First half of this year a mixed bag for hotels

By Kelly Yamanouchi
Advertiser Staff Writer

Hawai'i hotels brought in $1.24 billion in room revenue in the first half of 2003, up by about 3 percent from the same period last year.

But this year still lags behind the performance during the same period in 2000 by 10.7 percent.

The six months were also topped off with statewide hotel occupancy in June that was weaker than last year, according to a report issued by Hospitality Advisors LLC.

Despite that, for the first half of the year Hawai'i hotels had the highest occupancy levels among the top 25 hotel markets in the nation, coming in ahead of New York, San Diego, Washington, D.C., and Miami. However, New York had a higher revenue per available room, a key measure of hotel performance.

The state's hotel performance data is showing a lopsided recovery weighted toward Maui and Kaua'i, which have had strong occupancy levels compared with O'ahu and the Big Island.

"The unevenness is certainly there," said Joseph Toy, president of Hospitality Advisors.

The state's dependence on the Japan market, which has sharply declined with the Iraq war and spread of SARS, is especially evident in the numbers.

"The absence of Japanese particularly in the last four months has been noticed, particularly on O'ahu," said Perry Sorenson, chief operating officer of Outrigger Hotels & Resorts. "They're certainly not in numbers that they were, even last year."

But at the Four Seasons Maui at Wailea, general manager Radha Arora said occupancy levels are outperforming even 2000 levels.

"People from the West Coast choose to come to Maui as opposed to going to other parts of the world," Arora said. "Now that all the flights are coming into Maui and Hawai'i from the Mainland, people have that much more access."

In June, statewide hotel occupancy averaged

71.2 percent, down from 72.2 percent in 2002. The average daily hotel room rate rose to $139.56 from $136.73 a year ago.

O'ahu had the largest decline with 69.5 percent occupancy, down from 72.6 percent, reflecting the continuing weakness in Japanese tourism. The Big Island also saw a decline in occupancy, while Maui and Kaua'i posted higher levels.

For the first six months of the year, statewide hotel occupancy averaged 71 percent, edging up slightly from 69.7 percent a year ago. Average daily room rates increased to $144.70, up 2.4 percent.

"We have to be mindful that the gains are coming off some of the worst months that the market has seen," Toy said. "Hopefully, if the pattern holds, this forms the base of our future recovery."

There is cautious optimism in the hotel industry about the outlook for the rest of the year since July has been relatively good thus far.

"I think it's premature to say that we've turned a corner, but we're very thankful to say we have some business at this point," Sorenson said. "Our employees are working full time and that's great."

Toy said a full recovery will depend on the pace of an economic recovery on the Mainland.

So far, budget-minded travelers have contributed to a strong recovery for mid-priced and economy hotels.

Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.

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