Hotel occupancy falls; industry analyst warns of more to come

Economic turmoil in Asia could have dire consequences here

By Russ Lynch
Star-Bulletin

Hotel occupancy in Hawaii fell again last month and an industry analyst warns that economic turmoil in Asia spells even more trouble for the state's tourism industry.

Hawaii is so dependent on tourism that the visitor industry and government officials need to acknowledge that there are real threats out there and act strongly to counter them, said Ernie Watari, chairman and chief executive officer of PKF-Hawaii.

Otherwise, there could be "another even more crippling and devastating economic disaster in Hawaii," said Watari, whose firm has monitored the hotel industry since 1972.

Occupancy at Hawaii's hotels and resort condominiums slipped to 71.05 percent last month, from 72.48 percent in October 1996, according to PKF-Hawaii's monthly report. Watari said it was the sixth straight month in which occupancy has been lower than it was last year.

Kauai and Molokai showed improvements, with the Garden Isle showing higher occupancy than any other island, but all other areas were down and the forecast for the state as a whole is "somewhat dismal," said Watari.

Economic and currency instability throughout East Asia and the instability of the U.S. stock market will bring "extreme challenges for the Hawaii visitor industry and our overall economy," Watari said.

Paul Brewbaker, chief economist at Bank of Hawaii, today said the impact of the slide in value of the Japanese yen is already showing in shorter stays.

Hotels have raised their room rates, which Brewbaker called rational behavior after their losses in the early 1990s.

But he said "simple math" shows that a 35 percent decline of the yen against the dollar over the past two years and a 15 percent rise in Hawaii hotel room rates over the same period points to a roughly 50 percent price increase for the Japanese tourist.

The average room rate across the state was up 4.1 percent at $128.42 last month compared with $123.37 in October 1996. The Big Island led with an 11.3 percent rate increase to $130.15 a day, from $116.97 in the year-earlier month.

Occupancy averaged 74.3 percent on Oahu last month, 58.9 percent on the Big Island, 70.3 percent on Maui, 78.1 percent on Kauai and 40.6 percent on Molokai.

The island with the highest average room rate was Kauai, reporting at $148.24 compared with $139.13 in the previous October.

PKF-Hawaii surveyed 77 hotels and 60 condominium resorts, or 56 percent of tourist accommodations statewide.