Hawaii hotels hit midyear with record revenue

Propelled by summer gains, especially on Oahu and Maui, Hawaii’s hotel industry set a record for revenue in the first six months of 2012.

Statewide hotel revenue through June rose to nearly $1.6 billion, a 14.8 percent gain over the first six months of 2011, according to data released Tuesday by Smith Travel Research and Hospitality Advisors LLC.

Statewide occupancy rose 4.6 percentage points to 77.1 percent through June, and average daily rate (ADR) rose 7 percent to $201.32. Revenue per available room (RevPAR), considered the best measure of hotel performance, rose 13.8 percent to $155.22.

"It’s hard to complain about the market, especially on Oahu," said David Carey, president and CEO of Outrigger Enterprises Group. "It’s all great."

June results helped push statewide performance higher during the first six months, said Joe Toy, Hospitality Advisors’ president and CEO. Statewide occupancy rose 5.6 percentage points in June to 76.4 percent, and ADR grew 7.8 percent to $200.71. As a result, RevPAR increased 16.8 percent to $153.34.

Oahu led the market for June occupancy, ADR and RevPAR growth, Toy said. Oahu occupancy rose 6.8 percentage points in June, filling up to 85.3 percent of the isle’s hotel rooms. ADR grew 12.7 percent to $181.11, and RevPAR increased by 22.5 percent to $154.49.

June occupancy in Waikiki, the state’s best-performing summer hotel market, increased 7.1 percentage points to 86.8 percent. Waikiki’s ADR rose by 11.7 percent to $179.52, and RevPAR grew by 21.6 percent to $155.82.

"Oahu and Waikiki earned the highest-ever June ADR and RevPAR," Toy said.

Oahu’s June occupancy was the third-highest June occupancy, trailing only June 2005 and June 2006, he said. Waikiki’s June occupancy was second only to the June 2005 record, Toy said.

Carey said June occupancy levels helped hoteliers regain rates.

"Ideally, you want to manage (hotel room) rate so that you are in the low 80s for occupancy," he said. "It’s hard to deliver on service when occupancy is running higher."

Despite statewide and Oahu records, Toy said recovery has not been even across the islands.

While Oahu and Maui did well in June and Kauai is showing signs of strengthening, Toy said that Hawaii island still lags behind.

"There’s a 21.8 percentage-point difference between Waikiki and the Kohala Coast," Toy said. "There is still a big gap that needs to fill in to say that we have fully recovered."

Still, the good news for Hawaii’s hotel industry is that the strong markets should continue performing well.

"Halekulani Corp. is optimistic that visitor numbers will remain strong through the end of summer and the fall season," said Halekulani corporate Chief Operating Officer Peter Shaindlin. "If that trend continues, winter is on pace to re­cord healthy numbers as well, though ultimately that remains to be seen due to a trend towards shorter booking windows."

Carey said the upward trend appears sustainable.

"We’ve got increasing flights. People appear to be traveling despite the economy, and we’ve got currency advantages," he said.

Shaindlin said that the strength of the Asian market, particularly Japan, has been well received.

"We are seeing a good recovery for the continental U.S. but not to previous levels yet," he said.

Carrie Hussussian, who was part of a group of nine travelers staying at the Hilton Hawaiian Village in Waikiki this week, faced a long check-in Tuesday. But the Redwood City, Calif., visitor and her family patiently waited.

"Planes and hotels are always full in the summertime," Hussussian said.

The group had considered going to Atlantis Resort in the Bahamas but chose Hawaii because the prices were comparable and the trip was shorter.

"We would have had to travel another 31⁄2 hours in the plane to get to Atlantis," Hussussian said. "This place came highly recommended."

Consumer demand for Hawaii hotels should continue through the year, Toy said. By year’s end he expects statewide occupancy to hit 76 percent, a 2.3 percent growth rate over 2011. Toy anticipates that Oahu’s occupancy for the year will rise by 2.1 percent from 2011 to 83 percent. Toy also is projecting that 2012 statewide ADR will grow 6.8 percent to $203 and that Oahu’s ADR will rise 9.1 percent to $180. However, statewide ADR would have been $216 and Oahu’s would have been $181 if rates had kept pace with inflation since 2008, he said.

"The current gains have been excellent, but we still have ground to make up, considering the previous three years of minimum ADR growth and increased operating expenses," said Jon Con­ching, Hilton’s regional vice president of sales and marketing for Hawaii and select resorts.

While rates for many Oahu hotels have almost caught up with inflation, in many cases the increases have not outpaced costs, Carey said.

Electrical, medical, labor and administration costs continue to rise for hoteliers across the state, Carey said.

"Our margins are higher, so we need higher rates to make it work," he said.