Hawaii hotels report February as worst monthly performance in about a decade

February wasn’t a month to love for Hawaii’s hotel industry, which experienced its worst monthly performance in about a decade.

Statewide occupancy fell nearly 3 percentage points to 83.4 percent from February 2018, while the average daily room rate dipped just over 1 percent to $290 and revenue per available room declined more than 4 percent to $242, according a Hawaii Tourism Authority report published Monday, using data from the hotel analytic company STR.

Revenue decreased nearly 6 percent from the year-ago month to $360 million.

“Why people think everything in tourism is glorious is beyond me,” said Keith Vieira, principal of KV &Associates Hospitality Consulting, adding that the first half of the year is going to be weak.

August 2009 was the last time Hawaii hotels reported decreases across the metrics, including occupancy, average daily rate, revenue per available room and revenue.

The monthly results are concerning given that February is typically the best month of the year for Hawaii hotels, which have seen pockets of softening since June. The downturn in hotel performance means that there will be less momentum heading into the second quarter — which doesn’t bode well for a strong summer.

Vieira said the drop in occupancy is a carryover from last year’s volcanic eruption on Hawaii island and severe weather events, which slowed tourism’s pace. More problems came in the form of disruptions at some of the state’s top attractions, including Hawai‘i Volcanoes National Park on the Big Island, Haena State Park on Kauai and the USS Arizona Memorial at the WWII Valor in the Pacific National Monument on Oahu.

Mufi Hannemann, president and CEO of the Hawaii Lodging &Tourism Association, said the hotel strike on Maui and Oahu, which ran from early October to nearly December, didn’t help, either. He said he is also concerned with the growth of transient vacation rentals, which he said “aren’t operating on a level playing field” with hotels in terms of taxes and other costs.

“As an industry we still want to employ lots of people, but Mayor (Kirk) Caldwell’s property tax proposal on Oahu would make it very difficult for businesses not only to thrive, but to survive,” Hannemann said. “The industry is facing paying a state transient accommodations tax on mandatory resort fees.”

Vieira said he’s also concerned about the Hawaii Tourism Authority’s new tourism management approach — to emphasize managing tourism over marketing — at a time when more advertising could boost demand.

“It’s going to be a real challenge to turn this around by summer,” Vieira said.

While HTA has cut marketing budgets for Canada and Europe, the agency’s board is expected to approve additional marketing funds for Hawaii island, which has been grappling with tourism losses since May.

“Everyone recognizes that this is serious. This time last year we were going gangbusters, but we’ve been soft for a year,” said Stephanie Donoho, administrative director for the Kohala Coast Resort Association, which represents 10 resorts and hotels.

The February results continued earlier declines. For the first two months of the year, Hawaii’s hotel industry saw statewide occupancy fall 2.7 percentage points to 81.4 percent, average daily rates flatten to $294, revenue per available room decline more than 3 percentage points to $240, and revenues fall almost 5 percentage points to more than $751 million.

Joseph Toy, president and CEO of Hospitality Advisors LLC, said there’s still too much uncertainty to determine whether Hawaii’s hotel industry will bounce back this year. But so far, Toy said, the hotel industry looks to be hedging its bets to offset a multitude of concerns, including wobbling consumer confidence.

“I’ve heard the second quarter is soft. As evidence I’m seeing discounts and deals that I typically wouldn’t see this early in the year,” Toy said. “Discretionary travel, especially when it’s long haul, is very sensitive to consumer confidence.”