Hotel occupancy
hits 16-year low

In December, more than
one-third of the rooms
were vacant

By Russ Lynch
Star-Bulletin

Hawaii's hotels had a dismal December and one observer says the industry isn't likely to see a turnaround anytime soon.

The state's hotels had the worst December for hotel occupancy since 1982 and Oahu had the worst December since 1980, according to the latest hotel industry survey by the accounting and consulting firm PKF-Hawaii.

"I don't see anything turning around soon. I don't know when it's going to turn around," said Ernie Watari, PKF-Hawaii's chairman and chief executive officer.

The strong U.S. economy is about all that's keeping the business from getting even worse and if that should turn adverse it would be very bad for Hawaii, Watari said yesterday.

Statewide occupancy averaged 64.7 percent last month, meaning more than one-third of the rooms were empty. It was a decrease from occupancy of 67.6 percent in December 1997. Room rates in many areas came down as hotels and resort condominiums struggled to compete for the dwindling business.

The statewide average was $150.69 a night, down less than 1 percent from $151.04 in the previous December.

Room rates in some areas were down much more, however, including Waikiki where most of the hotel rooms are located. Waikiki's average room rate in December, $125.72, was down 4.5 percent from $131.68 in the year-earlier month.

Higher room rates on the neighbor islands, such as 5.6 percent rise on the Big Island, countered the Oahu decline. Oahu's average room rate last month was $125.12, down 4.3 percent from $130.71 in December 1997. Occupancy on Oahu averaged 69.4 percent, down from the year-earlier figure of 74.4 percent.

Waikiki occupancy was down almost five percentage points at 70.6 percent last month compared with 75.5 percent in December 1997.

Watari said 1998 should serve as a year of awakening for Hawaii and that drastic and innovative measures will have to be taken to avoid a depression. Watari's favorite fix would be to introduce legalized gambling but he acknowledged there is wide opposition to that idea. For all of 1998, Hawaii hotels had an occupancy average of 72 percent, down from 73.9 percent in 1997. Last year's average room rate was $140.63, up 2.6 percent from $137.06 in 1997, but the lower occupancy level kept overall room revenues flat.