GEORGE F. LEE / GLEE@STARBULLETIN.COM Visitors stroll past specialty shops and boutiques at the Aloha Tower Marketplace on Tuesday.

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Visitor arrivals rose
7% in first half of ’05

Waikiki hotels are benefiting
from more visitors chasing
fewer guest rooms

Growth in domestic and international arrivals reaped Hawaii a record number of visitors in June and the first half of this year.

Total arrivals increased 5.5 percent to 651,639 last month from the same month a year earlier. Domestic arrivals also hit a record, rising 6.7 percent to 483,236 visitors, according to the state Department of Business, Economic Development & Tourism. International arrivals, boosted by favorable exchange rates between the dollar and the yen and euro, lifted 2.3 percent to 168,403.

Japanese arrivals were relatively flat in June, rising 0.9 percent to 123,858 visitors, but through the first six months were up 7 percent to 731,151.

Visitors spent $1 billion last month, an increase that boosted spending in the first six months of the year 6.8 percent to $5.5 billion.

"It's been the best June and the best six months that I can remember since 1973," said Mike Paulin, owner and chief executive of Aqua Hotels & Resorts.

Paulin said Aqua has had hotel occupancies of 97 percent and higher every month this year and has been able to command strong rates because Waikiki is losing hotel rooms.

"Around 20 percent of the inventory in Waikiki has been removed for renovation or conversion," Paulin said.

Although Hawaii's visitor industry showed strong gains in arrivals and spending, the state needs to continue its efforts to attract higher-spending visitors if it wants to sustain momentum, said Keith Vieira, senior vice president and director of operations for Hawaii and French Polynesia for Starwood Hotels & Resorts Worldwide Inc.

"We're happy with the progress, but there's a lot of work to be done before anyone can be comfortable," Vieira said.

Although Hawaii's hotels are starting to see rate growth, it's not yet at a level that recovers expenses that were incurred during the down times, he said.

Increases in the corporate meetings market, honeymooners and arrivals from Japan have helped set Hawaii's hotel industry on a record pace through the first six months of the year, said Joseph Toy, president of Hospitality Advisors LLC.

"The strength of Hawaii's market has been outstanding, with all of our primary markets well ahead of 2004's near-record levels," Toy said. "Discussions in the industry indicate that these trends should hold firm through the end of the year."

Hotel room revenue statewide reached an all-time high of $1.45 billion in the first half of the year as occupancy and room rates improved across almost all of the islands, Toy's report said.

During the first six months of the year, Oahu occupancy increased by 6 percentage points to 84.1 percent, while its average daily room rate grew 10 percent to $132.83.

Hawaii welcomed 3.59 million visitors in the first half of the year, 7 percent more than the first six months of 2004, according to the new state data.

Visitor arrivals increased on Oahu, Kauai, Maui and the Big Island from the same period last year.

Also, visitor arrivals from the state's burgeoning cruise ship industry rose by 31.3 percent, with about 128,439 visitors touring the islands by ship.

Demand for Hawaii has resulted in more visitors for the state, but more importantly, data show that these visitors are spending more, said State Tourism Liaison Marsha Wienert.

Hawaii is on pace to break all records in arrivals, visitor days and visitor spending, Wienert said.

"We have only realized a billion dollars in spending twice before, once in July and again in December last year," Wienert said.