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Hawaii's Hotel Revenues Continue Upward Climb with an 11.6% Increase
Due to Rise in Room Rates

By Allison Schaefers, The Honolulu Star-AdvertiserMcClatchy-Tribune Regional News

Dec. 17, 2012--An increase in the number of tourists and higher room rates helped push up hotel revenues 11.6 percent in October to a record $249.7 million and put the state industry on track to set a year-end hotel room revenues record.

Revenue per available room, considered by many to be the best indication of hotel performance, grew for the 32nd month to $141.35, a 10.8 percent gain from October 2011.

The results, which were to be released today by hotel consultancy Hospitality Advisors LLC, were fueled by a 7.7 percent rise in the average daily rate (ADR) to $189.73 and a 2.1 percentage point gain in occupancy, which averaged 74.5 percent across the state.

"I'm confident that we'll hit a record for hotel revenues for the whole of 2012," said Joseph Toy, president and CEO of Hospitality Advisors. "The visitor market redefined itself this year, and we've got momentum heading into 2013 and 2014."

October's revenue gains were supported by a 12.7 percent increase in visitor expenditures and a 6.3 percent gain in per person daily spending as reported by the Hawaii Tourism Authority. The rise in spending coincided with the growth in the number of tourists, primarily from Hawaii's core market, the U.S. West, which rose 9.6 percent, and from Japan, which rose 15.2 percent to become the state's second-largest market that month. Tourist growth from higher spenders such as wedding couples and independent travelers (traveling outside of a group or tour) also contributed to gains.

While October occupancy on Oahu only rose 0.8 percentage points to 82 percent, the island's ADR grew by 10.7 percent, the most of any island, to $180.21.

"It really is record numbers that are coming to Waikiki through October as far as visitor count and the spend," said Jerry Westenhaver, general manager of the Hyatt Regency Waikiki Beach Resort and Spa. "Usually fall softens up, but we have had a solid November, a strong December, and first quarter of 2013 looks good."

Maui's October occupancy rose 2.7 percentage points to 69.1 percent, its ADR by 3.5 percent to $217.27, and revenue per available room (RevPAR) rose 14 percent to $150.13.

On Kauai, occupancy grew 0.5 percentage points to 68 percent, ADR rose 2.7 percent to $198.03 and RevPAR, 3.5 percent to $134.66.

On Hawaii island, occupancy rose 6.5 percentage points, the largest gain among all islands, to 61.4 percent. ADR rose 7.3 percent to $177.41, and RevPAR, over 20 percent to $108.93.

The results were in keeping with HTA's report that October arrivals to Oahu were 2.3 percent ahead of the agency's target. During the first 10 months of the year, 4.05 million tourists have come to Oahu, surpassing the 3.96 million target. But neighbor island tourism continued to be a challenge. All other islands were below target, including Molokai, which was off by 23 percent, Lanai by 19 percent, Hawaii island by 10 percent, Kauai by about 9 percent and Maui by about 8 percent.

Most hoteliers, especially on Oahu, are optimistic, but continue to have concerns about how much they will be able to offset increased costs with increased rates. Even high demand periods have a point where tourists will go elsewhere.

"Our revenues are finally getting past 2007 and 2008 levels," Westenhaver said. "The problem is that cost factors are rising so much quicker, and there's always a tipping point where the customer is unwilling to pay more. I'm very optimistic about next year, but controlling expenses is going to be a major factor in how well that we do."


(c)2012 The Honolulu Star-Advertiser

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