Occupancy dipped a little at Hawaii hotels in May, which hoteliers say will probably be their worst-performing month of the year.
If that holds true, the hotel industry is set for a pretty good year because gains in room rates and revenue in May more than made up for the 1.1 percentage-point decline in occupancy to 71.7 percent, according to the latest hotel flash report released today by Hospitality Advisors LLC and Smith Travel Research. While the $262 million in room revenue that hotels earned in May was significantly below the all-time revenue high of $328 million earned this January, it did set a record for the month. Other monthly records were set when May’s average daily rate (ADR) climbed 9.5 percent to $207.41 and revenue per available room (revPAR) rose 7.9 percent to $148.71. RevPAR, considered by many to be the best measure of hotel performance, is calculated by multiplying the ADR by occupancy.
Both May ADR and revPAR records were below the best-ever monthly rates in those categories. The best ADR was $235.88 in December, and the highest revPAR was $199.70 in February. Statewide occupancy in May also was significantly below the all-time high of 88.8 percent set in July 2005 or the May record, which was 79.4 percent in 1990. However, May occupancy varied from 80.4 percent on Oahu, which includes Waikiki, the top-performing hotel market in the state, to 52.6 percent on Hawaii island.
While hotel occupancy decreased 2.1 percentage points on Oahu, the island achieved the highest May ADR and revPAR gains of the major islands. Oahu set monthly records for its ADR, which rose 12.1 percent to $196.35, and its revPAR, which increased 9.2 percent to $157.87.
"When people ask us if we have a shoulder season, we say that don’t have one anymore," said Jerry Westenhaver, general manager of the Hyatt Regency Waikiki Beach Resort & Spa. "Occupancy has been pretty consistent in Waikiki. We (the Hyatt) are running at 94 percent for most of the summer, and our drop to 88 or 89 percent is someone’s best month in other parts of the country."
The strong performance on Oahu can be attributed to increased arrivals from the group and honeymoon markets, which brought an additional 12,000 visitors during what is typically a less popular month for travel to Hawaii. However, some members of the state’s visitor industry are concerned that prices are approaching benchmark highs since the average length of stay for Oahu visitors in May dropped 4.2 percent.
"We’ve had almost 24 months of double-digit revPAR growth driven by the price. It can’t go on forever," said Barry Wallace, executive vice president of hospitality services for Outrigger Enterprises Group.
"In May of last year, occupancy recovered and room rates were high, so there’s not much room for improvement on Oahu. However, we’ve got a ways to go on some of the neighbor islands."
Elizabeth Churchill, senior vice president of sales and marketing for Aqua Hospitality, said occupancy will decline as ADR rises.
"My only concern is that we could start to see a backlash from the traveling population who may try out competitive destinations because they are cheaper," Churchill said.
Some visitors like Los Angeles-based Donald Stoffel, who estimates that he’s been to Hawaii 125 times since 1980, already are making comparisons.
"It is getting harder on the pocketbook to stay in Honolulu. My room rate was around $350 a night. I could still get a room at the Hyatt for around $200 earlier in this century," said Stoffel, who was with the construction company that built the Wynn Encore in Las Vegas and is a Wynn stockholder.
"I can go (to Vegas) and get a great room for anywhere from a $135 to $160 a night."
Still, Stoffel said that he’s used to paying high prices elsewhere, and so far added costs in Hawaii haven’t deterred him from returning. He said that he’ll visit Honolulu for a few nights in October, as part of a vacation that includes a stay at his Maui time share. To be sure, a strong mix of international and domestic visitors helped Maui achieve the only increase in May occupancy among the islands. The island’s May occupancy increased by 2.3 percentage points to 66.4 percent, while its ADR grew 3.3 percent to $241.46 and its revPAR climbed 7 percent to $160.33.
May occupancy rose 2.6 percentage points to 66.9 percent on Kauai. While a 7.1 percentage increase in arrivals to that island didn’t offset a 3.5 percent decrease in visitor length of stay, Kauai set May ADR and revPAR records. ADR rose about 9 percent to $215.36, and revPAR grew to $144.08, which represented a nearly 5 percent gain.
Hawaii island, which typically lags behind all other major islands, saw its occupancy fall 3.1 percentage points to 52.6 percent. However, the Big Island’s ADR rose about 9.1 percent to $188.37, which was a monthly record for the island. RevPAR also rose 3 percent to $99.08.
"Overall, we’ve got nothing to complain about," Churchill said. "I think 2013 will be a very strong year with higher ADRs and flat or slightly lower occupancies."
