Hotels set January record earnings of $494M in total statewide revenue

Hawaii’s hotel industry ushered in the new year by setting a trifecta of monthly records for revenue, average daily rate and revenue per available room.

In January the industry earned a record $494 million in total statewide revenue, according to a report scheduled for release today by Hospitality Advisors LLC. Statewide occupancy rose 3.4 percentage points to fill 80.9 percent of hotel rooms.

Increased room demand helped push up the statewide average daily rate (ADR) by a scant 0.9 percent in January to a record-setting $256.42. Likewise, revenue per available room (RevPAR) climbed nearly 5.4 percent to $207.44, also a January record. That’s important because many hotel experts consider RevPAR to be the industry’s best performance indicator since it reflects the price attained by each hotel room regardless of whether it’s occupied.

“I think January exceeded a lot of people’s expectations,” said Joseph Toy, Hospitality Advisors’ president and CEO.

The domestic market was humming, helping to offset currency-related softening from the popular winter markets of Canada and Australia, said Barry Wallace, executive vice president of hospitality services for Outrigger Enterprises Group.

“The winners for the month were clearly the Kohala Coast and Kauai,” Wallace said. “The U.S. market had to be really strong to make the numbers come out that way. That’s great since it’s our largest market.”

Occupancy at Kauai hotels grew 4.5 percentage points to 79 percent. While occupancy was a January record, numbers were skewed due to renovations at the Hilton Garden Inn Kauai, which removed 200 rooms from service. Still, room demand helped Kauai hoteliers push up their average room rate 9.5 percent to a January high of $260.79. The gain helped Kauai achieve an all-time RevPAR record of $206.02, which was 16.2 percent higher than in January 2015.

Group business helped boost January occupancy for Hawaii island. Occupancy climbed 6.8 percentage points to a January high of 73.9 percent. The average rate rose 5.2 percent to a January record of $255.46. Likewise, RevPAR grew 15.9 percent to $188.78. The high-end Kohala Coast region achieved a record-setting occupancy of 77.2 percent. Room rates also climbed 4.3 percent to $347.52, and RevPAR grew 16.1 percent to $268.29.

Occupancy on Oahu crept up another 3.2 percentage points to 84 percent. Occupancy in Waikiki also rose 3.4 percentage points to 85.5 percent for the month. Oahu room rates ticked up 1.9 percent to a record $225.78, and RevPAR grew 6 percent to a record $189.66. Waikiki hotel rooms sold for a record $226.31, or 3.1 percent more than in January 2015. Waikiki hoteliers achieved a record RevPAR of $193.50, which was a 7.4 percent increase from January 2015.

In contrast, room rates on Maui dipped for the first time in 16 months. January room rates fell 3.7 percent year-over-year to $330.66. A 1 percentage point increase in occupancy to 78.6 percent could not offset the rate decline, so RevPAR slipped 1.7 percent to $259.90.

Toy said the overall market appears healthier than last year when revenue records were driven solely by rate and demand was flat. While he expected to see rate moderation from last year, Toy said he was surprised at how promptly hoteliers dropped prices to stimulate demand.

“We’ve got a better balance between demand and price this year, and that will help keep the momentum going into the spring shoulder season and summer,” he said. “The discounts are stimulating demand, and in many cases guests are trading up.”

Preliminary statewide hotel performance for February shows a 1.2 percentage point gain in occupancy to 84.7 percent and a weak 2 percent increase in average rate to $258.16, Toy said.

“The softness in the market has become more apparent in March, with the week ended March 12 at 79.7 percent, or 6.3 percent lower than 2015, and ADR at 1 percent above last year for same period in March at $252.09,” he said.

Still, the first quarter has been pretty good, said Jerry Gibson, area vice president for Hilton Hawaii.

“Hopefully, the first quarter will set the trend for the rest of the year,” Gibson said. “Still, there are some hot spots, and we’ll need to see how we do this summer. One of the challenges is that the convention center is way down this year. We need to see business fill in more.”