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Hawaii's Hoteliers Kick Off 2013 with Record Revenue of $328 million,
an 11.3% Increase in Rates and RevPAR Climb of 13.7% in January

Occupancy Grew to 80.7%

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

March 12, 2013--Hawaii's hotel industry kicked off 2013 in record-setting fashion, reaching new highs for average room rates and total revenue.

In January, statewide hotel occupancy climbed to 80.7 percent, up 1.7 percentage points from a year earlier. The strong demand allowed hoteliers to increase their average daily room rates by 11.3 percent year-over-year to $231.02, a new record.

With rates on the rise, hotels also set a record for total revenue at $328 million, beating the previous record of $313 million set in July.

A third record was set in revenue per available room, a key indicator of hotel profitability. It rose to $186.43, a year-over-year gain of 13.7 percent, according to a report scheduled for release today by Hospitality Advisors LLC and Smith Travel Research.

"The train keeps rolling," said Jerry Westenhaver, general manager of the Hyatt Regency Waikiki Beach Resort & Spa. "We came off as an industry one of the best revenue years that we've seen, and then the first quarter surpassed last year's first quarter. We think that the second quarter should follow suit. There is nothing out there in the horizon that indicates that the first half of the year won't be as good or better than it was in 2012."

To be sure, January was so strong that even Hawaii island, which has lagged other local markets, saw its monthly occupancy rise to 71.6 percent, an increase of 8 percentage points from January 2012. And, while Oahu's occupancy fell 0.8 percentage points due to shorter visitor stays, the 86.1 percent occupancy helped hoteliers increase their average room rate by 15 percent to a monthly high of $209.06.

January's gains align with the momentum from 2012, when hotel operators earned $4.81 billion, the all-time high for annual revenues. They also are in keeping with a robust full-year forecast from Joe Toy, president and CEO of Hospitality Advisors LLC.

Toy anticipates statewide hotel occupancy for all of 2013 will grow by roughly 3 percentage points to 80 percent. He also has forecast that Oahu's full-year occupancy will grow to 87 percent, Maui's to 76 percent, Kauai's to 72 percent and Hawaii island's to 64 percent.

"Strong recovery and real growth in Oahu's visitor market is really driving room revenues," Toy said.

"It's a nice beginning, but I don't think that we'll see full recovery across all islands until 2014."

While Toy said Oahu's hotels are packed, the neighbor islands still lag. Oahu hotels are above the occupancy range of 78 to 85 percent that the industry shoots for. However, Toy said hotel owners on Maui, Kauai and the Big Island are still trying to reach the preferred zone. More group business is needed to take pressure off the discretionary leisure side and improve performance, he said.

"The Big Island had a few groups in January, and that helped boost their market, but I still stand by my year-end forecast for them," Toy said. "We'll have to see Maui's group market firm up a little more before the overflow goes to the Big Island. While Kauai is mostly a leisure and time-share market, some key resorts like Princeville and Poipu also could benefit."

Full hotels in Waikiki could drive some of the leisure and group traffic to the neighbor islands, he said.

Jack Richards, president and CEO of Pleasant Holidays LLC, Hawaii's largest wholesaler, said Oahu hotels are expected to be full through the first quarter and the rest of the year.

"We are seeing a shift to the other islands, primarily Maui, Kauai and the Big Island in that order," he said.

However, Richards cautions that some of his U.S. customers are going to Mexico instead. As of Feb. 26, Mexico provided Pleasant's highest year-over-year increases, he said.

Toy said the second half of this year will be the true test of how the market compares with 2012.

"Last year started a bit softer, and then it really ramped up in the summer and continued throughout the year," he said.

Because tourists will book closer to the time they will travel, summer still is too far away to forecast, said David Carey, president and CEO of Outrigger Enterprises Group. However, Carey said it's a good sign that there is strength heading into the off-peak season, which typically runs from the end of March to June.

"It's not as strong as winter, but it's one of the better shoulders that we've had," he said.


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