Rates prompt some to avoid hotels

Nearly 8 percent of Hawaii's visitors stayed with friends and family last year amid rising hotel prices

Demand for luxury and upscale hotel properties pushed Hawaii's average daily room rates and room revenue to record highs, motivating some travelers with local connections to stay with their ohana.

Higher prices and limited availability drove nearly 8 percent of travelers to stay with their friends and family in 2005 and the pattern is continuing into this year, said Joseph Toy, president of Hospitality Advisors LLC.

Strong demand for Hawaii, a loss of about 6,000 hotel units and a push from the state's visitor industry to seek higher-paying travelers resulted in higher occupancy and prices for the state's luxury and upscale properties, according to the latest monthly hotel report from Hospitality Advisors.

"Hawaii moved up to first for (room revenue) and occupancy in the nation and was just behind New York in (room rates) for January," Toy said.

"Despite rising visitor arrivals and visitor days, the number of room nights sold have actually remained flat, with higher occupancy rates driven primarily by a reduction in supply due to conversions and out-of-service rooms that are currently under renovation or redevelopment," Toy said. Hawaii's core hotel inventory has fallen from 67,000 units to about 61,000 in the last five years, he said.

Luxury properties around the state reported a 2.5 percentage point increase in occupancy to 79.8 percent, and a 9.4 percent increase in the average room rate to $287.48, Toy reported. Upscale hotels recorded a 3.5 percentage point gain in occupancy, which averaged 82 percent, accompanied by an 8.3 percent increase in the average room rate to $171.65. All other hotel segments saw slight occupancy declines, but achieved higher room rates.

Overall, statewide occupancy grew by 1 percentage point to 81.6 percent. Statewide room rates continued to improve with a 12.7 percent increase to $180.02, an all-time high for the month of January.

As 2006 continues, Toy said he expects to see continued moderate gains building to a record finish.