Hawaii hoteliers ended 2022 with two of the worst occupancy months of the year, and some have started cutting employee hours with the expectation that the softness will continue.

About 29% of Hawaii’s hotel rooms were unoccupied in December, giving credence to the slowdown Hawaii’s hoteliers began anticipating from late summer.

December hotel occupancy was 71.3%, down 9 percentage points from December 2019, according to the Hawaii Hotel Performance Report published by the Hawaii Tourism Authority, using data from STR, a global hospitality data and analytics company.

Statewide occupancy in December was only ahead of November occupancy at 70.4% and January occupancy at 65.1%. Generally, the festive season, which runs from Dec. 23 to Jan. 3, helps strengthen December occupancy. Many years, Hawaii hotels are sold out during this period. But not this year.

The end-of-the-year occupancy was so soft that December occupancy was 1 percentage point below December 2021, when hotel occupancy was 72.3% and Hawaii still had not removed its COVID-19 entry requirements.

Jerry Gibson, president of the Hawaii Hotel Alliance, said the hotel business was soft from September through the festive season and that the booking pace for Hawaii’s hotels in the first quarter is off about 7% to 10%.

Gibson said Hawaii’s hotel industry is still grappling with sluggish international arrivals as well as group and association business, which dropped dramatically during the earlier part of the pandemic. Those problems have been exacerbated by concerns about a looming U.S. recession, he said.

“The U.S. was coming in last year, but I think people are just thinking about their pocketbooks right now,” Gibson said.

Discounting and value-­added offers came into the market to counter major softness in Hawaii’s festive season and first quarter, but Pleasant Holidays President and CEO Jack Richards said most were too little, too late. Richards expressed concern that hotel prices are high again as Hawaii heads into the first quarter.

He said Pleasant Holidays got a lot of pricing pushback in December, especially for Maui, where airfares and hotel prices were high.

HTA reported that Maui had the lowest December occupancy at 63.7%, a 4-­percentage-point drop from 2021 and a 12.8-­ percentage-point drop from 2019. The average daily rate on Maui in December was the highest in the state at $734 a night, down 1% from 2021 and up 35.6% from 2019.

“We are hearing a lot of travelers tell us that Hawaii is too expensive,” Richards said. “They are going to alternative destinations like Mexico, the Caribbean, Europe and even Tahiti, which used to be considered too expensive but not anymore compared to Hawaii’s price structure, especially on Maui.”

Leisure and hospitality jobs fell by 4,800, or nearly 4%, between November and December, a drop that made them the biggest job loser among the categories of nonagricultural jobs, according to data released Monday by the state Department of Business, Economic Development and Tourism.

According to DBEDT, a large majority of the contraction in leisure and hospitality was from food services and drinking places, which had achieved strong expansion throughout most of the year.

State economist Eugene Tian said he thinks the job count in the hospitality sector is likely a technical issue rather than economical, and may be due to a smaller sample size or a November estimate that was too high.

“I believe the job decrease in December 2022 was not reflecting the realities of the industry performance,” Tian said. “From the tax collection data and the daily passenger count, we knew the performance of tourism industry was great in December.”

To be sure, travelers were still willing to pay high rates for hotel rooms across the state in December, when the average daily rate exceeded $440, nearly 25% higher than December 2019. However, even with this year’s rampant inflation, the December average daily rate was only 4.3% higher than in December 2021.

The still-strong average daily rate helped revenue per available room, or RevPAR, increase to nearly $314, up nearly 11% from December 2019 and up nearly 3% from December 2021. RevPAR is considered by many in the hotel industry as the key performance measure as it is the rate that a room rents for regardless of occupancy status.

Statewide hotel revenue in December rose to nearly $538 million, which was up 10.8% from December 2019 and up 2.2% from December 2021.

Gibson said he has not heard of any layoffs at Hawaii hotels, but said that at some properties lower occupancy may have resulted in fewer hours for hotel employees.

Some junior employees at the Hilton Hawaiian Village, the largest single-resort property in the state, report that their hours have been cut.

“If the business is down, it makes sense that there would be fewer hours,” Gibson said. “That’s why it is so important for us to keep the tourism business going. Obviously, we want to make sure people have as many hours as they can. It’s pretty expensive to live here in Hawaii.”