Volcanic eruptions, natural disasters and canceled flights, oh my!

The eruptive hiatus at Kilauea is continuing, and Hurricane Lane and Tropical Storm Olivia weren’t as menacing as forecast, but canceled flights and other head winds from these events caused Hawaii island in September to experience its worst downturn since the Great Recession.

In September, Hawaii island hotels reported that occupancy dipped 8.9 percentage points to 58.7 percent, according to STR, a data and analytics specialist. The average daily rate at Hawaii island hotels stayed flat at nearly $208. Revenue per available room, which is the revenue a hotelier earns for every hotel room regardless of whether it’s occupied, fell nearly 13 percent to nearly $122. Hotel demand dropped more than 18 percent to 118,175 rooms sold. Revenue dropped nearly 18 percent to almost $25 million.

Brad Doell, director of sales and marketing for Mauna Kea Resort, said, “This was due to the ill effects effects of the two hurricanes that happened in August that affected our September numbers. And, we are still feeling the effect of the volcano, even though it stopped.”

Hawaii island’s September occupancy and revenue per available room drops were the worst since 2008, said Jan Freitag, STR senior vice president.

The perceived threat of natural disasters and volcanic eruptions leading into September affected fall booking decisions for Hawaii island, Freitag said. The same issues also affected occupancy at Kauai and Maui hotels, although these islands saw growth in average daily rate and revenue per available room, he said.

Oahu’s September occupancy stayed flat, which might be related to relocations from the neighbor islands, Freitag said. Oahu’s average daily rate and revenue per available room rose in September, he said.

Jerry Gibson, vice president of Turtle Bay Resort, said when natural disasters occur potential travelers tend to look at other destinations or elect not to travel at all.

“We can’t recover that business, but Hawaii is still in high demand. We’re hoping business will be stimulated by the holidays and we’ll soon get back to having a nice pace,” Gibson said.

Joe Toy, president and CEO of Hospitality Advisors LLC, said Hawaii hotels must increase the booking pace in November and December to increase momentum as they head into the first quarter.

“We need time to recover, but the scale of this will certainly be much different than the Great Recession, which was a global markets issue,” Toy said.

Freitag said he expects that the current impact on demand and occupancy will be short-lived. Overall, occupancy across the state through September is a healthy 81 percent, he said.

“You are selling 8 out of every 10 rooms every night,” Freitag said. “That is higher than New York state and Washington, D.C. You are still a very attractive destination with a very limited hotel supply. Compared to 2018, this time in 2019 will look great in terms of the percentage change. But that’s not really solace for operators today.”

Keith Vieira, principal at KV &Associates, Hospitality Consulting, agrees that Hawaii’s hotel market will turn around but doesn’t think that will happen until the second quarter of 2019.

“The booking pace has been down significantly ever since the volcano, and right when we expected things to start picking up, we had two hurricanes,” Vieira said. “Now we’ve got a strike. I expect this downturn to continue the rest of the year and maybe into the first quarter, because we had such an amazing first quarter last year and that would be tough to top.”