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The Honolulu Advertiser
Posted on: Thursday, October 18, 2001

Hotels at 60% occupancy, losing $2.7 million a day

 •  Chart: Hotel occupancy and revenue

By Frank Cho
Advertiser Staff Writer

Revenue at Hawai'i hotels has fallen an estimated $143 million compared to a year ago, and occupancy rates are still down more than 25 percent following the Sept. 11 terrorist attacks, according to a survey that offers the first hard look at the attacks' impact on one of the state's biggest industries.

In just one month, the financial impact already has surpassed the $135 million hotels said they lost during the entire first quarter of 1991 as a result of reduced travel demand during the Gulf War.

And industry observers say the impact could cost Hawai'i even more in the long run as hotel owners delay renovations and other projects that would have pumped millions of dollars into the Islands' slowing economy.

Hotels in the state lost about $7.7 million a day just after the attacks because of reduced visitor demand, according to the survey by Smith Travel Research and Hospitality Advisors LLC. The survey covers more than 65 percent of the state's hotel rooms.

Occupancy rates, which plunged in the week after the attacks, have been steadily improving and averaged 60.5 percent last week.

But occupancy remains at historic lows, and hotels are losing about $2.7 million a day, the survey found.

"The hotel numbers by themselves do not tell you the whole story, but they do tell you the situation is serious as hell," said Robert Fishman, chief executive officer of the Hawai'i Tourism Authority.

Murray Towill, president of the Hawai'i Hotel Association, said hotel companies are suffering financial losses worldwide, and many potential travelers still are staying away. But he said Hawai'i is doing better than many other destinations.

"International arrivals are off by 50 percent," Towill said. "It's a huge hit, but it also means that 50 percent are still coming and that is good news. And air service from the West Coast has not been reduced as it has in other markets."

Still, the impact of the drop in visitors on the state's No. 1 industry has sent economic shudders throughout the state.

More than 12,000 workers in Hawai'i, most of them in tourism-related businesses such as hotels and retail, have filed for unemployment benefits in the weeks since Sept. 11.

State economists have forecast that the decline in visitors will cost Hawai'i between $470 million and

$1.1 billion this year, and that the state will lose between 10,800 and 25,000 jobs.

Revenue per available room, a key profit indicator for hotels, has fallen to $100.84, down 22.4 percent from a year ago, and down 18.1 percent from the days before Sept. 11, according to the survey.

In an effort to aid the ailing industry, the state Legislature during its special session next week will consider appropriating $10 million in emergency money for tourism marketing programs.

The Hawai'i Tourism Authority, along with other private investors, plans to match that money with another $10 million to lure tourists back to Hawai'i.

"Hawai'i is not doing as badly as other places on the Mainland," Fishman said. "But I am seriously concerned. What we don't want to do is wait around for time to heal these wounds."

The Japanese travel market, one of the most important segments of Hawai'i's visitor industry, bounced back relatively quickly after the Gulf War. But industry analysts say they are not so sure that will happen this time around.

"Right now, the North American market is what is holding (the visitor industry) up," said Joseph Toy, president of the Honolulu consulting firm Hospitality Advisors, which worked with Smith Travel to conduct the survey. "The litmus test will be what happens toward the end of December when we start to go into our high season."

Keith Vieira, senior vice president for Starwood Hotels and Resorts for Hawai'i and French Polynesia, said the turmoil shaking the industry is the worst it has ever faced in Hawai'i.

And there is no clear indication when it might stabilize.

"We are going to take a wait-and-see attitude," Vieira said. "During times like these you go back to basics. We are going to do things that work, and we think this is going to take us to the better part of next summer. But the name of the game right now is to just stay alive."

Reach Frank Cho at 525-8088 or fcho@honoluluadvertiser.com.