February hotel performance brought the winter season to a strong finish for Hawaii hoteliers, and industry leaders say the momentum is expected to continue into the year.
Hotels across the state set February records in total hotel revenue; average daily rate, or ADR; and revenue per available room, or RevPAR, according to a report slated for release today by STR Inc. and Hospitality Advisors LLC.
Statewide hotel occupancy rose to 83.6 percent in February, up slightly from the year before. Hotel guests paid a record $271.63 per night, a gain of nearly 4 percent from the same month in 2016. The slight occupancy increase combined with higher rates helped bolster RevPAR by just over
4 percent to a record $227.08. The gains helped hoteliers earn a record
$502 million in total hotel revenue, which includes room, food and beverage, retail, parking and other hospitality spending.
“We had a record year in 2016 with a lot of strength in the fourth quarter, which continues to provide momentum for the first part of this year,” said Joseph Toy, president and CEO of Hospitality Advisors LLC.
February was the top occupancy month of the winter, which included December and January. During the three months, Hawaii hotels generated $1.66 billion in total hotel revenue, up 10 percent from the same period in 2015/2016. Statewide winter season occupancy was just above flat at 81.2 percent, while the average daily rate was $287.67, a 7 percent year-over-year gain. Winter RevPAR rose 7.5 percent year-over-year to $233.69.
“Anecdotally, there’s some optimism for the second quarter,” Toy said.
He said the question now for every hotelier is, “How much runway is left on the past hotel expansion, which started in 2012?”
Toy sees neighbor island capacity and the reinvestment cycle, especially on Oahu, as opportunity for continued growth. It’s too soon to tell whether this hotel expansion could echo the upward trends of the mid- to late 1980s or the
10-year run that took place from 1998 to 2008, he said.
“But barring any shocks, it appears they’ll continue to be strengthening in the market,” Toy said.
A positive indicator was that visitors coming to Hawaii in February were seeking higher-quality experiences than in the past. Occupancy for the two bottom categories of Hawaii hotels, the upper-midscale and the economy class, dropped in February, while the luxury, upper-upscale and upscale classes posted increases. Upper-upscale hotels, the second-highest price class with an average nightly rate of $272.84, were the fullest Hawaii hotels in February at 89.7 percent occupied.
“The Four Seasons Ko Olina; the Ritz-Carlton Residences, Waikiki Beach; and other luxury properties are doing very well this year,” said Jack Richards, president and CEO of Pleasant Holidays LLC, Hawaii’s largest package wholesaler. “We’re definitely seeing more luxury spending in Hawaii this year. We’re skewing upscale, upper-upscale and luxury.”
Oahu was the only market to show reduced occupancy in February, as hoteliers scrambled to absorb an additional 1,500 hotel rooms. Oahu’s new hotel inventory includes the Four Seasons Ko Olina; Hilton Garden Inn Waikiki; Ritz-Carlton Residences, Waikiki Beach; Hyatt Centric Waikiki Beach; and Laylow Waikiki.
Oahu’s February occupancy dropped just over
1 percentage point to
85.5 percent. However, room rates increased just over
3 percent to a new monthly high of $230.70, and RevPAR rose above 2 percent to a new February high of $197.25.
Maui’s February occupancy stayed relatively flat at 79.6 percent; however, ADR climbed 6 percent to a February high of $382.27. RevPAR also set a new February record with a nearly
6 percent gain to $304.29.
Kauai’s February occupancy also was nearly flat at 82.8 percent. However, the isle set new monthly records for ADR, which grew just over 2 percent to $269.06, and RevPAR, which increased just over 3 percent to $222.78.
Hawaii island tends to lag the other markets; however, its February occupancy increased by more than 5 percent to 83.4 percent. ADR rose nearly 5 percent to $263.66. The gains in February occupancy and ADR pushed Hawaii island’s RevPar up nearly 12 percent to $219.89, which set a monthly record and was just behind March 2000’s all-time RevPar high of 85.3 percent.
“We’re having a great year. So far, it’s off to a great start,” said Craig Anderson, vice president of operations for Mauna Kea Resort. “We saw double-digit percentage improvement in February and January, and we hear that the whole Kohala Coast is performing really well.”
Anderson said additional airline lift into Hawaii island, including Hawaiian Airlines’ direct flight between Haneda, Japan, and Kona, have paid off. Renewed interest in the volcano and massive hotel reinvestment, including an $18 million renovation at the Mauna Kea Resort, also are sparking interest, he said.
“It looks consistent into summer,” Anderson said. “The rising tide lifts all the boats, and we’re just happy to be in the water.”