to near record levels for October as the performance of hotels statewide improved.

Hawaii occupancy increased 1.6 percentage points to 72.5 percent in October, according to statistics released today by Hospitality Advisors LLC and Smith Travel Research. Hotels across the state collected an average daily rate of $176.18, a 7.4 percent increase from the prior year, and their revenue per available room, or revPAR, rose by 9.9 percent to $127.73.

A 6.1 percent rise in international visitors helped Oahu’s occupancy climb 3.1 percentage points to 81.4 percent, the second-highest October level behind only the peak 84.7 percent achieved in 2005. Oahu’s ADR rose by 9.6 percent to $163.05, which was only slightly lower than October 2007’s peak of $163.44. With both occupancy and ADR near historically high levels for the month, revPAR on Oahu rose by 13.9 percent to establish a new October record of $132.72.

"Oahu continues to lead the ongoing market recovery from the tourism downturn of 2008 to 2010," said Joe Toy, Hospitality Advisors president and chief executive.

While hoteliers are seeing positive trends, the cost of living has grown faster than ADRs, said Barry Wallace, executive vice president of Hospitality Services for Outrigger Enterprises Group.

"We are almost even with our best year of 2008, but inflationary costs have gone up at a much more dramatic rate," Wallace said, adding that it could take another two years for ADRs to catch up and hoteliers to return to profitability.

An increase in flights to the neighbor islands has helped Kauai and Maui, although Hawaii island continues to struggle, he said. "Oahu has been a lot more robust."

Still, Kauai experienced the largest October occupancy and ADR gains in the isles. October occupancy on Kauai increased 5.1 percentage points to 66.4 percent. Likewise, ADR rose 11 percent to $192.40. As a result, October revPAR rose 20.2 percent to $127.75.

"A 20.6 percent increase in direct air service from the U.S. West likely contributed to Kauai’s gains during October," Toy said.

Maui saw its occupancy slip 1 percentage point to 66.1 percent. However, Maui hoteliers saw ADR climb 8.1 percent $209.91, the highest on all islands. RevPAR on Maui in October rose 6.5 percent to $138.75.

Maui will need to fill up before Hawaii island fully recovers, Toy said. "Kona tends to get a lot of overflow when groups can’t get their time frame on Maui."

October occupancy on Hawaii island fell 1.5 percentage points to 56.2 percent, the lowest rate among the islands. Hawaii island’s October ADR also dropped 3.6 percent to $165.34. As a result, revPAR fell 6.1 percent to $92.92.

The Hawaii Tourism Authority, which manages state tourism dollars and marketing efforts, is working to support hoteliers through aggressive lobbying for increased airlift and by working to stimulate visitor demand across the state. While marketing during the downturn was geared to putting heads on beds, last year marketers began targeting higher-spending visitors again. First-time visitors, business travelers, international tourists and avid travelers looking for a once-in-a-lifetime experience are among those who tend to spend more while they are here.

"To cultivate the higher-yielding visitor, we’ll have to put more emphasis on the experiential side of the vacation in Hawaii," said David Uchiyama, HTA’s vice president of brand management.

Year-to-date through October, statewide occupancy has increased by 2.6 percentage points to 73.7 percent. Statewide ADR rose 8.5 percent to $186.93, and statewide revPAR climbed by 12.5 percent to $137.77.