Strong performance milestones that Hawaii’s hotel market hit through the first 10 months of this year are expected to carry over into 2016, according to an industry expert.
”I’m expecting momentum and consumer interest will build into next year as new inventory — like the Ritz-Carlton residences, the Hilton Garden Inn and the Four Seasons — gets delivered,” said Joe Toy, president and CEO of hotel consultancy Hospitality Advisors LLC. “We saw that happen in 2003 and 2004 after Waikiki underwent a major repositioning.”
Hawaii hotels reached an October record for total revenue as they brought in $415 million, according to data set for release today by Hospitality Advisors. Total hotel revenue includes expenditures like food and beverage, retail, parking and activities.
Statewide occupancy climbed to 78.4 percent, a gain of 1. 7 percentage points from October 2014. The average daily rate, or ADR, rose 2.2 percent year-over-year to an October high of $222.01. Revenue per available room, or RevPAR, a key measure of profitability, rose 4.4 percent year-over-year to $174.06, which also was an October record.
Heading into 2016, Toy said Hawaii will need to watch out for shorter booking windows, which signify weakening demand. Still, he’s confident that 2016 will be a better year than this one.
Hawaii ranked fifth among the top 25 U.S. markets in occupancy through September, according to the most recent data available. Only San Francisco/San Mateo, Calif.; New York; Los Angeles-Long Beach and Anaheim-Santa-Ana, Calif., were ahead of the isles. New York led all markets in ADR and RevPAR, while Hawaii ranked second.
The results also put Hawaii in second place for the best ADR and occupancy among competitive destinations abroad, including Singapore, New Zealand, Thailand, Australia, the Caribbean, Mexico, South Korea and China. Oahu’s occupancy topped Toy’s list of competitive sun and island destinations, while Maui came in third, Kauai fifth and Hawaii island sixth. The list also included Puerto Rico; Phuket, Thailand; Aruba; Costa Rica; the Maldives; and French Polynesia. Maui had the fourth-best ADR among competitive sun and island destinations, while Kauai came in fifth, Hawaii island sixth and Oahu seventh.
“Our market continues to be at the top of both our U.S. hotel market and other global sun and island destinations,” Toy said.
While Toy expects growth to continue moderating, he anticipates that statewide occupancy will rise another 0.9 percentage point to 79.3 percent in 2016. Toy expects occupancy growth on Oahu to remain flat in 2016 and anticipates moderate growth for Maui, Kauai and Hawaii island.
Statewide ADR in 2016 is expected to grow 3.3 percent to $253 with gains projected across all major islands.
“Maui will continue to benefit from Oahu overflow demand and from continued nonstop flights from North America,” he said.
Jerry Gibson, area vice president for Hilton Hawaii, said the state is benefiting from the success of hotels. Through October, Gibson said, visitor spending reached $12.5 billion and contributed $1.33 billion in state tax revenue. Hotels played a big role in those results.
“It’s part of our job to make sure the tourism industry helps the economy here in Hawaii, and we are definitely doing our share,” Gibson said.
Barry Wallace, executive vice president for hospitality services for Outrigger Enterprises, said results are good and would be even better if the state ensured that online vacation rentals and bed-and-breakfasts paid their fair share.
“Online vacation rentals and bed-and-breakfasts are growing,” Wallace said. “We aren’t opposed to giving visitors choices, but there should be a level playing field. Some of these properties aren’t paying taxes or are only getting taxed intermittently. They are undercutting traditional hotels, and the state is missing out on a huge revenue opportunity.”