Hawaii breaks 12 straight months of hotel occupancy declines

Hawaii hotels achieved a slight increase in occupancy after 12 consecutive months of decline, according to hotel consultant Hospitality Advisors.

Statewide hotel occupancy rose 0.6 percentage points to 72.7 percent for the month of May.  The occupancy gain was in line with the 1.4 percent increase in visitor arrivals as reported by the Hawai'i Tourism Authority, in particular from U.S. East, Japan, and Canada.

Average daily rates climbed 3.9 percent to $218.64 and revenue per available room reached $158.95 (+4.8 percent), both setting new highs for the month of May.

Strong room demand and rate growth led to a new May record of $390 million in total hotel revenue.  A larger number of visitors in high spending segments including honeymooners and those traveling to get married led to a 3.6 percent increase in visitor daily spending, supporting the hotel revenue gains.

Despite an increase in visitor arrivals to Oahu, occupancy remained flat compared to last year, averaging 80.5 percent for the month, primarily due to a sharp drop in average length of stay.

Average daily rates increased to a new May high of $202.92 (+3.1 percent).  Revenue per available room for Oahu hotels also set a new May record of $163.35 (+3.0 percent).  Oahu hotels benefited from growth in high-yield markets such as the honeymoon and marriage markets, those traveling for conventions, and business travelers.

Occupancy on Maui rose 1.1 percentage points to 67.3 percent, mainly due to a 3.0 percent increase in visitor arrivals.  Average daily rate climbed to a new May high of $261.20 (+3.1 percent) while revenue per available room reached $175.79, a 4.9 percent gain.  Maui's luxury resort region of Wailea enjoyed a remarkable month as occupancy grew 4.2 percentage points to 71.9 percent.  Average daily rate climbed to $377.82, leading to a new May revenue per available room record of $271.65.

The Island of Kauai's 3.8 percentage point gain in occupancy to 70.8 percent was the largest gain among the Hawaiian Islands.  Kauai hotels benefited from a slight increase in both visitor arrivals and average length of stay.  Room rates reached $222.28 (+1.9 percent), a new high for the month.  Kauai hotels also achieved a new revenue per available room record for the month of May of $157.37 (+7.7 percent), in line with an impressive 11.3 percent increase in daily visitor spending.

Hotels on the Big Island were 53.2 percent occupied for the month (+0.7 percentage points).  A longer average length of stay (+6.2 percent) helped offset a 2.6 percent dip in arrivals which led to the gain in occupancy.  Average daily rates climbed 10.5 percent to a new May high of $215.82.  Revenue per available room also achieved a double-digit gain of 11.9 percent to $114.82. The impressive gains were driven by hotel performance for the high-end Kohala Coast region where occupancy climbed 3.0 percentage points to 56.4 percent and both average daily rates and revenue per available room achieved new May highs of $291.30 and 164.29, respectively.

Occupancy for statewide luxury properties grew 4.1 percentage points to 66.5 percent for the month while room rates reached $398.72 (+1.5 percent).

Economy hotels' occupancy decreased to 73.9 percent (-2.5 percentage points) and Economy average daily rates dipped 2.5 percent to $97.15.

"Given the record highs that Hawai'i enjoyed last year, the moderation in Hawai'i's visitor industry was expected," said Joseph Toy, President and CEO of Hospitality Advisors LLC. "Although room rate growth has slowed to roughly half the pace achieved through May 2013, Hawai'i nonetheless ranked first in the nation in ADR."

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