The number of visitors filling hotel rooms in January declined across all major islands except Maui, causing a dip in statewide occupancy.
Statewide occupancy fell 2 percentage points to 77.5 percent in January, according to the latest hotel flash report, to be released widely by Hospitality Advisors LLC and Smith Travel Research on Friday.
Statewide average daily room rates, which climbed nearly 2.4 percent year-over-year to $254.62, rose across the major islands in January. However, only Maui and Kauai had high enough rate gains to boost revenue per available room (revPAR) from the prior year. Statewide total hotel revenue fell 1.4 percent to $482 million.
"We’re still seeing people willing to pay premiums, but we are starting to see some price resistance," said Joseph Toy, president and CEO of Hospitality Advisors. "We’ll see continued expansion in 2015, but we may see shorter booking windows and push back on pricing with gains likely to be moderate compared to the prior year."
A few other developments, including improvements to the U.S. dollar, and the growth of visitors who are seeking alternative accommodations, also could affect 2015 hotel performance.
Chris Kam, senior director of market insights for the Hawaii Visitors and Convention Bureau, said the U.S. dollar’s strengthening against other currencies has put a dent in demand.
"The price of a Hawaii vacation rises for international visitors while also making overseas travel more affordable for U.S. travelers. Our competition is cheaper for U.S. travelers who like to go overseas," Kam said.
And, while the Hawaii Tourism Authority reported a 0.7 percent increase in visitor arrivals in January, Toy said the number of visitors choosing to stay in hotels fell against other accommodation choices, including timeshares and condominiums.
"In January, 700,000 visitors came, and there was a 2.8 percent increase in air lift; however, many properties didn’t have their best January … where are they staying," said George Szigeti, president and CEO of the Hawaii Lodging and Tourism Association.
There also were changes in hotel financial performance in January that were worth noting. Long considered the best measure of hotel performance, revPAR is the amount of money that a hotel earns on every room regardless of whether it is filled. That’s why it was significant in January that revPAR in Waikiki, the state’s most active tourism market, fell for the first time in more than 4 1⁄2 years to $182.09, a nearly 3.8 percent year-over-year decline.
Waikiki, which has 42 percent of all the hotel rooms in the state, began the year with a 2.6 percentage-point occupancy drop to 82.5 percent.
While January occupancy on Oahu fell 3.2 percentage points to 81.2 percent, room rates grew a scant 0.3 percent to $223.10, which was a new January record. Toy said the record room rates could not make up for the occupancy decline, and as a result revPAR dropped 3.5 percent to $181.16.
Moving into the year, Toy said hotel fundamentals on Oahu may be bolstered by the number of rooms that are expected to go offline for hotel renovations and repositions.
"Once Oahu fills up, compression may drive some of the traffic to the neighbor islands," Toy said. "Maui tends to get the overflow first, followed by Kauai and the Big Island."
Maui already is enjoying a pretty good year, while other neighbor islands have further to grow. Maui’s January occupancy rose 0.4 percentage points to 76.1 percent, and the average daily rate rose 4.7 percent to $342.62, which was a monthly record. Hotels on Maui also set a January revPAR record of $260.73, which was a 5.2 percent gain over January 2014.
"The strong hotel performance on Maui can be attributed to a 6.8 percent increase in visitor arrivals and 1 percent stronger per-person daily spending," Toy said. "The luxury resort region of Wailea achieved an impressive 81 percent occupancy in January with an average daily rate of $479.14."
While occupancy on Kauai declined 0.5 percentage points to 73.9 percent, the island also set January records for the average daily rate, which rose 1.2 percent to $238.45 and revPAR, which grew 0.5 percent to $176.21.
Room rates on Hawaii island rose 2.7 percent to $241.51; however, revPAR stayed flat at $164.95 mainly because occupancy fell 1.9 percentage points to 68.3 percent.
