Fewer than one out of every 10 hotel rooms was occupied in Hawaii in April as the coronavirus lockdown devastated one of the nation’s top hotel markets.
Travel research company STR reported Wednesday that Hawaii’s statewide occupancy plummeted in April to 8.9%, a level that was down 88.6% from April 2019. The average daily rate (ADR) declined to $131.16, a decrease of 51.8% from April 2019. Revenue per available room (RevPAR) fell to $11.70, a decrease of 94.5% from the prior year.
These latest hotel figures show that Hawaii tourism, which supplies 17% of the state’s gross domestic product, finally fell off the cliff in April.
With the largest part of the state’s GDP down, Hawaii’s hotel industry has been thrust into a game of limbo, where participants are asking, “How low can you go?”
In the game, the participant that manages to duck under the pole without falling to the floor wins. That’s probably true here too, but the floor is coming dangerously close for many Hawaii hotel companies.
About 130 Hawaii hotels already have closed since the March 26 start of a mandatory 14-day self- quarantine for incoming passengers, which was extended April 1 to include interisland travelers. Neither quarantine is slated to end before June 30.
Without a guarantee that tourism lockdowns will end soon, additional hotel owners also are considering shuttering, said Keith Vieira, principal of KV &Associates, Hospitality Consulting.
“Many thought Hawaii tourism could reopen way earlier,” Vieira said. “They figured they could hang on a few months. With the passenger quarantine still in place, May and June are going to look just as bad as April. At 8%, hotels are losing more money staying open than they would if they were closed.”
Oahu, which by room count is among the nation’s top 25 hotel markets, posted an occupancy of 8%, the worst on the list. Average April occupancy for the nation’s top 25 hotel markets was 23.4% as compared to 76.4% in April 2019.
Results in Hawaii varied by island. While Oahu saw the steepest downturn in occupancy, Maui sustained the biggest year-over-year percentage drops in ADR, RevPAR and revenue. Kauai, at 7% occupancy, had the lowest occupancy rate.
While conditions vary, some Hawaii hotels already are facing financial distress, said longtime Hawaii hotelier Jerry Gibson.
“There are owners that are on the edge and worried about their businesses,” Gibson said. “Every owner has their own set of problems and difficulties right now. It’s definitely getting very difficult for our team members too.”
Gibson said he’s hopeful that the state might agree on a future tourism reopening date soon. The next 15 days would be an ideal time frame to give Hawaii hoteliers time to ensure that they are ready to restart when the quarantine is lifted.
Even then, he expects tourism will ramp up very slowly and that not all hotels will immediately reopen. Also, most properties won’t be back to a full workforce for some time, Gibson said.
“I think we’ll see about 15% to 25% occupancy in the beginning until we start to build momentum,” he said. “When we get to Dec. 22, I think we’ll be fortunate to get to 45% to 50% occupancy for that week-and-a-half-long festive period. I don’t think we’ll start to build to 55% to 65% occupancy until the third quarter of 2021.”
But Hawaii tourism can’t even begin recovering until government and the community agree on a safe reopening plan for tourism, Vieira said.
“It’s going to take bravery and leadership,” he said. “The community is concerned, but our economy has to get going. Opening up stores and all these things without tourism is going to cost people money.”
Rep. Gene Ward (R, Hawaii Kai, Kalama Valley) and Rep. Bob McDermott (R, Ewa, Ewa Villages, Ewa by Gentry, Iroquois Point) released a reopening framework to the House Select Committee on COVID-19 this week entitled “Making Hawaii Safe for Travel. The 23-page plan relies on COVID-19 testing to restart Hawaii’s visitor industry without creating a second wave of COVID-19.
The lawmakers said Wednesday that they’ve learned that regulations from the Federal Aviation Administration or the United States Department of Transportation don’t prohibit the state from requiring COVID-19 testing.
Ward said the idea is to urge visitors to get tested prior to coming to Hawaii so that those with a negative test could be exempted from the quarantine. Ward said interstate commerce laws prevent Hawaii from denying untested passengers entry onto a plane. But Hawaii could require that untested passengers be tested upon arrival and placed into a 14-day mandatory quarantine, he said.
“This is a way to reopen the economy safely,” Ward said. “The Legislature is recessing so it probably won’t pick this up, but the governor could do it now if he wants.”
Gov. David Ige was not available for an immediate comment.
Other lawmakers have said that they are taking reopening cues from state Department of Health director Bruce Anderson, state epidemiologist Sarah Park and Major Gen. Kenneth Hara of the Hawaii Emergency Management Agency.
“I’m hoping with the coalescence of doctors and leaders in the community and legislators and other opinion makers that those guys are going to have to loosen their grip,” Ward said.
Ward said in his view visitor testing is superior to contact tracing, which he says is about as effective as “chasing horses that get out of the barn.”
Ward said testing isn’t 100% effective, but it offers the best solution for restarting the economy, while mitigating risk.
“The priority of our plan is to protect our local residents while also allowing them to safely provide for their families. We have a moral and civic duty to do this,” McDermott, who is a member of the House Select Committee on COVID-19, said in a statement.