Group travelers give hotel occupancy a lift


POSTED: Friday, December 04, 2009

Conventioneers helped push occupancy at Hawaii hotels up in October for the second month in a row; however, even with the boost, hotel room rates and revenue continued to drop.

Statewide occupancy in October rose 1.2 percentage points to 68.3 percent. Still, the statewide average daily room rate fell by 8 percent to $163.46, and revenue per available room (RevPar), the best measure of hotel industry performance, contracted 6.4 percent to $111.64.

“;While the market continues to substantially lag behind the prior year, there is some positive news in that we've had the second straight gain in occupancy since the tourism downturn,”; said Joseph Toy, president and chief executive officer of Hospitality Advisors LLC, which released its hotel report today.

The occupancy increase underscores the importance of business and group travel for Hawaii, said Keith Vieira, senior vice president of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia.

Large group bookings help balance supply and demand for hoteliers, Vieira said. When fewer rooms are available, hoteliers can command higher room rates, he said. Similarly, group travelers spend more. Vieira said.





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




Big Island56.7%54.0%


        Source: Hospitality Advisors LLC



“;We need our group business to double,”; he said. “;It should be about 25 to 30 percent of our business.”;

While statewide convention traffic rose 1.6 percent, corporate meetings fell 36.8 percent and incentives fell 42.5 percent, the Department of Business, Economic Development and Tourism reported earlier this month.

Oahu, which saw more visitors in October as a result of increases from the U.S. West and Japan visitor markets, led the state with an occupancy of 76.8 percent. The American Dental Association conference, which brought 24,000 to Oahu, helped boost year-over-year occupancy by 3.5 percentage points.

In Waikiki, where most of the group business was concentrated, occupancy rose 4.1 percentage points to 78.8 percent. The average Waikiki daily room rate dropped 5.7 percent to $149.44; however, the increase in visitors helped keep RevPAR flat at $117.76.

Four major and 12 minor groups generated some 20,000 room nights at Hilton Hawaiian Village in October, said Jerry Gibson, Hilton Hawaii area vice president and managing director of Hilton Hawaiian Village.

“;We feel fortunate to have had those; however, usually October generates more like 30,000 to 35,000 room nights,”; Gibson said.

Hilton's group business gave employees more hours and boosted revenue for the chain's food and beverage, retail, activities and parking, he said.

However, Oahu's group business did not benefit all hotels in October, said Barry Wallace, executive vice president for Outrigger Enterprises Group.

“;If the group hotels get full, it creates ambient demand and helps drive up rates,”; Wallace said. “;But we didn't reach high enough occupancy statewide to see much related benefit.”;

While Outrigger's Oahu hotels showed improvement in their October occupancy rates on a seasonally adjusted basis, room rates were still low, he said.

“;Room rates are down and all other costs are rising,”; Wallace said. “;It's nice to see people on the streets and beaches and in the hotels and restaurants, but it's not a pretty picture.”;

It could take six or seven years for Hawaii's hotels to see average daily room rates return to the peak-2007 level, he said.

October occupancy rose about 4 to 5 percentage points at Hyatt Regency Waikiki Resort and Spa, said Brad Mettler, the property's director of marketing.

Still, Mettler said he expects 2010 will resemble 2009 without the catastrophic declines.

“;The bleeding has stopped, but growth is going to be slow to come back,”; he said. “;Our 2010 group business is somewhat north of fair, but we've got a ways to go.”;