Hotels make
big comeback

The state has its strongest
occupancy gain in 15 months,
industry figures show

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By Russ Lynch
rlynch@starbulletin.com

Oahu hotels, in a slump long before the Sept. 11 disaster, made a strong comeback last month, contributing to the best year-over-year statewide occupancy increase in 15 months, according to a new report from hospitality industry experts PKF-Hawaii Inc.

Hotel room rates fell, a sign of special deals created by the hotels to help attract tourists.

"People are still concerned. Yes, the trend is better. The numbers are better than they were in the first part of the year," said Murray Towill, president of the Hawaii Hotel Association.

"But rates are down, and that means reduced revenues, and that hurts everyone" in the industry, Towill said.

Statewide average occupancy of 69.2 percent was up from 68.5 percent in May 2001, and Oahu occupancy jumped nearly 5 points to 72.5 percent from 67.8 percent a year earlier.

"I think it is a positive change," said Ernie Watari, chairman and chief executive of the PKF survey firm, which has monitored Hawaii hotels since the early 1970s.

The solid upturn on Oahu "leads us to believe the strong domestic market continues and some of the Asian market is coming back," Watari said.

Noting that room rates dipped while occupancy rose, Watari said the numbers seem to reflect a marketing strategy among hotels, which are offering room discounts, extra nights and other incentives to attract guests.

The statewide room rate average last month was $136.88, down 5.8 percent from $145.26 in May 2001.

Waikiki occupancy rose to 73.5 percent from 68.4 percent a year earlier. The full-service hotels on the beach rose more than 10 points to average 79.1 percent full last month compared with 68.8 percent the previous May. Waikiki room rates dipped 3.6 percent to average $103 last month compared with a year-earlier average of $106.86.

Occupancy on the Big Island dipped to 57.9 percent, from 62.4 percent, and the island's average room rate slid 7.3 percent to $164.80 from $177.69.

Maui had a year-over-year slip of about 4 points in occupancy to average 70.3 percent last month compared with 74.5 percent in May of last year. On Kauai, however, occupancy rose more than 4 points to 71.1 percent from a year-earlier 66.7 percent. Maui's average room rate in May was $182.29, down 3.2 percent from $188.41, while Kauai hotels averaged $143.16 a night, down 2.6 percent from $146.94.

Molokai continued to struggle along with the lowest average occupancy in the state, 44.2 percent last month, but that was an increase from 42 percent the previous May. The average Molokai room rate, well above historic levels at $95.90, was up 7.2 percent from a year-earlier $89.43.

Historically, May has been a relatively slow month for Hawaii hotels. PKF-Hawaii figures show May occupancy running around 69 percent over the past 12 years with peaks of 75 percent in 1990 and 74 percent in 2000. The statewide May average room rate peaked at $147.77 in 2000, compared with $96.11 in 1990.