Hawai'i's average hotel room rates reached an all-time high last month, and room revenue hit a monthly record despite a slight drop in occupancy.

The statewide average daily rate was $198.78 in August, topping the previous high of $198.22 set in July, according to Hospitality Advisors LLC. Hawai'i's hotel industry grossed about $305 million in overall room revenue, a record for August.

Hotels continued to enjoy growing rates and revenue although occupancy last month fell 1.9 percentage points to 84.3 percent. Room demand also fell 5 percent to 1.5 million room nights sold.

Still, Hawai'i's occupancy ranked third in the nation behind Seattle and New York City, and the average daily rate here was second to New York City. Statewide revenue per available room, a key measure of profitability, grew 8.5 percent to $167.63.

"After the prolonged industry slump during most of the 1990s and the recovery from the sharp drop after 9/11, it's actually quite amazing that we are seeing such strong room rates in 2006," said Hospitality Advisors President Joseph Toy. "However, as with the national travel market, the industry is showing signs of a moderate slowdown. Nonetheless, the immediate outlook for Hawai'i's hotel industry continues to remain strong going into the first quarter of 2007."

Occupancy dropped on every major island except for Maui, which grew 2.4 percentage points over the previous August. All islands enjoyed growth in average daily rates and revenue per available room.

All hotel categories from budget to luxury saw improvements in rates and revenue per available room, although only budget properties saw an increase in occupancy.

Business for Marriott properties in Hawai'i improved year-over-year, said Ed Hubennette, Marriott International Inc. vice president for Japan, Hawai'i and the South Pacific.

"Still doing fine. ... The usual thing, month after month," he said with a chuckle.

But Hubennette emphasized that the industry still needs to work hard to stay successful.

"We've still got to do the right things: We've still got to make sure we're out selling the larger conventions and meetings, which I think is a bit of a challenge in '07 and '08 for Honolulu," he said. "And we've got to make sure that we're focused on keeping the destination fresh because of the high amount of repeat customers that we have. We shouldn't be trying to rest on the work that's been done to date, because if we do, we're going to go backwards. So we've got to be really aggressive in relation to looking for business."

The survey, compiled by Smith Travel Research with Hospitality Advisors, included 142 properties representing 45,726 rooms, or 77.9 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.