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The Honolulu Advertiser
Posted on: Thursday, September 29, 2005

Hawai'i hotels No. 1 in room revenue

By Lynda Arakawa
Advertiser Staff Writer

Hawai'i's hotel industry set an all-time high in average room rates last month, and is expected to generate record-level revenues this year, Hospitality Advisors LLC reported yesterday.

Statewide average daily room rates reached $179.80 in August, the highest average room rate recorded for any month since Hospitality Advisors began its surveys in 1987, said president Joseph Toy.

Hawai'i's room rates ranked second among the nation's top 25 hotel markets behind New York City, but Hawai'i's revenue per available room of $154.52 — a key measure of profitability — topped all others in the country, Toy said. Statewide hotel occupancy of 85.9 percent was second only to Seattle.

Hawai'i's high room rates helped push room revenues up by 11.5 percent to about $290 million last month.

"Christmas come early," said Stan Brown, Marriott International's vice president for Pacific islands and Japan. "The numbers actually were outstanding for August, there's no question about it. And that was across all islands, all of our properties, all brands, from the luxury tier down to the moderate tier."

But Brown said rising energy costs are a "big cloud on the horizon," affecting both hotel properties and airlines.

"It's definitely affected profitability on the properties now from a heat, light and power perspective," he said. "So while the sales look strong and the demand looks strong, there are also cost increases that have outpaced our expectations."

The hotel figures come a day after the state reported 692,254 tourists visited Hawai'i last month, a record for August.

Both Brown and Toy said there's still opportunity for hotel room rates to grow because of the combination of high demand and a restricted supply of rooms.

"It would seem that given the continued increase in demand, the attractiveness of Hawai'i, the constriction of supply, and the fact that on an inflation adjusted basis we've only seen real increases over the past year, that there would appear to be still some room left for some rate increases, but probably at a more moderate level," Toy said, adding that the visitor industry has entered the fall shoulder season.

"It's clear that we'll be setting a record in room revenues this year, which is also keeping in line with room revenues nationally," Toy said. "We're following the national trend, but obviously we're one of the top performing markets in the nation in a very strong industry."

Toy said high-end hotel properties have been leading the growth, thanks to a strong increase in upscale travel. So far this year the industry has seen increases in such high-yield markets as Japanese visitors and honeymooners, as well as convention and cruise markets, he said.

O'ahu was the only major island that saw higher hotel occupancy last month over August 2004, but every island still saw increases in average daily rates and revenue per available room.

All hotel categories saw year-over-year increases in rates and revenue per available room. Occupancy rates grew at upscale, luxury and economy hotels, while midprice and budget hotel occupancy remained relatively flat.

The monthly hotel survey, compiled by Smith Travel Research with Hospitality Advisors, averaged more than 145 properties representing approximately 48,645 rooms reporting, or 79.7 percent of all lodging properties with 20 rooms or more in the state, including full service, limited service and condominium hotels.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.

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