It’s beginning to look a lot like Christmas at Hawaii’s airports, which are filling up with passengers for the holiday season.
But the same can’t be said for Hawaii’s hotels, which are reporting one of the worst festive seasons. Typically, Christmas to New Year’s is oversold at Hawaii hotels with occupancy above 100% and sky-high room rates. This year Hawaii’s festive season, especially on Oahu, is not delivering, with a few hotels even reporting occupancy as low as 40% in the days leading up to Christmas.
Inflation eating into pandemic savings and the looming recession are playing a role in dampening demand from Hawaii’s core U.S. market. The sluggish return of international visitors, especially from Japan, isn’t helping, either.
As a result, some Hawaii hotels have removed blackout periods and standard minimum length-of-stay requirements for holiday bookings. Hoteliers also are offering discounts on everything from rooms to parking to resort fees. Visitors can take advantage of value-added extras from free breakfast to complimentary room nights on select dates with minimum stays.
Kamaaina specials — a sight rarer than snow in Hawaii for the holidays — also have emerged, and there are still local deals available even on Christmas and New Year’s Day.
Kekoa McClellan, a Hawaii spokesman for the American Hotel and Lodging Association, said Hawaii hotels are generally oversold or close to it in the last two weeks of the year.
“There are properties in Waikiki today that are currently at 40% or 50% occupancy, and there are many properties that are 10% to 15% below full booking on Christmas,” McClellan said. “I don’t remember in my lifetime a time when there were ever kamaaina deals in Hawaii at Christmas.”
Duke E. Ah Moo, Hilton’s vice president and commercial director for Hawaii and French Polynesia, said kamaaina rates are available during this festive season because the number of international travelers is significantly lower compared with pre-COVID-19. Hilton Hawaiian Village is offering kamaaina up to 30% off its regular rates, and Hilton Waikoloa Village is offering locals up to 47% off.
“Japanese visitors, in particular, have enjoyed spending the festive season in Hawaii but are still reluctant to travel overseas due to the risks associated with COVID,” Ah Moo said. “There is also pent-up demand for visitors from the U.S. mainland to travel to international destinations this year due to the lifting of travel restrictions and a strong U.S. dollar relative to foreign currencies.”
Prince Waikiki has put out a kamaaina festive offer that allows kamaaina to stay at discounted rates between Friday and Jan. 2. The property also is offering a new-year deal that offers kamaaina, who book between Jan. 3-31, discounted stays valid through Dec. 22, 2023.
General Manager Joshua Hargrove said, “We always appreciate the support of the kamaaina market, and with inbound travel still on the mend, we want to ensure we offer our local market the best rates to encourage stays not just through the holiday season, but also well into the new year.”
Outrigger Reef Waikiki Beach Resort General Manager Marcus Krebs said the hotel runs kamaaina deals throughout the year but often has holiday blackouts. This year the hotel is offering kamaaina holiday specials, which start around $329 a night for the room and include half off the $45-a-day parking fees as well as complimentary amenity fees, which would normally be another $45 a day.
“Over 40% of our guests are typically international from Asia,” Krebs said. “Since our reopening we’ve been focusing on the local market with great offers for kamaaina.”
Krebs said he’s still got holiday openings for kamaaina, who he estimates have made up about 15% of his holiday market this year.
“They are certainly helping us bridge the occupancy,” he said.
Even luxury hotels are getting in on the value-added holiday trend. Earlier in the season, the Halekulani offered a package with a fifth night free to guests who stay four nights. The deal was good for bookings for select dates into March.
Sean P. Dee, Outrigger Hospitality Group’s executive vice president and chief commercial officer, said the fourth quarter for Hawaii’s hospitality industry is expected to remain somewhat challenged, especially on Oahu where recovery of the critical Japanese market remains sluggish.
“As we look into 2023, there are of course significant headwinds driven by the looming global recession, unfavorable international currency exchange rates, soft group/business segment pace and ongoing COVID-19 travel concerns,” Dee said. Lynette Eastman, general manager of the Surfjack Hotel &Swim Club in Waikiki, said the festive season is relatively strong for her small hotel. Even so, she said she chose to discount room prices by about $50 when bookings slowed amid competition from all the lower-occupancy hotels that are flooding the market with deals.
“It’s like a fire sale, ” Eastman said. “One hotel in my competitive set was selling at $700 a night in November for year-end and is now offering those rooms for $350.”
McClellan said the first quarter of 2023 is even worse for Hawaii hotels than the holiday season.
“People are being attracted to other markets,” he said. “This is not the same conversation that destinations are having that are actively marketing, that are trying to attract quality visitors and that are investing in a marketwide approach that tries to curate and capture the attention of the U.S. mainland.”
To be sure, the Transportation Security Administration has said it anticipates airport security checkpoints nationwide will see more travel volume than in 2021. TSA is expecting this festive season will come close to the pre-pandemic level as travel volumes rise from Thursday to Dec. 30 — the busiest days.
McClellan said one of Hawaii’s biggest issues is that while the Hawaii Tourism Authority has been floundering for a year now to award its top U.S. tourism contract, other destinations like Mexico, the Caribbean, Florida and Europe have been aggressively marketing.
It looks like HTA will have to go to a third procurement for the U.S. tourism contract, and finding a contractor to handle its largest piece of business could take some time. HTA is expected to decide Thursday whether it will extend the current U.S. tourism contract held by the Hawaii Visitors and Convention Bureau, which expires March 31.
McClellan said, “We know that we don’t have a marketing contract for that critical period April through June when visitors are booking for their May, June, July and August vacations to Hawaii. That has the industry on edge.”
Jerry Gibson, who heads the Hawaii Hotel Alliance, said it feels like the current softness will be in Hawaii’s hotel market awhile.
“There just aren’t a lot of green shoots,” Gibson said. “We think we are going to have a slower ramp-up getting into summer.”
Chris Kam, president and chief operating officer of Omnitrak, said extending current offers could address some of 2023’s softness as it relates to affordability of travel and economic uncertainty.
“People are on the fence,” Kam said. “At the intersection of travel interest and concerns over rising travel prices and inflation in general, travel discounts can be the factor that convert Hawaii travel considerations into Hawaii vacations.”
He said preliminary data from TravelTrakAmerica, an ongoing monthly survey of more than 9,000 past-year travelers, shows that U.S. West travelers are now slightly less likely to have set travel plans for the next six months yet more likely to still be considering travel during this period.
Alex Herring, a visitor from Sacramento, Calif., who was hanging out with friends Tuesday at the Outrigger Reef, said he had expected Hawaii to be busier this holiday season.
“People may have been wanting to save money for Christmas,” Herring said. “We’re here on business. It’s been pretty great.”
His friend James Trevino said he didn’t think the current situation is an indication of future demand for Hawaii, especially from California.
“People still want to come,” Trevino said. “Oh yeah, there’s demand. Big time.”
