Summer is red-hot for tourism

Hawaii’s hotel industry set a record for most room revenue earned and for the average daily room rate in July at the start of the third quarter; however, some weakness has begun to creep into the market as it moves toward the fourth quarter.

"We’ve seen some seasonal softness in August and September," said Keith Vieira, senior vice president of operations for Starwood Hotels and Resorts in Hawaii and French Polynesia.

"It also may be in reaction to overall pricing in the destination or concerns about the economy or potential conflict with Syria. However, we don’t think it’s a structural change or that we should expect decreases in the future."

To some extent, Vieira said the fall slowdown is a natural leveling off of the frenzy in some Hawaii tourist destinations, particularly Waikiki.

"I think we’ll remain on a growth pace, but when your occupancy is running in the 90s percentage-wise it’s unrealistic to see it keep rising. You have to grow your market through rate and that carries risk because of price point challenges," he said.

Hawaii’s average daily rate went up 11.8 percent to $241.63 in July from the same time a year earlier, the most recent data available from Hospitality Advisors LLC, which was set to release its monthly hotel flash report today.

"The rise in Hawaii room rates drove the revenue in July," said Joe Toy, president and CEO of Hospitality Advisors.

Hawaii’s hotel sector in July also set a room revenue record for any single month. The $336 million in room revenue outpaced the previous all-time high set in January by 2.2 percent, or $7 million.

These gains were accompanied by a 2.9 percentage-point drop in occupancy, which was 78.9 percent statewide in July.

"I think it was to be expected because of the bump that we had in pent-up demand last year," Toy said. "Really, the last 12 months starting from last summer we’ve been on this incredible ride. It’s still very tight in Waikiki even with the pullback."

While Hawaii’s statewide occupancy in July relative to other destinations was very strong, it came in about 10 percentage points lower than the all-time high for occupancy, which was 88.8 percent set in July 2005.

Revenue per available room or revPAR, considered by many to be the best measure of hotel performance, didn’t set a record in July. However, July’s 7.8 percent year-over-year climb in revPAR brought the average to $190.65, which was the highest of any July.

Vieira said some of the decline in fall occupancy might be more of a timing issue for consumers than a concern about pricing since Hawaii has never been a "cheap" destination.

San Francisco visitors Maria and Jeff Bantay, who have made multiple trips to Hawaii, said they noticed this visit was more expensive than some of their previous stays.

"But it’s beautiful," said Maria Bantay, who was playing with her nearly 2-year-old grandson, Jameson, at the Sheraton Waikiki pool on Friday. "It’s just like paradise."

Pricing is relative, said Rocio Perez, a visitor who hails from Lima, Peru, and has lived on the mainland.

"People say Hawaii is expensive, but I was discussing it on the plane with another visitor who has been here 12 times and they said it’s not that bad. Now that I’m here, it’s OK," said Perez, who was taking a lei-making class Friday morning at The Royal Hawaiian hotel.

Still, Vieira said Starwood and other hotels are working with operators like Pleasant Holidays LLC to drive more traffic. Pleasant Holidays is running a sale through Oct. 20 that includes a free seven-day rental for a Hertz convertible, luxury car, SUV or minivan until Sept. 15, 2014.

The packages include trans-Pacific airfare and a minimum three-night accommodation at a participating "Hot Deals" hotel.

Pleasant Holidays, which is the state’s largest wholesale travel seller to Hawaii, also has lowered trip deposits to $50 per person for Hawaii vacations.

"As you are aware, the increased costs of Hawaii vacations was a chief concern expressed at the recent (Hawai‘i Tourism Authority) Conference in Honolulu and may be forcing travelers to book vacations elsewhere such as Mexico and the Caribbean," said Jack Richards, Pleasant Holidays’ CEO and president.

"We believe the new Pleasant Holidays reduced deposit program will encourage travelers to book Hawaii vacations further in advance with less money down when Hawaii hotel inventory and air seats are more widely available."