June hotel data fans fears

Dampening consumer enthusiasm for long-haul travel already was softening tourism to Hawaii at the start of the year.

HOTEL OCCUPANCY Occupancy rates at Hawaii hotels in June and the same month last year: 2008 2007 STATEWIDE 69.1% 76.1% BY ISLAND Oahu 74.4% 79.1% Kauai 72.2% 77.1% Maui 64.6% 75.2% Big Island 57.2% 67.0% Source: Hospitality Advisors LLC

However, the shutdown of Aloha Airlines and ATA Airlines, the loss of two NCL America ships and the continued rising of fuel and commodity prices took its toll in June and resulted in sharply dropping occupancy rates at hotels throughout the state.

Statewide occupancy in June fell to 69.1 percent, down 7 percentage points from the year-prior month, according to the Hospitality Advisors hotel flash report released today. Room sales also fell by 11.3 percent and revenue per available room dropped 7.4 percent to $142.13 per available room. All of these performance factors contributed to a substantially weakened second quarter that left hoteliers forecasting further occupancy declines ranging from 10 to 30 percent throughout the state.

Consumer confidence took a very sharp nose dive earlier this year, but Hawaii's visitor industry is just starting to see the ripples, said Joseph Toy, president and chief executive of Hospitality Advisors LLC. Since summer sets the tone for fall, the hotel industry is very concerned about how the rest of summer will pan out, Toy said.

"I suspect that unless some good news starts to happen that occupancy will be far below where it has been," he said. "If that happens, realistically we would be looking at summer of 2009 for recovery, and if that doesn't materialize, we wouldn't be positioned for a recovery until 2010."

Statewide luxury properties, which tend to be the least affected by economic downturn, led the market in occupancy in June at 75.2 percent. Not surprisingly, economy properties fared the worst, with a 10.6 percentage-point decrease in occupancy to 63.5 percent.

Still, while hoteliers complained about decreased occupancy and softer forward bookings, most saw a small rise in June room rates. Average daily room rates grew on every island and in every class, aside from the upscale category.

June's performance weakened Hawaii's second-quarter results considerably, Toy said. Compared to other U.S. markets, Hawaii's hotels performed well for the first half of 2008, he said. Occupancy at Hawaii's hotels ranked third behind New York City and Miami and the state was ranked the No. 2 U.S. destination for average daily room rates and revenue per available room, Toy said.