Cancellations outpace bookings for Maui hotels

The volume of wildfire-related hotel cancellations on Maui is outpacing bookings, a troubling sign for the island’s economy.

“On a normal day most hotels pick up 200 to 300 future bookings, but I’ve talked to different hotel owners from Wailea to Kaanapali to Kapalua and every owner has said they are in the negative,” said Keith Vieira, principal of KV &Associates, a hospitality consulting company. “Any new days for the future are outnumbered by those canceling.”

Jerry Gibson, president of the Hawaii Hotel Alliance, said until hoteliers start seeing positive booking days, it is difficult to know how long the economic decline from Maui’s wildfires will continue.

But Maui hotels, especially in Wailea, are “really troubled as far as the numbers. We really need to find a way to turn that around, otherwise we are going to have a huge economic challenge.”

Because Maui’s hotel room rates are higher, Gibson said the downturn in West Maui alone could cause an 18% to 20% dip in statewide transient accommodation tax collections, which before the Aug. 8 fires was on track to pump about $1 billion into the state’s general fund this year. He said the drop in South Maui also could cause a significant TAT decline.

Gov. Josh Green used the opportunity of President Joe Biden’s visit Monday to strongly encourage visitors to travel to the unaffected parts of Maui and the rest of Hawaii.

“No one can travel to West Maui right now. We will share when that is possible again. Only returning residents and authorized emergency relief workers should come here now. But all of the other areas of Maui … and the rest of Hawaii are safe,” Green said. “When you come, you will support our local economy and help speed the recovery of the people that are suffering right now.”

Green’s sixth emergency proclamation, which runs through Oct. 17, indicates that nonessential travel to West Maui is strongly discouraged for the proclamation’s duration.

Gibson said West Maui hotels are now housing about 700 staff members and their families, and a large number of residents and FEMA workers. He said hotels have helped to nearly empty the shelters on Maui, but longer-­term plans are needed to move residents into vacation rentals and other housing where they will be more comfortable.

Vieira said West Maui hotels aren’t taking reservations for leisure travel until after Oct. 17, and understand that the reopening date could change as conditions unfold.

Still, he said the setting of a potential tourism reopening date for West Maui is an important step toward recovery as it gives the visitor industry time to prepare for the return of tourism.

Vieira said with so many affected by the wildfires, hoteliers and other businesses need time to take care of their workforce and the community.

“The No. 1 top of the list priority is sensitivity to what’s going on. With 850 people still on the missing list, there’s no doubt that many are gone forever,” he said. ”I can’t imagine that there isn’t more significant bad news still coming. At the same time, we are recognizing that the economy is taking a beating.”

Vieira said at Westin Maui two workers are still among Maui’s missing.

“We think about 160 of the 635 employees have had their homes affected, and about 70% to 80% of them have lost their homes. The situation changes daily, but I’m hearing similar numbers from hotels throughout the region,” Vieira said.

It will also take time to prepare West Maui hotels for the return of leisure travelers, whose needs differ from those of displaced residents and emergency workers. The industry also needs time to scale up new experiences, since Lahaina was a major commercial center.

Vieira said West Maui hotels are exploring developing artisan and food truck villages to help get Maui residents back to work and to give visitors an experience beyond the resorts. Hundreds of brick-and-mortar retail and food-and-beverage venues were lost in the wildfires, he said.

Gibson said West Maui hotels are likely to reopen in stages, with Kapalua likely ready to reopen before Kaanapali.

Mufi Hannemann, president and CEO of the Hawaii Lodging &Tourism Association, said success for Maui’s visitor industry will depend on clear messaging.

“We need everybody, not just the governor and the Maui mayor, to jump on board to make sure that we encourage travel and commerce to all of Maui outside of west side, even places like Hana,” Hanne­mann said, adding that federal relief like the paycheck protection programs used during COVID-19 might be warranted.

He said travel to other Hawaiian Islands, outside of Oahu, also is softening.

“There are people that are concerned that this is not the time to come to Hawaii, and they don’t want to come if we are not ready to receive them,” Hannemann said. “We need to let them know that we are open.”

Gibson said many travelers are taking a wait-and-see approach, and only about 20% to 30% of Maui cancellations are getting re-booked to the neighbor islands.

Maui’s hotel occupancy dropped to 57%, a 22.6% decline from the same week in 2022, according to Aug. 6-12 data published by STR. Revenue per available room plummeted 21.7% to about $390 during the same period.

Occupancy on Hawaii island and Kauai also fell to 76%, down 6.9 percentage points from the same week in 2022.

On a week-over-week basis, STR said Maui’s occupancy fell 14 percentage points, while Hawaii island and Kauai’s occupancy dropped 5.1 percentage points. However, wildfire evacuations to Oahu caused hotel occupancy to rise 5.7 percentage points over the prior week to 87.8% — the nation’s third-highest occupancy behind Alaska and Portland, Maine.

Tim Powell, principal of Powell &Aucello, said, “We are seeing some lift in Waikiki, and I think that will continue. We’ll also see some travelers heading to Kauai and Hawaii island. I think Maui is going to take a hit. The rates are still holding in Maui, and now there are limits on what visitors can and cannot do.”

Powell said conditions are likely to worsen at least through the emergency proclamation but likely beyond.

“I’m getting emotional because it’s a dagger in the heart for human beings. The hotel industry is secondary to all of this. My heart and mind are with the victims. A lot of them are in the hotel industry — it tears me apart I have friends that are suffering; I just feel helpless. I want them to get their lives back as soon as possible, but it’s hard to say when it will happen.”