Hawaii hotel occupancy decline signals continued slowdown

About 30% of Hawaii’s hotel rooms were unoccupied in November — giving credence to the slowdown Hawaii’s hoteliers begin anticipating from late summer.

Hotel occupancy statewide in November was 70.5 %, down 8.6 percentage points from November 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.

November occupancy was 10.8 percentage points above November 2021, when hotel occupancy was 59.7%, but that was before Hawaii had removed its COVID-19 entry requirements.

Travelers were still willing to pay much higher rates for hotel rooms across the state in November, when the average daily rate exceeded $345, more than 32% higher than November 2019. However, even with this year’s rampant inflation, the November average daily rate was only 3.6% higher than in November 2021.

The still-strong average daily rate helped revenue per available room, or RevPAR, increase to more than $243, up nearly 18% from November 2019, and up more than 22% from November 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.

A key question now is how long can Hawaii hotels hold on to strong average daily rates given all the discounting and value-added offers that have come into the market to try to counter major softness in Hawaii’s festive season and first quarter.

The state’s visitor industry also has begun efforts to attract more kamaaina. On Wednesday, the Hawaii Visitors and Convention Bureau announced a program geared to making offers to Hawaii residents. HVCB is giving its members the chance to post first-quarter offers, Jan. 2 to March 31, on kamaainaspecialoffers.com.

Activities and attractions as well as lodging are on sale to locals across the islands.

Hotel performance varied across the counties in November. Occupancy was down compared to November 2019 on every island except Kauai, which increased by a mere two-tenths of a percentage point. Average daily rates during the same period were up across all the counties. November RevPAR was above November 2019’s RevPAR on every county expect Oahu, where it dipped a scant 0.5%

Compared to last year, all counties fared better in November. Average daily rates and RevPar last month were better in every county than they were in November 2021. Most counties saw an increase in November occupancy as compared to November 2021 except for Maui, where occupancy dipped a scant 0.3 percentage point.

November’s results contributed to a 17.8 percentage-point decline in statewide hotel occupancy during the first 11 months of the year when compared to the first 11 months of 2019. During this period, statewide ADR rose more than 14% to nearly $365 and RevPAR rose nearly 51% to more than $269. Over the year, ADR and RevPAR gains have moderated across the state.

Keith Vieira, principal of KV &Associates, Hospitality Consulting, said signs of the slowdown already had begun to emerge last summer as bookings decelerated for the fall and for the festive season.

Vieira said Hawaii’s festive season, which runs from Dec. 23 to Jan. 3, is an indicator of a market’s strength and this one “is shaping up to one of the most difficult Decembers.”

Vieira said the lackluster festive season is likely to hurt momentum going into the first quarter, which could set the tone for a worse 2023 than expected.

“History tells us that whenever we have had a bad first quarter, it was a difficult year,” he said.

Kekoa McClellan, the Hawaii spokesperson for the American Hotel &Lodging Association, said many hoteliers are still struggling from 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 the looming U.S. recession, soaring inflation, and a pullback in marketing due to the uncertainty over the U.S. tourism contract award, McClellan said.