Hotel occupancy drops to 60.9% statewide


POSTED: Thursday, February 05, 2009

Hawaii's hotels and resorts experienced their lowest occupancy in December since the aftermath of 9/11.




Hotel occupancy

        Occupancy rates at Hawaii hotels in December and the same month last year:


Statewide 60.9%70.4%
By island
Oahu 68.2% 73.3%
Kauai 52.5%67.8%
Maui 56.8%71.2%
Big Island 48.2%60.7%

        Source: Hospitality Advisors LLC


However, the outlook could be worse since visitor industry experts and economists think it will take the islands longer for the current market to recover.

“;Frankly, the rate of deceleration and the depth of losses in December were astounding,”; said Joe Toy, president and chief executive officer of Hospitality Advisors LLC, who spoke yesterday at the annual Travel & Tourism Research Association/Pacific Asia Tourism Association tourism forecast seminar.

Going forward, Toy said that he expects to see a shallow first quarter for 2009 with steep drop-offs.

“;We aren't building a lot of momentum, so it likely will be summer 2010 at the earliest before we enter into the recovery phase,”; he said.

Statewide occupancy in December dropped 9.5 percentage points to 60.9 percent, according to a report released earlier this week by Hospitality Advisors. Revenue per available room - the industry's main measure of profitability - fell 17.7 percent to $129.91 from the year-ago period. Average daily room rates, which came in at $213.40, were also off 4.8 percent from the prior year.

“;The loss of two airlines serving Hawaii and a deepening global recession led to a slowdown in Hawaii's visitor industry,”; Toy said.

The dismal December occupancy rate contributed to a 4.6 percentage-point slide in statewide occupancy for the year, which came in at 70.4 percent.

“;It is tough going,”; said David P. Carey, president and chief executive of Outrigger Enterprises Group. “;I've been Chicken Little to the visitor industry and nobody was listening to me and unfortunately I was right.”;

Revenue per available room ended the year at $141.90, off 5.4 percent from 2007 levels. However, the statewide average daily room rate broke through the $200 mark for the first time in 2008, growing a modest 0.7 percent to $201.43.

As a result, total revenue for Hawaii's hotel industry in 2008 fell 6.6 percent to $2.91 billion from $3.12 billion in the prior year. While Hawaii's occupancy ranked second only to New York City in 2007, last year's downturn pushed it into fifth place for occupancy behind New York City, San Francisco, Miami and Los Angeles.

While the drop-off in Hawaii tourism after 9/11 was linked to one major event, the visitor industry is currently battling everything from the collapse of the U.S. housing market to a global financial crisis and the ensuing lack of consumer confidence, said Chris Kam, director of market trends for the Hawaii Visitors & Convention Bureau.

“;We ended 2008 close to 2004's arrival levels so we essentially lost three years of growth,”; Kam said.

The confluence of factors is why “;this time Hawaii's recovery cycle is going to take much longer,”; Toy said.

As a result, Hawaii's visitor industry is going to have to change its focus, Carey said.

“;We went through a period where frankly we were expensive and proud of it because we were worth it and we worked on boosting yield,”; he said. “;Now, we have to boost volume and all companies will have to rethink their products.”;

Carey said he expects to see a slight retraction in Hawaii's visitor industry during the next two to four years as it adapts to the new market.

“;Some businesses will close and we'll see some restaurants and hotels and shops convert to a different use because they can't spend enough capital to make their operation worthwhile,”; he said.