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The Honolulu Advertiser
Posted on: Thursday, March 2, 2006

Records set in January for room rates, revenue

By Lynda Arakawa
Advertiser Staff Writer

Gale Nishida, guest recognition coordinator, released one of many butterflies at yesterday's blessing at the renamed The Kahala Hotel & Resort, where room rates range from $435 to $635.

GREGORY YAMAMOTO | The Honolulu Advertiser

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Hawai'i's hotel industry continued its stellar growth into 2006 setting January records for daily room rates and revenue per available room.

Statewide average daily room rates grew 12.7 percent to $180.02, according to a report released yesterday by Hospitality Advisors LLC. Revenue per available room, a key measure of profitability, was up 14.1 percent at $146.84.

Occupancy statewide in January was 81.6 percent, up 1 percentage point, although it's driven largely by a shrinking room inventory from renovations and conversions to condominiums and time-shares.

The hotel data come on the heels of a report Tuesday that showed the state's visitor industry enjoyed record monthly visitor arrivals in January and $1 billion in expenditures, despite a 7.3 percent drop in Japanese tourists.

"We looked at 2005 as being the turnaround year with excellent growth in revenue per available room," said Mike Paulin, owner of Aqua Hotels & Resorts. "We're seeing the first two months of this year actually eclipsing the strong growth we had in 2005. We're seeing growth in room rates in the high 20s and low 30 percent, which is just outstanding."

But Paulin added that for 20 years Waikiki was significantly underpriced relative to the growth in the Neighbor Islands.

"So we're playing catch-up," he said. "It doesn't hurt that the infrastructure has been so well and thoughtfully improved. And the conversion to condotels has eliminated much of the marginal accommodations and the majority of the condotels have undergone massive renovations. The overall visitor product as well as the visitor hotel product as well as the infrastructure has substantially improved and that's being recognized in these rate gains."

Kaua'i was the only island where hotel occupancy dropped, falling 2.6 percentage points to 69.1 percent. Still, all islands reported higher average daily rates and revenue per available room.

Statewide luxury and upscale properties reported higher occupancy and room rates. Other hotel segments saw slight declines in occupancy, but gained in room rates.

Hospitality Advisors also noted a growing number of visitors are staying at alternative accommodations such as condominiums, time-shares and cruise ships, and that despite growing visitor arrivals, room sales have remained flat.

The survey, compiled by Smith Travel Research with Hospitality Advisors, averages more than 137 properties representing about 45,016 rooms, or 75.1 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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