Hawai'i's hotel industry fared exceptionally well in the first half of 2005, setting records for room revenue, average daily rates and revenue per available room.

Hawai'i hotel occupancy, rates and revenue per available room through June also ranked second among the top 25 hotel markets in the nation behind New York City, according to hotel consultancy Hospitality Advisors LLC.

"It's just been a superb year thus far, and indications are that these trends should continue through the end of the year, barring any shocks in the economy or political situations," said Hospitality Advisors president and CEO Joseph Toy.

The visitor industry is expecting a record 7.3 million tourists this year.

Hotels in Hawai'i generated $1.45 billion in room revenue the first six months of the year — an all-time high — thanks in large part to record average daily room prices of $161.51. Statewide occupancy grew 3.5 percentage points over the same time last year to 81.3 percent, although part of that is attributed to a decline in available rooms because of the conversion of some hotels to condominium-hotels.

Revenue per available room — a key measure of hotel profitability — through June was the highest on record at $131.29.

STILL 'A SAFE HAVEN'

Toy said increases in Japanese visitors, the corporate meetings market and honeymooners drove the industry throughout the year. Visitors in these markets typically stay at higher-end hotels.

"As each month has gone by, hoteliers become more confident," Toy said. "We still have a short booking window issue but it seems that reservations have been firming up at a much earlier stage, which is good news.

"We're still considered a safe haven, an exotic destination compared to other destination choices."

Toy added that a continued strong economy also brought more visitors here.

"And we just have a really good product, a lot of product renewal in Hawai'i, which has created a lot of buzz in the market. And so the image of Hawai'i has really been elevated, particularly in Waikiki over the last couple years," he said. "And the good news is that we'll still continue to see a lot of renewal in the market and investments in the market."

Luxury and upscale hotels accounted for nearly 75 percent of total room revenue, as well as 54.6 percent of total room demand during the first half of the year. Upscale properties had the strongest room demand growth of 6.7 percent to 1.47 million room nights sold.

Meanwhile, budget hotels, at 87.6 percent, had the highest occupancy, partly because of a smaller supply from room conversions.

O'AHU LEADS WAY

O'ahu hotels had the highest occupancy for the first six months of the year. Every major island saw higher occupancies in the year through June except Kaua'i, which dropped 1.2 percentage points to 77.9 percent. All major islands, however, saw higher average daily rates and revenue per available room compared to the first half of last year.

All categories of hotels, from budget to luxury, also saw increases in occupancy, average daily rates and revenue per available room in the first half of the year.

Hawai'i's hotel industry also set new June records last month in average room rates ($163.30), revenue per available room ($136.54) and occupancy (83.6 percent), Toy said, adding that the high occupancy was driven by high demand and a reduction in rooms. Those figures also ranked second in the nation behind New York City.

Big Island hotel occupancy last month dropped 0.9 percentage points to 70.7 percent, and Kaua'i occupancy fell 2.3 percentage points to 80.4 percent. O'ahu and Maui hotels posted gains with occupancies of 88.2 percent and 83.4 percent, respectively.

All islands saw higher average daily rates and revenue per available room last month.

The monthly hotel survey through June, compiled by Smith Travel Research with Hospitality Advisors, averaged more than 146 properties representing about 48,771 rooms reporting, or 79.7 percent of all lodging properties with 20 rooms or more in the state.