Hotel occupancy dropped to 70 percent during 2001

By Dan Nakaso
Advertiser Staff Writer

Every major island saw its hotel occupancy rates drop overall last year, according to data released yesterday by hotel consulting firm Hospitality Advisors LLC.

O'ahu — led by Waikiki, the hub of Hawai'i tourism — saw its hotel occupancy plummet from 76.2 percent in 2000 to 68.8 percent last year. Maui's rate fell from 80.4 to 74 percent; The Big Island went from 71.4 to 65.1 percent and Kaua'i dropped from 74.4 to 70.6 percent.

It was a disappointing end to a year that had started well.

Statewide occupancy rates were up 10.4 percent last January, which had hotel executives encouraged that they might see another successful year like 1999 and 2000.

For the first eight months of the year, hotels increased room rates — which led to an overall 3.6 percent increase for the year.

But then September saw a 25 percent drop in statewide occupancy, following by a 23 percent decline in October and 20 percent in November, according to hotel consulting firm PKF-Hawaii, which released its own similar survey yesterday.

The figures in the two surveys often vary slightly.

Hotels responded by discounting room rates during their peak holiday season, but tourists continued to stay away in large numbers.

Occupancy rates ended the year at 61 percent for December — down 12 percent from December 2000, according to PKF-Hawaii. Overall, hotel occupancy rates averaged 71.9 percent for the year — an 8 percent decrease compared to 2000, according to PKF-Hawaii.

"The outcome for 2001, state-wide average occupancy of 61 (percent for December) was expected, considering the circumstances of Sept. 11 and the drastic drop off in visitor arrivals during the following months," said Daisy Aio, PKF-Hawaii's director of management and tourism consulting.

The $1.9 billion luxury market was hit the hardest, said Joe Toy, president of Hospitality Advisors. Total luxury hotel revenue fell $148.9 million. Luxury room revenues were off 7 percent. But the budget market was down, as well. Total revenues for budget hotels dropped by $2.9 million; room revenues were off by $1.9 million.

For the beginning of 2002, preliminary data shows that some hotels are offering discounts of 15 to 20 percent compared to last January, Toy said.

"Because these discounts are out there," he said, "we're beginning to see a little bit of a surge in people taking advantage of them."

Toy's preliminary data shows that occupancy rates for January are still off by 9 percent. But with heavy discounts and visitor confidence increasing, Toy said, "February appears more promising."

Hospitality Advisors bases its figures on surveys of 162 Hawai'i properties, or more than 70 percent of the industry, Toy said. PKF-Hawaii bases its data on 131 Hawai'i properties.

Advertiser capitol reporter Lynda Arakawa contributed to this report.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.