Statewide hotel occupancy in June decreased for the first time in 18 months amid U.S. debt concerns, global economic uncertainty, dropping consumer sentiment and continued fallout from natural disasters.
While statewide occupancy fell by 0.7 percentage points to 70.7 percent in June, the hotel industry’s average daily rate (ADR) rose for the eighth straight month to $185.46, which represented a 9 percent increase, according to hotel flash report released today by Hospitality Advisors LLC and Smith Travel Research. Statewide revenue per available room (revPAR), considered by many to be the best measure of hotel health, increased 7.9 percent to $131.12, the report indicated.
The June hotel numbers reflect the pattern seen in visitor arrivals. The number of visitors to Hawaii in June fell 2.9 percent, but their spending rose 13.1 percent.
The slight occupancy decline was not enough to offset improvements in hotel performance during the first half of the year. Still, it’s something to watch as summer moves into fall, said Joe Toy, Hospitality Advisors’ president and chief executive.
“Our outlook is more cautious given economic numbers that weren’t as strong and robust going into the summer,” Toy said. “We’re doing better in terms of ADR and revPAR, but occupancy demand has been off, especially on the neighbor islands. Until everyone is in full gear, the state’s hotel performance will reflect it. Preliminary July occupancy numbers are off, too.”
Hoteliers across the state, while mostly still bullish, have said that they are monitoring fall for signs of softening.
“I’m cautiously optimistic,” said Jerry Westenhaver, general manager of the Hyatt Regency Waikiki Beach Resort & Spa. “Right now, summer was healthy and fall is encouraging for us; however, going forward, it’s going to depend on what we see in the U.S. and markets across the world.”
Shallower peaks can signal a downturn, which in turn would lead to deeper valleys during slower periods, like the upcoming fall shoulder season, Toy said.
“Everybody is looking to see if our fall shoulder will be steeper than we had hoped,” Toy said. “The timing of APEC (the Asia Pacific Economic Cooperation), which is a really major event, couldn’t be better. Hopefully after APEC there’ll be more momentum and confidence, but right now the outlook is fairly uncertain.”
Uncertainty is the bane of the industry, said Keith Vieira, senior vice president and director of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia. It leads to fear, which ultimately will equal fewer bookings, Vieira said.
“When people know things are good, they will book,” Vieira said. “When they know things are bad, they will decide what to do. But, when things are uncertain they decide to wait, and that affects us all.”
While news in Hawaii’s hotel sector was mostly good during the first six months of the year, the negative affects of uncertainty already may be creeping into the results, Toy said.
Hawaii’s lodging industry reported more hotel rooms were filled during the first half of the year than last year, he said. However, the rate of occupancy growth for Hawaii hotels slowed during the first quarter of 2011, and the trend continued into the second quarter of 2011 following the earthquake and tsunami that struck Japan on March 11 and subsequent radiation concerns, Toy said.
The deadly tornado that struck Joplin, Mo., in May and the nation’s debt issues also marred consumer confidence, Toy said.
While statewide occupancy experienced a 6.3-percentage-point gain during the first three months of 2011, the increase narrowed to just 1.3 percentage points during the second quarter, he said.
“2011 has shaped up to be a very tumultuous year. We couldn’t catch a breath,” Toy said. “All of these events (Japanese tsunami and the nation’s debt issues curtailing consumer confidence) coming together at the same time gave everyone a bit of pause.”
Still, the first six months of the year were good for most Hawaii hoteliers, he said. They reported statewide occupancy increased 3.8 percentage points to 72.8 percent, and ADR increased by 9.1 percent to $187.84, he said. Driven by improved hotel room prices, the midyear RevPAR increased by 15.1 percent to $136.75, Toy said.
