The fall chill is expected to extend into the beginning of 2025 for Hawaii hoteliers, who saw lower hotel performance measures in September than in the prior year when the Maui wildfires had just begun to wreck havoc in the market.

Statewide hotel occupancy for Hawaii in September dropped to 68.9%, a 6.3-percentage-point change from September 2023, according to the Hawai‘i Hotel Performance Report, compiled by the state Department of Business, Economic Development and Tourism using data from STR, a company that supplies data and analytics to the hospitality industry worldwide.

STR data shows that it was the worst monthly statewide occupancy since January 2022, the last time that statewide occupancy dipped below 70%. It was also the worst year-over-year drop in that same period.

The average daily rate paid for a Hawaii hotel room in September fell 8.2% year over year to nearly $316, according to DBEDT. Revenue per available room, considered one of the better measures of performance because it measures the revenue generated by each available room at a hotel, decreased 15.9% year over year to nearly $218.

September’s hotel results contributed to a year-to-date downturn. In the first nine months of this year, occupancy at Hawaii hotels fell 0.6 percentage point to 74.4%, ADR dropped 3.3% to almost $365 and RevPAR declined 4.1% to just over $271.

Lynette Eastman, general manager of the Surfjack Hotel & Swim Club in Waikiki, said, “Fall is always soft, but it’s softer than in 2023 and 2022, which isn’t a good thing. I don’t have any confidence, so I’ve dropped nightly rates, which typically range from $200 to $300 a night, by $20 to $40 on average for the next six months.”

Eastman said official military travelers, who tend to stay longer but pay lower rates, saved Surfjack’s fall occupancy and created momentum going into December. However, she said January and February, which are usually top months for hoteliers because of New Year’s and Valentine’s Day traffic, “are terrible, and that’s a concern because I always say, ‘As goes the first quarter goes the year.’”

Eastman said she does not see a noteworthy occupancy pickup until March, April and May, which are normally softer shoulder-­season months. She said the shift indicates that “people are traveling, but they are price-sensitive so they are traveling when the rates are lower.”

Ongoing slowdown

Chris Kam, president and COO of Omnitrak Group Inc., said there’s been an ongoing slowdown nationally in general travel demand from U.S. travelers, who make up the highest volume of visitors to Hawaii.

“We had the pent-up travel demand from the pandemic and then just a slowing toward the end of 2023,” Kam said. “We had a little surge in the first quarter nationally, and then it tapered off after that closer to prior-year levels. I think there’s probably a certain amount of market uncertainty associated with the elections. People are maybe just holding their breath for another week. There’s a lot of noise, and we just don’t have their attention right now.”

Kam said price sensitivity among travelers from the U.S. has moderated, according to the U.S. Travel Association’s Travel Price Index. However, that’s not the whole story.

“On the one hand, prices don’t seem to be the barrier to travel that they were,” he said. “On the other hand, when you look at survey research, people are still saying that their top reason for not traveling is travel prices. I guess what happened is that prices went up in the high-inflation environment. Then they stabilized but they haven’t gone down. So from that perspective, then yeah, the pricing would be deterring travel.”

Kam said the key is for Hawaii to focus on “the higher end of the market, the affluent people who are the avid travelers that will travel even though the overall market place is experiencing a downturn. These are the people who also are more resilient to the higher prices.”

Hotel performance results were mixed across the state, although September occupancy, ADR and RevPAR showed year-over-year declines on every island.

Keith Vieira, principal of KV & Associates, Hospitality Consulting, said Maui’s hotel performance continues to lag the rest of the state.

West Maui closed for tourism in the wake of the Aug. 8, 2023, wildfires, which killed at least 102 people and at one point caused upward of 7,200 Maui fire survivors to turn to Maui hotels for shelter. While the disaster was not great for hotel revenue or staffing, it filled rooms.

“One of the things that helped Maui bear what it went through were the Red Cross rooms, the rooms for employees and the rooms for the Army Corps of Engineers and the builders,” Vieira said. “There were significant numbers of room nights just this year from Jan. 1 to June 10, when most residents left the hotels, and by the end of this year, that’s gone. In addition to starting from ground zero, Maui hotels will have to make up 260,000 room nights.”

Maui’s hotel occupancy fell 9.2 percentage points in September to 52.6%, while the average daily rate paid for a Maui hotel room in September fell to more than $453, a 15.6% decline from September 2023. RevPAR during the same period decreased 28.2% to nearly $239. 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.

Hawaii island’s September hotel occupancy declined to 62%, a 4.2-percentage-point drop. The island’s ADR fell 5% to more than $348, and RevPAR dropped 11.1% to nearly $216.

Occupancy in September on Kauai fell 7.3 percentage points to 72.6%, while ADR dropped 0.1% to just over $394 and RevPAR declined 9.3% to more than $286.

September occupancy on Oahu, which has the most hotel room supply of any island in the state, fell 5.4 percentage points to 76.9%. ADR dropped 4.2% to $258, while RevPAR fell 10.5% to more than $198.

Oahu’s results may have been affected by an ongoing strike of 1,800 UNITE HERE Local 5 union members that began Sept. 24 at the Hilton Hawaiian Village Waikiki Beach Resort, the largest single-property resort in the state and one of Waikiki’s flagship oceanfront resorts.

Vieira said hotels have been trying to come back from the mixed messaging that made some visitors feel unwelcome following the Maui wildfires, but that’s been challenging given the drop in state-driven marketing spending and now the strike on Oahu.

“The strike sends the wrong message to visitors at a time when we are trying to welcome visitors back to Hawaii,” he said.

Local 5 is urging visitors and members of the community not to eat, meet, sleep or work at any hotel where workers are striking.

The Hawaii Medical Service Association, which was supposed to have an annual all-employee meeting Wednesday for about 1,400 at the Hilton Hawaiian Village, is just one of the groups that has recently relocated business.

Vieira said, “Hawaii is mostly a leisure destination. People don’t have to come here.”