Hawaii’s hotel industry appears headed for further softening as it tries to hold onto its hotel room rates amid declining demand and occupancy.

In May, hotel average daily rate (ADR) statewide rose more than 1% to $256, while occupancy declined eight-tenths of a percentage point to 79.2% and revenue per available room (RevPAR) was flat at $203, according to a hotel report released by the Hawaii Tourism Authority Friday using statistics provided by STR, a data and analytics company.

Last month, Hawaii hotel room revenue statewide also was down more than 1% to more than $339 million. Several Hawaii hotels were closed for renovation or had rooms out of service for renovation during May, which caused the supply of available room nights to fall nearly 2%, resulting in nearly 26,000 fewer available room nights. However, the demand drop in May was larger than the supply drop, resulting in approximately 34,000 fewer occupied room nights, a demand dip of nearly 3% compared to May 2018. Statewide hotel revenue fell more than 1% in May to more than $339 million.

Pricing is strongly connected to supply and demand. Lower hotel supply creates competition for the remaining rooms. However, when demand drops faster than supply it’s an indication that the market, or at least pockets of it, may be weakening. It’s difficult to recover room rates so when demand first drops, hotels typically will try to drive additional visitor traffic with add-on specials like offering on-property credits, free nights or other perks. When that doesn’t work, the market starts to see pricing shifts.

Joseph Toy, president and CEO of Hospitality Advisors LLC, said when an “ADR increase isn’t strong enough to offset the decline in occupancy over a long period of time, that typically signals a downward change in the market.”

The statewide monthly results contributed to a flat daily rate, with declines in occupancy and RevPAR during the first five months of the year. Through May, statewide occupancy fell more than 2% to 80%, while RevPAR dropped more than 2% to almost $224. ADR was just above flat at $280.

Through May, there was a nearly 2% drop in supply, which was outpaced by a more than 4% decline in demand. Year-to-date hotel revenue dropped nearly 4% to more than $1.8 billion.

Keith Vieira, principal of KV &Associates Hospitality Consulting, said although summer’s booking pace appears to be an improvement over the first five months of the year, it’s still soft.

“When you look at the wholesale pace and the mix of visitors and the struggle even in the international markets, it scares me because we are doing crazy things like Tuesday’s protest in Kauai, where they were jumping on the hoods of people’s cars,” Vieira said. “Stuff like that gets all over social media, and it doesn’t help us. We have to have better tourism management so that people aren’t taking things into their own hands — that won’t bode well for what is already a softening market.”