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Hawaii Hotels Suffer 5th Straight Month of Record Low
 Occupancy: Grim Data 'Completely Unprecedented'
By Robbie Dingeman, The Honolulu AdvertiserMcClatchy-Tribune Regional News

Aug. 21, 2009 - Hawai'i hotels experienced the fifth consecutive month of record low occupancy in June, when the rate fell by 5.8 percentage points to 63.1 percent.

In the latest report from industry analyst Hospitality Advisors LLC, the occupancy rate for the first half of the year was the lowest recorded since the survey began in 1987. It reflected the 9.8 percent drop in visitor arrivals to Hawai'i reported by the state Department of Business, Economic Development and Tourism.

Although O'ahu hotels led the state in occupancy at 67.8 percent, that number was 6.4 percentage points below a year ago, according to Joseph Toy, Hospitality Advisors president and chief executive officer.

With visitor arrivals down for 13 consecutive months, Hawai'i hotels have cut rates and added deals to try to fill up rooms but the discounts have dropped revenues.

Deep discounts reduced the average daily hotel rate 16.6 percent to $171.97.

"It's just been something that's completely unprecedented in the market," Toy said.

The steep decline indicates that the traditionally busy summer season has not brought recovery to the state's largest private industry, he said.

"Despite the steep discounting of room rates in the market, hotel occupancies during what would normally be our busy summer season are at record lows, and the impact on hotel revenue and Hawai'i's tax base is tremendous," Toy said.

"With such weak performance, we still do not expect to see any foundation for recovery until mid-2010."

Toy said Hawai'i is experiencing a slump that is reflected throughout the industry and at destinations across the country and internationally.

"Similar to most destinations, we have experienced a tremendous pull-back in the market, unlike anything we have seen before," he said.

Hotels on Kaua'i suffered the most in June, dropping 10.3 percentage points in occupancy to 61 percent, with the average daily rate falling by 17.1 percent to $180.26.

Maui experienced the sharpest drop in average daily rate at 19.3 percent, falling to $227.35.

Toy noted that in the first half of this year, Hawai'i hotel room revenues fell by $339 million to $1.22 billion, representing a steep 21.8 percent decline compared with the first six months of last year, according to Toy's Hawai'i Hotel Flash Report.

This loss was driven by a combination of a 7.8 percentage point decrease in occupancy to 66 percent, and a 12.6 percent decrease in the statewide average daily rate to $181.13.

But Toy said Hawai'i is holding its own compared to tourism markets across the nation. Although Hawai'i slipped to fifth place in hotel occupancy among major U.S. destinations, it remained second behind New York City in average daily rate.

Hawai'i's budget market posted the highest occupancy for the first six months at 74.7 percent and had the smallest decline from the prior year at 4.6 percentage points. The luxury hotel segment had the steepest decline in average daily rate -- 13.5 percent, to $256.92, compared with $296.95 a year ago.

All islands reported losses in occupancy and rates for the first six months of the year. Maui suffered the largest average daily rate loss at 13.3 percent, to $242.36, with occupancy falling by 9.6 percentage points to 64 percent. The Big Island had the lowest occupancy in the state at 55.6 percent with an average daily rate of $187.07.

O'ahu fared best, but still saw occupancy drop by 5.4 percentage points to 70.9 percent, with a 12 percent decline in average daily rate to $150.69 for the first half of the year.

The luxury price segment achieved the highest occupancy at 68.1 percent, but was down 6.8 percentage points from the prior year.

The hotel survey is compiled by Smith Travel Research in conjunction with Hospitality Advisors.

Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com.

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Copyright (c) 2009, The Honolulu Advertiser

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