HAWAII Occupancy recovery slows

Visitor industry buffeted by range of outside events

After starting the year showing good gains, occupancy rates at Maui resorts tailed off as the months wore by, and by the end of June the overall occupancy rate for the first half of the year was 72.1 percent, still better than the depressed 68.2 percent of January to June 2010.
Starting in April, growth slowed to a crawl, and in June the Maui occupancy rate was 66.7 percent, just a little better than the 65.7 percent of the previous June.
The first half and June numbers were released Wednesday by Hospitality Advisors.
President Joe Toy said the year was "punctuated by a number of tumultuous events."
These included a Japanese earthquake-tsunami (which had a small direct effect on Maui, which doesn't get that much Japanese business), higher fuel prices, revolution in the Middle East, record spring storms in the U.S. and persistent unemployment, Toy said.
"These events have certainly impacted the speed of our recovery, which remains fairly uneven, with Kauai and the Big Island lagging well behind Oahu and Maui," he said.
The visitor industry recovery from the depths of its 2009 misery continued, but more and more slowly, and it changed its character, Toy wrote.
In 2010, recovery was driven largely by increased occupancy, with rooms being sold at heavy discounts. The rise in traffic was enough to overcome the discounts and increase the total take.
This year, rates strengthened, and occupancy did too, but less. For the first half of the year on Maui, the occupancy rate was up about 5.7 percent, but the key figure of revenue per available room was up 16.2 percent, from $154 to $179.
In June, though, available room revenue gains slowed down along with occupancy, showing an improvement of nearly 8 percent, from $148 to $160.
In better times, June should be one of the busier months, so selling two out of every three room nights was not impressive.
"While the percentage gains in room rates may seem impressive," Toy wrote, "the gains primarily reflect continued recovery from the steep discounts of the past three years."
The revenue per available room figure is still 11.5 percent below what it was in 2006, even though it increased 15 percent this year over the first half of 2010.
The statewide occupancy rate this year is very close to Maui's numbers: 72.8 percent, up from 69 percent, for the first six months of the year. In June, statewide occupancy was 70.7 percent, down from 71.4 percent in 2010. The June occupancy figure represented the first time in 18 months the statewide rate has dropped. However, the state's average daily rate in June was $185.46, up 9 percent from $170.16 in the same month last year. The rate has increased for eight consecutive months, but it still trails the June 2008 peak of $207.04 by 10.4 percent.
Despite the sharp trough in Japanese visits to Oahu in April to May, that island showed a total occupancy of 79.2 percent for January to June, up from 75 percent. The era when Waikiki rooms were 90 percent filled in the summer are now a distant memory.
Oahu did show a healthy gain in revenue per available room, up from $109 to $127 in the first half of the year. And, the other Neighbor Islands showed some growth, but from much lower bases than Oahu and Maui.
Big Island occupancy rose from 55.2 percent to 59.2 percent, and room revenue grew from $101 to $109. Kauai occupancy barely grew from 59.9 percent to 61 percent, and room revenue rose from $110 to $122.
Occupancy grew in four of five price categories, falling only for budget rooms. Maui does not have enough of these to be included in the Hospitality survey.
On Maui, the strongest occupancy gains came in the luxury and economy categories, the two extremes.
Luxury occupancy rose from 67.7 percent to 72.2 percent, while rack rates rose from $324 to $349. (As a price category, luxury changes from island to island. Oahu luxury rates are only $217.)
Maui's economy occupancy in the first half of the year went up from 65.8 percent to 71.5 percent, while rack rates rose from $125 to $139. (Again, economy is defined differently depending on where you are. Oahu economy rates averaged $79.)
The number that sends the loudest signal that the recovery has stalled is the average rate of change in occupancy. This trend was up strongly, over 12 percent, in January, but by June it had turned negative, down 0.9 percent.
The statistics are compiled for Hospitality Advisers by Smith Travel Research, which allows comparison with other destinations (except Las Vegas, which does not participate but does publish its own numbers).
Excluding Las Vegas, Hawaii finished at the top in occupancy among leading holiday venues, its 79.2 percent eclipsing Miami's, 77.7 percent.
Hawaii is typically at or near the top, although usually behind New York City. New York dropped to third in occupancy, 77.4 percent, but remained by far the most expensive place to visit. Average rack rates there were $224, with Miami next at $165 and Hawaii third at $160.
Revenue per available room in New York is also far higher than anywhere else, $173 compared with $127 in Hawaii.
Maui alone compares more evenly with New York, and is slightly more expensive, with its average rack rate of $248 and revenue per available room of $179.