No vacancy signs were out at many hotels, including Aqua Bamboo Hotel, a boutique condotel on Kuhio Avenue, where occupancy was at an all-time high 99.7 percent.

"We had a really great month," said general manager Joseph Yamaoka. "June was pretty good but not nearly as good as July."

The growth in numbers of visitors to Waikiki were obvious to everyone from bellhops to massage therapists.

Sales at Tiki's Grill & Bar, in the Aston Waikiki Beach Hotel, grew 32 percent in July compared with last year, making last month its best so far. August is also shaping up to be a solid month, currently up 22 percent from last year.

"It's been absolutely noticeable," said Slade Neeley, general manager. "There's just more people in Waikiki in general."

The Na Ho'ola Spa in the Hyatt Regency Waikiki had to turn people away this summer, said spa director Karen McGill.

"We're just busy all the time," she said.

The surge in occupancy rates was driven, in part, by a 10.7 percent rise in visitor arrivals for the month. A total of 683,006 visitors came to the Islands last month, the state reported Wednesday. Domestic arrivals by air rose 7.2 percent in July to 504,692, the best July on record.

"We had a phenomenal July," said Kelvin Bloom, president of Aston Hotels & Resorts. "We're extremely pleased with not only the results for the month of July but the entire year to date."

Occupancy rates for Aston properties rose between 10 percent and 20 percent from July last year, he said.

Helping boost July numbers were two national conventions that brought more than 20,000 visitors to Hawai'i, contributing to a 73.8 percent jump in visitor arrivals for meetings, conventions and incentives over July 2003.

The return of Japanese tourists coupled with strong travel from the U.S. East have also helped the industry this summer. Japanese and U.S. East visitor arrivals in July rose 28.9 percent and 15.9 percent, respectively, from last year.

Part of the rise in occupancy rate is the Japanese coming back and a much stronger marketing push toward the U.S. East market, "which prior to the last five years, hadn't been a market we were penetrating very well," said Joseph Toy, president of Hospitality Advisors LLC.

The first week of August is already showing strong occupancy rates for Hawai'i hotels, he added, on track to be higher than last year.

"It could very well be a record summer," Toy said.

In addition to occupancy rates, average daily rates for rooms statewide also increased, up 8 percent to $159.21. Waikiki alone rose 13.7 percent to $125.35.

An increase in room rates are an indicator of an improving economy, said Toy. During a downturn in the economy, rates will drop, as they did after Sept. 11, 2001, he said.

Hawai'i's upscale properties led the state in occupancy and gains in average daily rates for the month. Occupancy at these hotels increased by 9.3 percentage points to 88.9 percent; rates grew by 9 percent to $165.65.

In anticipation of a strong summer, Aston did away with some of its discounts.

"Previously, there was a lot of focus on getting a deal," Bloom said. "Now people are willing to pay a bit more ... I have no complaints."

The Smith Travel Research/Hospitality Advisors monthly hotel survey averages more than 150 properties representing about 49,662 rooms reporting, or 76.5 percent of all lodging properties with 20 rooms or more in the state.

The number of hotel rooms dropped from last year, as many hotels are selling rooms as condo units.

Three of the four major islands saw increases in occupancy rates. Maui occupancy fell slightly to 82.4 percent, though the average daily rate grew by 9.4 percent to $214.99. Maui luxury hotels reported the highest average daily rate in the state at $323.26.

The statewide average revenue per available room, a key measure of financial performance, was $137.02 in July, up from $116.61 a year ago.

"We expected '04 to be strong," Bloom said. "Fortunately it turned out to be stronger than even anticipated."

Reach Catherine E. Toth at 535-8103 or ctoth@honoluluadvertiser.com.