Hawaii hotels continued improving in July with year-over-year gains in occupancy, average daily rate, revenue per available room and revenue.

Statewide occupancy in July grew to 85.2%, up 1 percentage point from July 2018, according to the Hawaii Hotel Performance Report, published by the Hawaii Tourism Authority. Meanwhile the average daily rate (ADR) grew nearly 4% to $305, and revenue per available room (RevPAR) increased more than 5% to $260. During the same period, hotel revenues grew by nearly 4% to almost $435 million.

Keith Vieira, principal of KV and Associates Hospitality Consulting, said it was good to see year-over-year improvement in July; however, the gains are coming on top of “what was a really lousy last summer.”

“It’s good things are improving, but we’ve still got issues with demand,” Vieira said.

To be sure, July results were mixed across the islands, with Hawaii island and Maui reporting strong year-over-year increases. Oahu hotels posted flat occupancy and small gains in RevPAR and ADR. However, Kauai experienced drops across all categories.

Sue Kanoho, Kauai Visitors Bureau executive director, said going into 2019 she expected results would be similar to 2017 since 2018’s robust growth was due to the anomaly of visitors shifting from Puerto Rico and Florida and other places affected by storms and from Hawaii island, where there were concerns about heightened volcanic activity. Extra marketing this year designed to bolster Hawaii island’s recovery also may be causing potential Kauai visitors to shift, Kanoho said.

“We had nearly 1.38 million arrivals last year — that’s a record in the history of tourism on Kauai,” she said. “The highest number we had prior to that was 1.29 million in 2007 before the recession.”

Despite July’s strong gains, Hawaii hotel performance year-to-date is still somewhat lackluster. Part of the reason is that gains in June and July were partially due to the severe weakening that some hotels, especially on Hawaii island, began experiencing in May 2018 following heightened eruptions at Kilauea Volcano.

Statewide occupancy during the first seven months of the year dropped more than 1 percentage point to 81.3%, and RevPAR was flat at nearly $231. However, ADR through July was up more than 1% to $284.

A more telling assessment of the market is that demand was still falling faster than supply during the first seven months of the year. According to the hotel report, demand dropped more than 3% through July, while supply fell nearly 2%.

Lower hotel supply creates competition for the remaining rooms. However, when demand drops faster than supply, it’s an indication that the market, or at least pockets of it, may be weakening. Year to date, hotel revenue has dropped nearly 2% to just over $2.6 billion.

Still, there are signs that the market is too diverse to call.

Jack Richards, president and CEO of Pleasant Holidays, said the company has seen a “pretty healthy uptick since August.”

“The first half of the year was very difficult, but the second appears to be much better,” Richards said. “For 2020, ADR is tracking up 10% compared to same time last year, however, we do not believe this is sustainable and way too early to call.”

So far this year, Richards said, the hotel ADR that Pleasant Holidays customers have paid is up 4% from 2018 — the results are based on an 11% gain for Hawaii island, a 7% rise for Maui and an increase of 6% for Kauai. However, Oahu ADR dropped 1%, he said.

“Oahu’s decline could be a hangover from the hotel labor strike that started in October and ran through the end of November,” he said.