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The Honolulu Advertiser
Posted on: Wednesday, February 5, 2003

Hotels end 2002 on high note

By John Duchemin
Advertiser Staff Writer

Hawai'i hotels capped a year of recovery with a relatively strong December, but key statistics show the industry is still down from its peak capacity.

Hotel occupancy, room rates and revenues all rose in December for the entire state and most of the major islands, according to the latest survey by travel industry consulting firm Hospitality Advisors LLC.

For the year, however, occupancy, rates and revenues in 2002 were either at or below 2001 levels, reflecting the industry's continuing struggle to recover from the economic shock of the Sept. 11 terrorist attacks.

As visitor counts fell after the attacks, hotels were forced to cut prices to fill their rooms. The resulting drop in rates led to lower revenues. Hospitality Advisors estimates hotels collected $2.4 billion in revenues in 2002 — down from $2.5 billion in 2001 and $2.7 billion in 2000.

Despite stronger numbers this past fall, hoteliers have proven reluctant to raise their rates until a long-term rebound is certain, said Joseph Toy, president of Hospitality Advisors.

"Hawaii's hotel industry is in the difficult position of having to balance the trade-off in discounting room rates with hotel occupancy," Toy said. "Generally, the steeper the discounting, the longer it takes to return room rates to the level prior to the downturn."

Hoteliers also said a possible war with Iraq is having a dampening effect on future prospects.

"The numbers in December were quite encouraging, but the future is still a hazy crystal ball," said Kelvin Bloom, president of hotel company Aston Hotels and Resorts, which has 34 hotels and resorts in Hawai'i.

In December, statewide hotel occupancy was 66.4 percent, up from 57.2 percent the same month of 2001. Occupancy was higher on all islands except Kaua'i, with O'ahu showing the strongest gains.

Daily room rates averaged $153.90, up from $149.30 in December 2001. Again, O'ahu rates were up most significantly, while Maui was the only island that experienced a drop.

Per-room revenues in December rose to $102.14 per night, up from $85.36 in December 2001. Revenues increased on all islands.

Reach John Duchemin at 525-8062 or jduchemin@honoluluadvertiser.com.