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The Honolulu Advertiser
Updated at 10:54 a.m., Tuesday, August 5, 2008

Times 'challenging' for Maui hotel industry

By HARRY EAGAR
The Maui Times

Maui hotel occupancy was way down in June, to 64.6 percent compared with 75.2 percent last year, The Maui News reported today.

For the first half of the year, the numbers are down only modestly, from 75.6 percent in January-June 2007 to 73.8 percent this year.

The accelerated recent decline was not unexpected. The tourist head-count is down sharply.

Average posted daily room rates are up by 4 percent to $207 statewide. Ordinarily, this would be taken as a sign of strength, but Hospitality Advisors, which publishes the numbers, says not this year.

"Total visitor expenditures dropped by 3.4 percent during this period, indicating that visitors spent more on their hotel rooms and significantly less on other items during their stay," it said in commentary to its Hawaii Hotel Flash Report.

The report, issued Monday, called the first half of this year "challenging," noting losses in air seats, cruise ships and the weak national economy.

The decline in the statewide room occupancy rate was smaller than Maui's, from 76.1 percent to 69.1 percent. However, that figure conceals that a meaningful number of hotel rooms - 1.3 percent - were out of service for renovations.

Hospitality Advisors said that despite the bad news, Hawaii hotels performed well compared with U.S. averages for the first half of the year. Only New York City had higher numbers.

But business was down, with room nights sold down 2.5 percent for the year to date and off 11.3 percent in June.

Hotels across the state took in $1.56 billion in six months, with luxury resorts collecting $859 million.

Smith Travel Research, which compiles the numbers for Hospitality Advisors, breaks rental rooms into five categories.

In addition to luxury, they are upscale ($306 million so far this year), midprice ($245 million), economy ($82 million) and budget ($74 million).

Joseph Toy, president of Hospitality Advisors, called the declines in the past couple of months "dramatic," unmatched since the falloff in the early 1990s following Operation Desert Storm, Hurricane Iniki and a Mainland recession, and the shorter, sharp decline after the Sept. 11, 2001, terrorist attacks.

"The market today is far more complex, and the loss in air seats and rapid rise in fuel costs is clearly reflected in the second quarter results," he said.

Oahu had the highest occupancy rate in June, 74.4 percent, although that was nearly five points down from the previous June.

Hawaii County matched Maui's drop, but from a lower ledge: It was down to 57.2 percent. Kauai's drop was comparable to Oahu's, down to 72.2 percent.

Hoteliers maintained and even increased their average daily rates for rooms, although it is likely that package deals, perks and other incentives have become easier to find in recent weeks.

Maui's daily rates jumped $7 in June to $278, although that was a slower pace than earlier in the year. Kauai had the second-highest daily rates, $219. Hawaii was at $202, and Oahu was at $173.

Revenue per available room is up so far this year, except on the Big Island, but it took a beating in June.

Maui's revenue per available room fell $46 to $284, by far the biggest drop.

Kauai was down $7 to $158, Oahu was down $4 to $128 and Hawaii was down $15 to $116.

New York City has enjoyed an occupancy rate of 81.4 percent this year, with an average daily rate of $263 and revenue per available room of $214.

No place else is in the same league. Hawaii is second in revenue for available rooms ($153), second in average daily room rates ($207) and third, behind Miami, in occupancy (73.8 percent).

* Harry Eagar can be reached at heagar@mauinews.com.