Foreigners had hotels humming in August

Hawaii hotels benefited from increased occupancy and average daily rates in August as stronger international arrivals helped offset dwindling visitor counts from the mainland.

Statewide occupancy in August rose to 77.5 percent, a 1.8 percentage-point increase over August 2010, according to a report released today by Hospitality Advisors LLC in conjunction with Smith Travel Research. At the same time, Hawaii’s statewide average daily room rate increased by 7.4 percent to $195.28, and revenue per available room, considered by many to be the best measure of hotel performance, increased by nearly 10 percent to $137.62.

The hotel results closely followed August arrivals and spending data. The Hawaii Tourism Authority reported earlier that August visitor arrivals fell 4.2 percent as visitor counts from Hawaii’s top U.S. West and U.S. East markets dropped for the third month in a row. However, total visitor spending increased 2.3 percent as visitors from higher-spending international markets took advantage of favorable exchange rates.

A strong increase in visitor days for international markets outside of Japan and a higher mix of visitors choosing hotels over time shares, independent vacation rentals or staying with friends and family were among the factors that boosted occupancy amid falling arrivals from the U.S. mainland and Japan, said Joe Toy, president and chief executive of Hospitality Advisors. Increased air service from Japan and Korea and the start of nonstop service between Shanghai and Honolulu bolstered Oahu’s occupancy to 87 percent, the highest occupancy among islands for August, Toy said.

There was a 37 percentage-point difference between Oahu’s occupancy rate and Hawaii island’s 59.5 percent rate. That suggests a statewide recovery is still a couple of years out, Toy said.

"The occupancy difference shows that we are still a long way from market recovery," Toy said. "Until the gap between the highest and lowest market closes, recovery is a couple of years away."

An 8.5 percent increase in the average daily room rate to $193.09 during the summer helped push total summer hotel room revenue to $751 million, a 7.5 percent improvement over last year.

Strong results for Maui and Oahu helped hoteliers keep September a little bit ahead of last year; however, October results are coming in slower, and booking windows are shortening, Toy said.

"August was good for us but September fell a bit," said Keith Vieira, senior vice president and director of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia.

While concerns about the economy and oil prices have flattened the U.S. market, Vieira said Starwood has seen pickup from emerging international markets like Korea and China and even Australia.

"We were up in rate and occupancy for the entire summer," Vieira said. "We continue to be OK, but there’s no question that economic uncertainty will hang a cautious cloud over the market. Overall, I think that this will be a better year than the last because the first half of 2010 was pretty bad."

Jerry Gibson, area vice president for Hilton Hawaii, said the chain’s October visitors are favoring shorter lengths of stay, but thanks to "favorable currencies and airlift," the month is shaping up better than the same period last year.

"I have no complaints whatsoever," Gibson said.

Toy said he expects bookings for before and after the Asia Pacific Economic Cooperation summit coming here Nov. 7-13 will fill hotel rooms on Oahu and send some overflow business to the neighbor islands.

Statewide occupancy probably will end the year slightly higher than last, Toy said.

"We’ve seen room demand soften over the past six months, and we’ll continue to see that, so occupancy probably won’t end up much ahead," he said. "However, in terms of rate we’ll be up much more."