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Storm likely to further curb September hotel performance

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Sandbags lined the Halekulani Hotel property in Waikiki on Wednesday, as part of the preparation for Hurricane Lane.

Hoteliers, especially those on the Big Island that suffered losses connected to the Kilauea eruption during the peak summer period, are bracing for another hit as Hurricane Lane moves closer to the islands.

At worst, resorts may have to deal with dramatic infrastructure damage caused by the storm. At the very least, they may be looking at September decline on top of an already softer June and July, said Joseph Toy, president and CEO of Hospitality Advisors LLC.

“For September, no matter what, we’ll likely see a much deeper drop than normal as the market transitions,” Toy said.

That’s on top of the July results released today by Tennessee-based STR, which tracks hotel performance across the state. STR reported that Hawaii island’s July occupancy fell 4.6 percentage points to 74.2 percent. The average daily rate paid for a Hawaii island hotel room in July stayed flat at nearly $247. Revenue per available room (RevPAR), which is the price earned for each hotel room regardless of whether it is occupied, dropped 6 percent to $183. Hawaii island’s July hotel revenue also fell just over 7 percent to nearly $40 million.

Hawaii island hoteliers had hoped that that they would be headed into the fourth quarter with enough late third-quarter gains to offset some of these peak summer losses, said Kansas Henderson, hotel manager of the Mauna Kea Beach Hotel on Hawaii island’s Kohala Coast.

“We had just started to rebound in August,” Henderson said. “Then came Hurricane Lane.”

By late Tuesday afternoon, the Mauna Kea Beach Hotel’s Henderson said he already had received about six cancellation calls and about 12 inquiries from in-house guests who are looking to change their reservations to leave early or extend their stay in anticipation of flight cancellations.

“When they changed the hurricane watch into a warning that got people’s attention,” Henderson said.

John Monahan, president and CEO of the the Hawaii Visitors and Convention Bureau, said the agency’s call center started receiving calls on Saturday, with callers mainly “concerned about whether the hurricane would hit Hawaii.”

But guest concerns amid softening performance isn’t unique to Hawaii island hotels. Oahu’s July occupancy fell 1.3 percentage points to 87.9 percent, while ADR rose nearly 3 percent to just over $260 and RevPAR grew 1 percent to about $229. Oahu’s July revenue also grew less than 2 percent to more than $212 million.

July was better for Kauai, where occupancy rose 1 percent to 78.8 percent, ADR increased more than 8 percent to nearly $315 and RevPAR rose almost 10 percent to just over $248. Revenue was up nearly 10 percent to just over $34 million.

Maui’s July occupancy rose less than a percentage point to just over 81.2 percent, ADR rose more about 9 percent to more than $404 and RevPAR increased more than 10 percent to almost $328. Monthly revenue reached nearly $129 million, a roughly 10-percent gain over July 2017.

Alan Mattson, president and CEO of Castle Resorts and Hotels, began to receive cancellations at its 23 properties on Tuesday.

“They aren’t widespread, but they are starting,” Mattson said. “We’ve elected to waive any cancellation fees for stays going forward from now until Sunday.”

Just how bad the latest visitor industry disruption will be is still undetermined, said Jack Richards, president and CEO for Pleasant Holidays LLC.

Destinations typically rebound quickly from hurricanes unless there is substantial infrastructure damage, Richards said.

“People wait and see. We saw that in the Caribbean last year. Once the threat has passed, they start booking again,” he said.

But if the industry’s infrastructure sustains damage, it could be years for the markets to return to normal, said Hospitality Advisor’s Toy.

“After Hurricane Iniki hit Kauai, it took six or seven years for the island’s hotel market to recover,” he said.