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The Honolulu Advertiser
Posted on: Friday, April 9, 2010

Hawaii hotel occupancy rising and room prices dropping

By Alan Yonan Jr.
Advertiser Staff Writer

More positive signs emerged for the state's hotel industry in February, with occupancy rising for the third consecutive month and a slowing in the decline of both room rates and revenue.

The state's hotels were 75.5 percent full during the month, up from 72.3 percent in February 2009, according to a report from industry consultants Hospitality Advisors and Smith Travel Research. The jump followed occupancy increases in December and January and was the fifth rise in the past six months.

The average daily rate for a hotel room fell to $175.21 in February from $188.19 the same month a year earlier. The 6.9 percent decline was the smallest drop since December 2008, according to the report.

Revenue per available room, a key measure of hotel profitability, fell to $132.28 in February, a 2.8 percent decline from $136.06 a year earlier. That was an improvement from the 5.6 percent drop in January revenue.

"While 2010's winter busy season is still far below normal levels, we are definitely seeing more confidence returning to the market," said Joseph Toy, president and chief executive officer of Hospitality Advisors. In the boom years, February hotel occupancy would run at 85 percent or higher, he said.

The recent improvement in occupancy has come at a price for hotel owners who have had to slash room rates over the past year or more to attract guests who were feeling pinched by the economic downturn, Toy added.

"We'll probably see discounting through the remainder of this year and into next year," he said. "It will take a while to come back."

The statewide occupancy rate was in line with a modest increase in February visitor arrivals reported by the Hawai'i Tourism Authority on March 30.

Castle Resorts & Hotels, with properties on all the major islands, has experienced an increase in bookings in recent months, said President Alan Mattson,

"It's encouraging that occupancy is starting to rebound; however, average daily rates continue to be heavily discounted," he said.

One positive sign going forward is that guests are booking their accommodations further in advance, Mattson added.

"Previously we were seeing a significant amount of bookings with short lead times of a month or less. That has changed to longer lead times for bookings, which is a good sign," he said.

"People are planing further out with longer lead times of 60 to 90 days. They're committing to their vacations earlier instead of waiting to the last minute."

The Hospitality Advisors report showed that all classes of hotels experienced occupancy gains, with the budget category posting the largest increase of 5.4 percentage points to 86.6 percent.

By island, Maui led the way with a 7.8 percentage-point increase in occupancy to 77.9 percent. Occupancy on O'ahu rose 3.4 percentage points to 80.5 percent. Kaua'i saw its occupancy rate fall by 4.5 percentage points to 62.8 percent, while the rate on the Big Island dropped by 0.3 percentage point to 62.4 percent.

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