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The Honolulu Advertiser
Posted on: Friday, February 2, 2007

Record revenue for hotels in Hawai'i

By Lynda Arakawa
Advertiser Staff Writer

In 2006, Hawai'i's hotel industry set a revenue record for the third year in a row, thanks to a tighter room supply and property upgrades. One such project is Waikiki Beach Walk, above, which includes a Donald Trump condominium tower. The building at right was torn down to make room for the Trump tower.

ADVERTISER LIBRARY PHOTO | September 2006

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Hawai'i's hotel industry continued to raise the bar in 2006, setting a record in revenue for the third year in a row, according to a report released Thursday by Hospitality Advisors LLC.

Hotels collected $3.17 billion in revenue last year, thanks to healthy visitor arrivals and continued growth in room rates made possible by a tighter room supply and property upgrades.

The previous records were $3 billion in 2005 and $2.7 billion in 2004.

"To my immense surprise, it's the best year we've had in a long time," said Barry Wallace, executive vice president of hospitality services for Outrigger Enterprises Group.

"I think we entered the year feeling that '05 was as good as it gets, and to be honest, it got even better in '06."

Bookings for the first quarter of this year, however, appear to be softer than the last two years, Wallace said. But room rates are still expected to grow, he added.

"We're following two record Januarys, and this January is not holding up to the level of those," Wallace said. "I think if you look at a 10-year perspective this would be a fine January, but it pales next to '05 and '06.

Hotel occupancy for the year fell slightly from 81.1 percent to 79.8 percent. But average daily rates grew 11 percent to $184.81, and revenue per available room grew 9.4 percent to $147.41.

Hawai'i ranked second in the nation behind New York for the year in occupancy, average daily rates, and revenue per available room.

Occupancy fell on all major islands except for Maui, but all islands enjoyed increases in rates and revenue per available room for the year.

For the month of December, occupancy dropped 4.1 percentage points to 72.4 percent. Still, average daily rates grew 9.6 percent to $207.41, and revenue per available room grew 3.7 percent to $150.16.

The survey is compiled by Smith Travel Research with Hospitality Advisors.

Hawai'i's rising room rates have helped boost the earnings of several hotel companies.

Starwood Hotels & Resorts Worldwide Inc., whose operations here include the Westin Maui Resort and Sheraton Kauai Resort, said fourth-quarter profit increased 28 percent as the company charged more for rooms.

Net income climbed to $203 million, or 93 cents a share, from $159 million, or 70 cents a share, a year earlier. Revenue increased 3.7 percent to $1.57 billion.

Hilton Hotels Corp., which operates the Hilton Hawaiian Village and other resorts in Hawai'i, said Wednesday its fourth-quarter profit nearly doubled as revenue per available room increased and revenue from leased hotels surged.

The company raised its 2007 estimates for per-room revenue, a key industry measure, a sign that the company's expansion plans are being matched by increased worldwide demand.

Net income climbed to $207 million, or 50 cents per share for the three months ended Dec. 31, compared with $105 million, or 26 cents per share, during the prior-year period.

Revenue grew to $2.23 billion from $1.08 billion last year, coming in slightly above analysts' $2.20 billion consensus forecast.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.

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