A brighter future for Hawaii’s improving hotel industry will lead a statewide economic recovery.

However, most hoteliers still won’t see performance match the recent peak in 2007 until 2013, and it could be 2015 before performance outpaces costs.

That was the opinion of industry analysts who spoke yesterday at the 18th annual 2010 Visitor Industry Leaders Briefing, hosted by Hospitality Advisors LLC.

"We’re on the up slope," said Joseph Toy, Hospitality Advisors’ president and CEO. "But, we are recovering — we aren’t growing yet."

Total Hawaii visitor arrivals, which dropped significantly during the recession, have come back much stronger than predicted, said Carl Bonham, executive director of the University of Hawaii Economic Research Organization. The organization forecast in October that Hawaii visitor arrivals would grow by 6.7 percent this year, another 2.6 in 2011 and 1.9 in 2012, Bonham said.

"Those numbers are going to be too low," Bonham said. "Tourism is the only facet of the economy that’s growing."

The Hawaii Tourism Authority reported earlier this week that visitor arrivals were up 7.8 percent for the year through October.

Increased visitors have improved hotel occupancy and have circulated dollars throughout the economy, Bonham said.

"Tourism-related job creation also has offset job losses in construction, local government, education, finance and banking," he said.

By the end of the year, Toy expects statewide occupancy to rise to 71.1 percent, a 4.6 percentage point gain from the year-ago 66.5 percent. However, it will be 2012 before statewide occupancy surpasses 2007’s peak 75 percent, he said.

Hawaii hotel profitability has improved as revenue per available room (RevPAR), the best measure of hotel revenue, has posted gains. Still, even if this year’s RevPAR reaches the $122 forecast by Toy, it will be 4 percent higher than the $117.30 attained in 2009. Toy doesn’t expect RevPAR to surpass 2007’s peak $150.20 per night until 2013. That’s because Hawaii hoteliers have had to discount rooms to drive demand, said David Carey, president and chief executive officer of Outrigger Enterprises, who attended the briefing.

"I don’t see the profit picture turning around unless the numbers get back to the 2007 level as adjusted for inflation," Carey said. "We’ve still got a gap."

Toy expects hoteliers statewide will see their average daily rate (ADR) fall another 2.5 percent this year to $172 per night from the $176.46 achieved last year. By 2013, Hawaii’s ADR still will be 1.9 percent below the $201.85 it hit in 2008, Toy said.

"We’ve got a lot of ground to make up," he said.

Because hotel operating costs have been rising while revenues have been dropping, Hawaii hoteliers would need to see occupancy in the mid-80s and ADR at $217 to get back to where they were in real terms, said Jerry Gibson, area vice president for Hilton Hawaii.

"Sometimes the expenses that we have in business, especially labor, don’t offset the average," said Gibson, who is also general manager of the Hilton Hawaiian Village, which has been embroiled in a lengthy bargaining dispute with Unite Here! Local 5 workers whose contract expired in May.

While Hawaii tourism is rebounding, other sectors of the economy are probably feeling it more, he said.

"In other words, if you have a retail shop and you sell an extra widget, you can cover that with the same labor," Gibson said. "But, if we sell extra rooms, we need extra housekeepers, waiters and bartenders, and that comes with the heavy expense of labor and benefits."

Hilton has proposed wage increases for its union employees, he said. Last year the nonunionized Outrigger Enterprises Group increased wages in the low single digits, Carey said.

Union hotel workers have used improved arrival and occupancy numbers to seek wage increases during this bargaining cycle, but Carey said it’s hard to rationalize increases when profits as adjusted for inflation are still down about 20 percent.

"We are watching what happens with the union negotiations," he said, adding that Outrigger aims to offer competitive wages and benefits. "Labor is a big unknown."

That said, Hawaii hoteliers are faring better than those in other destinations, said Steve Hood, Smith Travel Research’s senior vice president for its Research and Educational Institute. Hawaii’s occupancy, ADR and RevPAR ranked second out of all 50 states and Washington, D.C., in October, Hood said. The state’s occupancy improvement in October also was the fourth best in the nation, he said.

Hawaii’s leisure demand dipped slightly and recovered quickly, and group demand is moving back up, Hood said. Hawaii’s hotel owners also have managed inventory better, he said. The surplus of rooms in some mainland markets has upset supply and demand, Hood said.

"Hawaii has done a great job closing hotels," he said.

Hawaii added four hotels and 1,144 rooms in 2009 and 2010, Hood said. Hoteliers closed eight properties and took 870 rooms off the market during the last three years, he said.

"There’s very little hotel construction in the pipeline," Hood said, adding that the only two hotels under construction in Hawaii are an 85-room Wyndham in Koloa, Kauai, and the 350-room Aulani, a Disney Resort & Spa at Ko Olina.