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Hawaii’s visitor industry showed signs of deterioration before hotels began to close

The rapid deterioration of Hawaii’s hotel industry in the wake of COVID-19 lockdowns began to hit its stride in March, with occupancy plummeting by at least 37% across every island.

Hawaii’s visitor industry and hotels posted strong January results with only the beginning of a wobble in February. But March hotel reports from STR prove how much difference a few weeks can make.

In February, Hawaii hotels saw occupancy rise 1.2 percentage points to 84.7%, and the average daily rate grew more than 6% to $310. That’s all but evaporated with the spread of the COVID-19 pandemic, said Keith Vieira, principal of KV & Associates, Hospitality Consulting.

“The first half of March was still strong. Then, we entered into completely uncharted waters, and Hawaii’s visitor industry collapsed,” Vieira said.

In mid-March Gov. David Ige took the unprecedented step of “strongly encouraging” visitors not to come to Hawaii for the next 30 days. The counties began issuing stay-at-home orders. Then, on March 26, Hawaii became the first state to require that all arriving trans-Pacific passengers follow a mandatory 14-day self-quarantine. Ige extended that order in April to include interisland passengers.

STR’s March report is like looking at the start of the storm surge, which by all accounts has far from peaked.

Oahu, which gets the majority of the state’s visitors, especially international arrivals, saw March hotel occupancy drop to 42.9%, a 46% plunge from March 2019. At the same time, the average daily room (ADR) rate dropped nearly 5% to just over $218. Revenue per available room (revPAR), the measure of what each hotel room earns despite its occupancy status, fell 49% to nearly $94. The results caused hotel revenue to plummet by nearly 49% to $88.8 million.

Hotel occupancy on Kauai fell to 45.7%, a nearly 37% decline from March 2019. RevPAR decreased 34% to $135. However, Kauai’s average daily rate rose 4% to nearly $296. Hotel revenue on Kauai fell more than 39% to $17.4 million.

Hawaii island’s March hotel occupancy took a year-over-year dive of nearly 42%, to 46.1%. ADR stayed flat at just over $274, but revPAR dropped more than 41% to more than $126. Hotel revenue decreased to $24.9 million, a nearly 42% drop from March 2019.

Occupancy at Maui hotels in March declined nearly 40% to 47.4%. ADR fell nearly 3% to just over $413, and revPAR dropped more than 41% to nearly $196. Hotel revenue plummeted 42% to $76.1 million.

By April, occupancy was in a free fall, and at least 129 out of some 148 hotels across the state had suspended operations. Vieira said most planned to reopen in May or June; however, recent emergency order extensions have made those plans unlikely.

Ige said Monday that Hawaii’s stay-at-home order will probably be extended past April 30. Honolulu Mayor Kirk Caldwell said Tuesday he is extending the stay-at-home, work-from-home order for Honolulu through May.

“Most of the reopening models were looking at June, but that’s out the window now,” Vieira said. “Hopefully, they’ll be reopening by fall.”

While passenger quarantines haven’t been entirely effective, they have dramatically reduced passengers coming to Hawaii. At this time last year, more than 30,000 passengers were arriving daily in Hawaii. In the 26 days since the trans-Pacific quarantine began, some 3,313 visitors have arrived. That’s an average of 127 passengers a day who are visitors.

The fact that some visitors are still coming to Hawaii and some are misbehaving has created angst in the community, which in some cases has rallied strongly to get noncompliant ones sent home.

The Visitor Aloha Society of Hawaii has helped 19 visitors, who were not prepared to undergo the 14-day quarantine, get back home.

Law enforcement officials also have sent back some visitors. Aarona Browning- Lopez, 37, was returned to Los Angeles on Friday after violating COVID-19 emergency rules. Officials allowed Browning-Lopez to enter Hawaii despite only providing a post office box for an address. Law enforcement later arrested Browning-Lopez after getting complaints from the community that she was trying to set up a tent on the side of a road.

On Tuesday, Kimberly Kim Tien, a 34-year-old visitor from Las Vegas, and Edwin Htun, a 33-year-old visitor from Sydney, were arrested after a hotel manager turned them in for violating emergency rules.

The LayLow, Autograph Collection manager reported the couple after an “irate” citizen flagged Tien for making Instagram posts that showed she was venturing outside of her Waikiki hotel room before she had completed her quarantine.

Special agents from the state Attorney General’s Office interviewed hotel staff and obtained records that showed that the pair had repeatedly left their hotel room from the day they arrived, April 15, through Monday.

As Hawaii considers opening back up, Vieira said the current emphasis on public health and safety needs to change from enforcement to prevention. Economic recovery plans for travel should emphasize rapid COVID-19 testing, social distancing and other safety protocols, he said.

Vieira envisions a process where every traveler to Hawaii gets tested and must present a negative result before being allowed entry. Once they are here, social distancing policies should be consistent.

“If we have the proper rapid testing and safety protocols in place, our isolation could work to our benefit,” Vieira said. “We could own the rebound and get people back to work, which should be a focus given that we have the highest unemployment rate in the nation.”

However, Vieira cautions that even after the state reopens to travel, recovery will be far from immediate.

“Once things start to open, hotels will be lucky if they are getting 30% to 35% occupancy,” Vieira said. “I’d like to see us at plus 40% occupancy, which is the break-even point for most hotels, but I don’t think that’s possible this summer.”

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