After one of its best first quarters ever, Hawaii’s hot hotel industry cooled off some in the second quarter, allowing New York to reclaim the distinction of having the nation’s costliest nightly hotel rate.

Among the top five U.S. hotel markets at midyear, Hawaii ranked second in average daily rate (ADR) and revenue per available room (revPAR) behind New York and fourth in occupancy after New York City, Miami-Hialeah and San Francisco/San Mateo, according to a report released today by Hospitality Advisors LLC and STR.

"New York typically leads the U.S. because it’s a business center and a gateway tourism city," said Joseph Toy, president and CEO of Hospitality Advisors. "Overall, Hawaii still has a strong market. It’s just a little more moderated, but we expected that, based on the pent-up demand that drove the market in the first quarter."

Most of the softening occurred on the neighbor islands, said David Carey, president and CEO of Outrigger Enterprises.

"The great strength has been Oahu," Carey said. "The neighbor islands are doing OK, but the Big Island’s performance has been disappointing."

Based on the most recent market indicators, Toy still expects it will be 2014 before the gap between the top-performing Oahu market and Hawaii island closes.

In the meantime, Hawaii’s hotel industry attained statewide monthly and midyear records for hotel room revenues, average daily rate and revenue per available room. According to the latest hotel flash report, statewide room revenue in June increased 9.4 percent year-over-year to $290 million, a June record. Likewise, monthly room rates increased about 11.5 percent to $225.34, and revPAR rose about 10.2 percent to $169.91. However, June occupancy declined 0.9 percentage points to 75.4 percent.

"We were surprised by the softness in some areas of the market, and we’ve seen some shortening of booking windows, which tends to proceed market weakening," Toy said. "But if you look at where the hotel industry is now compared to three years ago, it’s hard to imagine how far we have come. We’ve had an unprecedented rise in revenues not just for hotels, but for the overall visitor industry."

During the first six months of the year, statewide hotel room revenue rose 11.9 percent to $1.8 billion, a new midyear record. Year to date, statewide ADR increased about 11.4 percent to $225.49, and revPAR climbed nearly 12.4 percent to $175.21, while occupancy improved slightly to a very respectable 77.7 percent.

Although the rate increases look robust, Carey said they’ve mostly just returned Oahu and maybe Maui hotels to an inflationary trend line.

"While the industry in Hawaii is encouraged by continued strong demand, expenses continue to rise at a much faster pace than revenue, posing us with unprecedented planning and operational challenges," said Peter Shaindlin, chief operating officer for the Halekulani Corp. "We need to remember that the economy is still on a long, slow recovery."

Shaindlin also is concerned about how Hawaii will continue to fare at a time when global competition is unprecedented and "airfares into Hawaii remain significant, largely due to oil still hovering in the $100-per-barrel range."

Still, Carey said the fact that occupancies are keeping pace with rate increases shows that customers still see value in Hawaii’s hotel products.

"Visitors finally are recognizing that Hawaii has a very high-quality hotel inventory," Carey said. "We don’t have a lot of budget product here."

Continued increases in air seats and direct flights combined with limited hotel room capacity also have increased the number of higher-paying visitors who are coming to Hawaii, said Keith Vieira, senior vice president of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia.

"We started off with a very strong first quarter, and it continues to be a strong year. Summer looks good, so hopefully that momentum will carry us through the rest of the year, " Vieira said.