Tourism ends summer on high note

August provided a strong finish to a record-breaking summer for hotels, and industry leaders say momentum should continue well into next year.

Hotels across the state set August records in total hotel revenue; room revenue; average daily rate, or ADR; and revenue per available room, or RevPAR, according to a hotel flash report slated for release today by STR Inc. and Hospitality Advisors LLC.

Although statewide occupancy was a smidgen below flat in August, some 80.5 percent of hotel rooms across the state were rented compared with 80.6 percent in the year-earlier period. The results were significantly lower than the highest statewide August occupancy of 86.1 percent in August 2005. Still, Joseph Toy, president and CEO of Hospitality Advisors, said occupancy was impressive.

“Hoteliers consider occupancy above 78 percentage points to be full because at any given time some rooms are expected to be offline for improvements,” Toy said.

August statewide room revenue and total hotel revenue rose 7.6 percent to $351 million and $519 million, respectively. August statewide room rates improved 5.1 percent year-over-year to a monthly record of $264.51 and, RevPAR rose 4.9 percent year-over-year to a monthly record of $212.93. RevPAR is the amount a hotelier realizes per room regardless of whether that room is rented.

August occupancy on Oahu remained high at 86.9 percent, which was a 1.2 percentage point decline from last year. Still, the results were strong considering that some 1,300 rooms were added to Oahu’s hotel supply with the opening of the Four Seasons Ko Olina, the Hilton Garden Inn Waikiki and the Ritz-Carlton Residences Waikiki. Oahu ADR rose 5.1 percent from August 2015 to to set an August record of $243.51. The ADR gain offset the occupancy loss helping RevPAR grow another 3.7 percent year-over-year to $211.61, an August record.

“Oahu hotels have basically been at capacity for the last four years,” Toy said. “When the markets fill up there, overfill goes to Maui and then Kauai and then the Big Island, which is finally coming into its own this year.”

Maui’s occupancy rose to 74.9 percent, or 1 percentage point above August 2015. Hotels there attained August highs in ADR, which grew 5.7 percent year-over-year to $335.13 and RevPAR, which rose 7.2 percent year-over-year to $251.01.

Occupancy at Kauai hotels in August improved to 74.5 percent, a 2.4 percentage point climb from August 2015. ADR remained flat at $257.38. However, RevPAR climbed 3.2 percent year-over-year to an August record of $191.75.

Hotel occupancy on Hawaii island in August rose 0.2 percentage point from the same month in 2015 to 68.1 percent. August records were set in room rate, which grew 4.9 percent year-over-year to $244.63, and RevPAR, which rose 5.2 percent to $166.59 during the same period.

“August was unbelievable and helped us hit another high-water mark for the summer,” said Jerry Gibson, area vice president of Hilton Hawaii. “There’s a lot more inventory and places to shop that are more convenient for guests, and they are spending more money. Food and beverage and retail are doing well. I sure hope the spend side continues.”

Room revenue and total revenue during the summer rose 6.6 percent year over year to $1.05 billion and $1.55 billion, respectively, according to Toy.

“For the first time in history, room revenue alone surpassed the billion-dollar mark over the summer months,” he said.

Summer statewide occupancy hit 81.1 percent, remaining nearly level with last year, despite the added room inventory on Oahu. Summer ADR rose 4.5 percent year over year to $263.97, while summer RevPAR increased 4.4 percent year over year to $214.20.

“It was an exceptionally strong August and an exceptionally strong summer,” said Jack Richards, president and CEO of Pleasant Holidays, Hawaii’s largest travel wholesaler. “It’s an exceptionally strong fall, and forward bookings all the way into June look strong, too.”

Gibson said strong convention, group and event business will boost Hilton’s October and parts of November and December. However, Keith Vieira said it’s not a great group fall for the overall market, which would benefit from the added market compression and higher spending that group bookings bring.

“Our challenge always has been about value because we are dealing with a market that is 90 percent leisure where almost nobody is expensing stuff,” said Vieria, principal at KV &Associates, Hospitality Consulting LLC. “We have to grow more corporate meetings and incentives.”

Vieira said Hawaii can’t compete on price, so it has to focus on enticing leisure travelers through storytelling.

“We have one of the best stories of any travel market in the world,” he said. “We have to pound that cultural message — it’s what sets us apart.”

Richards said Hawaii tourism and its hotels and condominiums also are getting a leisure boost from strong air seat capacity and stable air and hotel fares. Concerns over bad weather in other U.S. destinations, terrorism in Europe and Zika in Mexico and the Caribbean have contributed to increased bookings, too, he said.

Increased luxury hotel and condominium products on Oahu also are stimulating more interest from U.S. travelers, he said.

“Maui is still the No. 1 luxury destination in Hawaii, but Oahu has been coming way up,” Richards said. “In general, more U.S. travelers, especially from the West Coast, are booking Hawaii, and more of them are booking higher-category accommodations. We’re seeing mainly 4-, 4.5- and 5-star bookings.”