Statewide hotel occupancy fell slightly in September, but the industry is still seeing gains over recent years, with revenue per available room up for the 31st consecutive month.
The monthly report due out today by Smith Travel Research and Hospitality Advisors LLC showed the number of filled hotel rooms statewide was down 0.7 percentage point to 73.8 percent in the month due in part to a higher mix of time-share visitors.
However, the average daily room rate rose 8 percent to $186.47, while revenue per available room — a key industry measure of profitability — increased 7 percent to $137.61.
The recovery in tourism began to accelerate before a record-breaking summer, keeping hotels on track for a record year for revenue, the report said.
Still, hotel profits have not recovered from a peak more than five years ago.
"The untold story is that while we may be having really positive revenues, we’re also experiencing record cost increases," said David Carey, president and CEO of Outrigger Enterprises. "Those costs marched along, rising all the way through the period. Profit margins have gone down because costs over the five-year period have grown faster than revenue."
Joseph Toy, president and CEO of Hospitality Advisors, said hotels are operating at much lower profit margins because of higher labor expenses as a number of contracts were renegotiated over the past year.
"There’s certainly higher labor costs and utilities have gone up substantially. Property maintenance costs overall have increased," he said. "There’s a lot of pressure on earnings. It’s a new norm. Some of these costs are just going to be there."
Oahu was the only major island to record occupancy growth, ending the month at 84.5 percent. Waikiki, in particular, posted the highest rate at 85.9 percent, bolstered by a 14.1 percent boost in international visitors, primarily from Japan.
The island’s strong occupancy contributed to a 12.7 percent jump in the average daily room rate to $179.37 and a 13.3 percent surge in revPAR to $151.57 — both records for September, when the industry transitions from the summer high season to the slower fall shoulder season.
"The whole story of the year has been really the recovery, which in turn was driven by Oahu," Toy said. "The Oahu market in turn was driven by a sharp increase in Japanese and other Asian markets like Korea and China, which all had double-digit growth. These markets overwhelmingly stay at hotels when compared to U.S. visitors who choose other types of accommodations, including time share and condominiums."
Maui properties began strengthening in September, posting the state’s highest average daily rate at $213.09, 3.3 percent higher than the previous year.
Occupancy on Maui fell 1 percentage point to 65.1 percent, while revPAR rose slightly by 1.7 percent to $138.72, due in part to growth in higher-spending markets, including honeymooners and independent travelers, the report said.
Kauai recorded a 3 percentage-point loss in occupancy to 68.7 percent, resulting from fewer international tourists and a slight decline in the number of visitors choosing to stay in hotels. A 3.1 percent growth in average daily rates couldn’t offset the lower occupancy, thereby pushing revPAR down 1.2 percent to $137.37.
Hawaii island continues to lag the rest of the state as occupancy fell by 3.3 percentage points to 54.2 percent due to fewer overall visitor arrivals. In addition, revPAR dropped 5 percent to $88.05, while average daily rates inched up by 0.8 percent to $162.46.
"While recovery has really gained momentum particularly starting in the summer, it’s still somewhat uneven as the Big Island continues to lag the market," Toy added.
