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Hotel occupancy
surges

But an analyst warns against
'over-optimism' in the face
of global economic changes

By Russ Lynch
Star-Bulletin

Occupancy in Hawaii's hotels and resort condominiums averaged 75.4 percent last month, the best April in 10 years and nearly 6 percentage points above the 69.6 percent average for April 1999.

That kind of momentum will be needed in coming months as the U.S. and Asian economies begin to feel negative effects of stock market volatility, rising interest rates and increasing fuel costs, said Ernie Watari, chairman and chief executive of PKF-Hawaii, the consulting firm that issued the monthly hotel report yesterday.

Noting that recent reports and economists' comments have suggested that Hawaii's economy has bottomed out, Watari cautioned against what he called "over-optimism." Hawaii's economy depends mostly on tourism and 85 percent of that tourism comes from two areas, the mainland and Japan, he said.

Stock market losses could hurt Hawaii's prime mainland tourism market, the West Coast, "and several international economists believe it could be several years before Japan emerges from its own economic crisis," Watari said.

"Don't celebrate yet," he added.

April, however, was clearly a good month for the industry, as higher room rates joined the improved occupancy to push hotels' revenues higher, the report shows.

The statewide average room rate, which refers to advertised room rates, was $154.57 last month, up 5.5 percent from $146.58 in April 1999. But a more important figure to the hotel business is the actual money received per room, since the posted rates are often discounted and not all rooms are occupied. The revenue-per-available-room figure showed an even-better 14.2 percent increase to $116.51 last month from $102.01 in April 1999.

Nearly all the individual islands showed occupancy increases, with only Molokai falling behind. And except for a dip of less than a dollar on Oahu, all islands showed higher room rates as well.

Among individual resort areas in the state, the Kohala Coast of the Big Island showed the best performance by far with average occupancy up more than 14 points at 76.2 percent, from 61.7 percent in April 1999, and revenue per available room up 30.8 percent at $187.92, from a year-earlier $143.63.

The Big Island as a whole showed average occupancy of 68.8 percent last month, up from 60.4 percent in April 1999, while room revenue averaged $123.44, up 25.6 percent from a year-earlier $98.25.

Oahu occupancy was 73.9 percent last month, up from 67.1 percent, while its room revenue averaged $87.11, 9.4 percent above $79.63 in April 1999. Maui's occupancy was 82.4 percent, up from 78.6 percent, and its revenue per available room averaged $160.60, up 15.8 percent from $138.73.

On Kauai, last month's average occupancy was 75.6 percent, up from 73.1 percent, and the average room revenue was $133.16, up 14.3 percent from $116.51. Molokai's occupancy dipped to 36.5 percent, from 38.7 percent, and its room revenue slipped 3.8 percent to $27.72, from $28.80.

PKF-Hawaii, which has monitored hotel performance since 1972 in conjunction with the Hawaii Hotel Association, based its April study on information from 152 properties with a total of 41,525 rooms, or 58 percent of the available rooms in Hawaii.