Summer isn’t coming in hot for Hawaii hoteliers, who saw hotel occupancy drop to its lowest level of the year in May and are expecting a continued slowdown.
Statewide hotel occupancy for Hawaii in May dropped to 71.2%, a 1.3% loss from May 2023, according to a report from STR, a company that supplies data and analytics to the hospitality industry worldwide.
The average daily rate paid for a Hawaii hotel room in May fell 1% year over year to $342, according to STR. Revenue per available room, or RevPAR, considered one of the better measures of performance because it measures the revenue generated by each available room at a hotel, decreased 2.3% year over year to $243.
Lynette Eastman, general manager of the Surfjack Hotel &Swim Club in Waikiki, said, “It’s ugly out there. We may get last-minute pickup for the summer, but will it be enough to be as good as last year or the year before? I doubt it. It’s going to fall a little short.”
The statewide decline in May was mainly because of Maui’s hotel performance, which has lagged in the wake of the Aug. 8 wildfires, which killed at least 101 people and at one point caused some 7,200 Maui fire survivors to turn to Maui hotels for shelter.
Jerry Gibson, president of the Hawai‘i Hotel Alliance, said, “Maui is continuing to pull down state results.”
STR reported that Maui’s occupancy in May decreased 7.1% year over year to 58.3%. Gibson said the results were likely due to fire survivors and disaster workers moving out. He estimates that fewer than 1,000 fire survivors and hotel team members are now
sheltering in Kaanapali.
The average daily rate paid for a Maui hotel room in May fell to $517, a 4.2% decline from May 2023, while RevPAR during the same period decreased 10.9% to nearly $302. Worse yet, Maui hoteliers report that operating costs are rising due to the shift from survivors and disaster workers to leisure travelers, who require a full range of services at a time when occupancy has declined.
Gibson said Maui fared the worst of the islands, which experienced mixed results. While the islands experienced an aggregate RevPAR drop of 2.3%, he noted that Oahu’s RevPAR went up 3.7% to more than $213 — a sign of a fair month.
STR reported that Oahu’s May occupancy rose a scant 0.3% year over year to 78.4%, while ADR increased 3.4% to nearly $272.
“We started to pick up a little bit in May on Oahu,” Gibson said, “and there was some fairly good group business.”
Still, Eastman said Oahu’s overall hotel performance is not meeting expectations, and hotel deals abound even headed into summer.
“If you look at the (hotel room) rate on Oahu, you’ll see they are relatively high but not like they used to be,” Eastman said.
Gibson said May results were mixed on Hawaii island and Kauai. STR reported that Hawaii island’s May occupancy increased to 63.7%, a 2.1% increase from May 2023. Hawaii island’s May ADR fell 3% to $362; RevPAR dropped 1% year over year to nearly $231.
Occupancy on Kauai in May fell 4% year over year to 70.9%, ADR rose 6% to more than $412 and RevPAR increased 1.8% to nearly $293, according to STR.
While continued challenges on Maui have affected Hawaii hotels, earlier this month STR and Tourism Economics, an Oxford Economics company, made significant downward revisions to their U.S. hotel forecast.
Amanda Hite, STR president, said in a statement, “Travel remains a priority for most Americans, but the volume has lessened as prices on goods and services continue to rise.”
Jack Richards, president and CEO of Pleasant Holidays, said costs have played a role in Hawaii’s travel downturn, which he said has caused Pleasant Holidays’ Hawaii bookings to fall 24% for the year. Bookings to Maui are off 50%, he said.
“Travel advisers tell us that price comes up. The other is that visitors don’t feel comfortable coming into an area that has been beset by tragedy,” Richards said. “They also don’t know their geography. They don’t say there were fires in Maui; they say there were fires in Hawaii.”
Richards said new messaging from the Hawai‘i Tourism Authority and the Hawai‘i Visitors and Convention Bureau moved the dial some but is more likely to affect 2025’s results.
“By the time the messaging got out, by the time some of the crisis started to moderate, people had already bought their vacations for 2024, particularly for the summer,” he said. “People are going to Asia and Europe in record numbers. Mexico was down but has been getting better
over the last two to three months, and the Caribbean is on par with 2023, which was a record year.”
Richards said Pleasant Holidays has been aggressively marketing Hawaii for summer, but returns have been mediocre.
“I was on with a large travel agency customer today, and they said, ‘I think you should redirect your money to somewhere else because it is just not resonating with travelers,’” he said.
Gibson and Vieira, however, said they believe more marketing is needed now.
Gibson said, “The awareness needs to continue on all islands — some of it is driven by the hotels, a lot of it is driven by HVCB. We can’t let up. We need to be maniacal about the market.”
Vieira said, “Hawaii has had an incredible history of rebounding after airline strikes, after 9/11, after hurricanes, but that’s because we immediately got a message out that, ‘Hey it looks great. You are welcome. Please come.’”
Hawaii began struggling with its welcome messaging when visitor arrivals topped 10 million in 2019, inspiring anti-tourism pushback even before the pandemic. Conflicting sentiments during the pandemic and then after the Maui wildfires exacerbated the situation and played a role in dampening tourism marketing.
“As a result, we are going to have a tougher time to bring back more workers and drive tax revenue,” Vieira said. “But you can understand why the situation is the way it is. We just need leaders to be brave and go out and market and drive business.”
