Isle hotels fall on 3 indexes


POSTED: Monday, May 04, 2009

Trouble came in threes for Hawaii's struggling hoteliers in March as all major industry indicators plunged to the lowest level in 22 years.

It was the first time that Hawaii had seen its occupancy, average daily room rate (ADR) and revenue per available room (RevPAR) simultaneously hit bottom. Statewide occupancy fell 10.4 percentage points to 66.9 percent while ADR declined 16.5 percent to $182.17, leading to a staggering 27.8 percent decline in RevPAR, the industry's best performance measure, according to a hotel flash report to be released today by Hospitality Advisors LLC.




Hotel occupancy


        Occupancy rates at Hawaii hotels in March and the same month last year:

By Island


Big Island56.7%72.1%



Source: Hospitality Advisors LLC


Hawaii's hotel industry is like “;a pretty fast train going the wrong way,”; said Joseph Toy, president of Hospitality Advisors.

“;The decline was simply unprecedented,”; Toy said, adding that March results helped push first-quarter room revenue into a 23.1 percent drop from the previous year.

Since the train has left the station, Hawaii could find that it will be next to impossible to turn it around any time soon, Toy said.

“;With a very weak first quarter and indications that the drop-off has continued into April, I'd have to think that we'll be looking at a very soft summer,”; he said. “;I think it will be mid-2010 before we'll see a sustained uptick.”;

Cheryl Williams, regional vice president of sales and marketing in Hawaii and French Polynesia for Starwood Hotels and Resorts Worldwide, categorized March as the worst month since her 1982 arrival in the islands.

“;I don't ever remember a month that was as difficult as this past month,”; Williams said.

A continuing decline in the global economy, combined with business travel cancellations in the aftermath of the taxpayer bailout, caused steep March drops, she said.

“;Typically, the first quarter is the busiest month for groups on the neighbor island, but we had some cancellations and we didn't see as much attendance pickup as we had hoped for,”; Williams said.

Hawaii's hoteliers set records in hotel-room discounting in March as value-added amenities failed to move the market, Toy said.

“;They tried to hold their rates as long as they could, but the demand was simply not there and they had to get more realistic,”; he said.

Even with consumers looking for a bargain, Hawaii's economy and budget-priced properties are not necessarily at an advantage, said Beth Churchill, vice president of sales and marketing for Aqua's hotels and resorts. Steep discounting has narrowed the price gap between beachfront and off-beach properties and put additional pressure on hotels, she said.

“;When there's so much compression in price, people will tend to buy up,”; Churchill said. “;To keep their business, we have to offer more.”;