Hawai'i hotels in September experienced their worst performance since the months following the Sept. 11 terrorist attacks, according to the newest figures on hotel occupancy.

Hotel guests filled only 63.2 percent of rooms, or 11 percentage points less than September 2007, when nearly three-quarters of rooms were filled during the month, a report being released today from Hospitality Advisors LLC says.

We have a "severe economic period that's driving the occupancy and revenues downward," said Hospitality Advisors President Joseph Toy.

The report shouldn't be much of a surprise given the continued decline in visitor arrivals and layoffs occurring in the state's tourism industry. Last week the state Department of Business, Economic Development and Tourism reported September visitor arrivals plunged 19.5 percent during September, while DFS Group, the retailer targeting the visitor market, laid off 130, or 16 percent, of its about 800 employees.

The occupancy downturn was the worst in seven years and was the seventh consecutive month that statewide hotel usage had slid lower compared with a year earlier.

Hotel activity turned downward in April, shortly after the abrupt demise of Aloha and ATA airlines, two carriers that accounted for roughly one-sixth of the number of airline seats from the Mainland.

Since that time the Mainland and global economy has worsened, while oil prices have driven up the cost of airline tickets. The economic turmoil was heightened in September with the bankruptcy of Lehman Brothers and financial market crisis.

The Hospitality Advisor report shows hoteliers also suffered when it came to their financial statements, with total hotel revenue — composed of room, retail, food, beverage and other sales — dropping $58 million in September 2008 compared with a year earlier.

That worked out to a 17 percent decline in what hotels collect in receipts. Hotels tried to avoid lowering room rates and tried to entice bookings with offers of extra nights for complimentary spa treatments or free meals.

"I think the longer the downturn in the overall market lasts the harder it is to not discount rates," Toy said. "We're already seeing that deterioration."

The average daily room rate was $178.35, or 1.8 percent lower than September a year earlier.

In terms of occupancy the report also said: