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North American travelers lift Hawaii’s hotel occupancy

Travel demand from North American travelers is bolstering Hawaii’s travel industry, but the absence of international travelers is still hampering recovery for some members.

Demand for Hawaii hotels in May helped achieve higher room rates than in 2019, but despite marked improvement over the course of the pandemic, occupancy and the revenue per available room were still lower than they were during that record year.

Hawaii Tourism Authority reported on Monday that occupancy at Hawaii hotels rose to 61.5% in May. It was Hawaii’s highest statewide monthly occupancy since February 2020, when the COVID-19 pandemic was just beginning and occupancy at Hawaii hotels was a robust 84.7%.

The 46.3 percentage-point gain year over year represents continued occupancy improvements throughout this year, which saw occupancy reach 50.8% in April, 43% in March, 31% in February and 23% in January.

Still, Hawaii Hotel Alliance President Jerry Gibson said May’s occupancy was below the level that most Hawaii hotels need for profitability, or to address pandemic-related debts and losses. Gibson said May is a shoulder month for hotels, but a more normal statewide occupancy is around 76% or 77%.

Kekoa McClellan, Hawaii spokesman for the American Hotel &Lodging Association, said pent-up demand from the U.S. has helped hotels that cater to those markets, but hotels that cater to international travelers and groups haven’t recovered as much.

May’s hotel report did contain some good news, though. The statewide average daily room rate more than doubled to nearly $288, with revenue per available room rising to $177, up nearly 868% from May 2020.

Compared to May 2019, a more normal month, HTA reported that RevPAR was 12.3% below 2019 levels, ADR was 12.6 % higher, and occupancy was 17.5 percentage points lower.

The room rate gains this May came although most passengers arriving from out of state and traveling intercounty still needed a negative COVID-19 NAAT test result from a trusted testing partner to bypass the state’s 10-day travel quarantine.

On May 11, Hawaii’s Safe Travels program also began allowing people who were fully vaccinated in Hawaii to travel intercounty without pre-travel testing or quarantine beginning the 15th day after their vaccination.

On June 15, Hawaii ended the intercounty quarantine. It also began allowing domestic travelers who had at least one of their COVID-19 vacations in Hawaii to bypass the trans-Pacific travel quarantine.

Members of Hawaii’s travel industry say tourism will continue to improve once 60% of the state gets vaccinated, and Gov. David Ige allows all fully vaccinated domestic travelers to bypass the testing requirement when they enter Hawaii through Safe Travels.

Ige has not said when a vaccination exemption would be offered for international travelers. However, he has indicated that Safe Travels would sunset once 70% of all the people living in Hawaii were vaccinated. Given that children under 12 are not eligible to be vaccinated, the benchmark is really 82% of everyone eligible to be vaccinated in Hawaii.

Hawaiian Airlines President and CEO Peter Ingram said Monday that 70% is ambitious, especially given the thresholds that other states have set.

“Getting to 82% I think is difficult,” Ingram said. “I hope if we have trouble reaching that level that the governor and the advisers that are helping him with policy will take a look at the totality of the data we have in terms of the number of cases, hospitalizations and, if things keep moving in a positive direction, we would like to see those restrictions lifted sooner rather than later.”

Ingram made these comments during a Hawaii Spotlight interview with Yunji de Nies and Ryan Kalei Tsuji.

He said demand from North America, which was about 55% of the carrier’s pre-pandemic business, is substantially recovered.

“In the month of June, we are actually flying about 12% to 13% more capacity to North America destinations than we did in June of 2019, and we are going to have a load factor that is within a couple of percentage points of where we were,” Ingram said.

But Ingram said travel to the neighbor islands, which made up about 20% of Hawaiian’s pre-pandemic revenue, is about 70% to 75% of where it had been before.

The sluggish return of international travel, which is normally 25% of Hawaiian’s market, is still affecting the airline’s profitability, too.

“We don’t have the Japanese visitors in numbers. We don’t have Australians or Koreans coming at all right now,” Ingram said.

Ingram said Hawaiian’s daily cash burn, which was about $3.5 million during the second quarter last year, and was about $1 million at the end of last year, has now flattened.

He said “cash coming in equals cash flowing, isn’t the ticket to long-term success. But he said it’s better than Hawaiian was a year or so ago.

“What we really need to turn us into (a profitable airline), not just to cover our cash each day but also to pay back those long-term investments in airplanes and other assets, is getting that international part of the business back,” he said. “I think we’ll be there in few months, but we aren’t quite there today.”

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