Hotel occupancy increases

September’s room revenue beats last year’s level but falls well short of 2006’s

Waikiki hotels enjoyed a surge in business last month, with Oahu occupancy rates up 7.5 percentage points over last year. Rates were up on all islands, contributing to statewide hotel occupancy of 70.8 percent in September.

Hawaii’s hotels were fuller and generated more revenue in September compared with the same month a year earlier, but the revenue levels were still well below those reached during the tourism boom in 2006, according to an industry report released today.

Statewide hotel occupancy rose to 70.8 percent in September from 63.6 percent in September 2009, led by big increases at properties on Maui and Oahu, according to the report from Hospitality Advisors LLC and Smith Travel Research. Revenue per available room, a key measure of industry profitability, rose to $113.20 from $102.02 during the same period.

Through the first nine months of the year, room revenue totaled $1.9 billion, a 7.4 percent increase over the same period in 2009. Compared with 2006, however, revenue was down by about 20 percent, said Joseph Toy, president and chief executive officer of Hospitality Advisors.

Hotel owners are still having to offer discounted rates to generate the demand needed to fill rooms, he added. The average daily room rate was $159.88 in September compared with $160.41 a year earlier.

“Although we’re seeing demand build back into the market, pricing hasn’t recovered,” Toy said. “There is still a lot of excess capacity, especially on the Big Island and Kauai, which continue to lag.”

Occupancy was highest on Oahu, where hotels were 81.7 percent full, up from 74.2 percent 12 months earlier. The biggest increase in occupancy was on Maui, where the rate rose to 63.7 percent, 10.4 percentage points higher than September 2009.

Hotels on Kauai saw their average occupancy rate rise to 58.7 percent in September from 55 percent a year earlier. The Big Island trailed with occupancy rising to 52.1 percent from 49.6 percent.

Ken Fujiyama, whose family business owns the Naniloa Volcanoes Resort in Hilo and the Volcano House hotel in Hawai’i Volcanoes National Park, said although business did pick up during September, it slipped again in October. That followed a “strange few weeks” in July when occupancy at the Naniloa surged to 90 percent, he added.

Volatility in the hotel occupancy rate has always been a problem for Hilo properties because of the lack of exposure the area receives, Fujiyama said.

“Hilo has always been that way. It’s not a primary visitor destination. It’s never been marketed as a destination spot even though 90 percent of the island’s attractions are on the east (Hilo) side,” he said.

Although Hawai’i Volcanoes National Park is just a 45-minute drive from Hilo, it is often tied to tour packages that originate at the resorts on the western side of the island, he said.

Fujiyama said he was optimistic that his business would improve in the coming year as the economic recovery solidifies and renovations at the Naniloa Resort near completion. The hotel has been experiencing disruptions from construction since the Fujiyama family bought it in 2006. The hotel will begin offering restaurant services this month for the first time since the renovations began, he said.

“We still have more to do, but now we can start marketing the hotel and sign contracts with major travel wholesalers,” he said.

The Hospitality Advisors report said Hawaii’s 71.2 percent hotel occupancy rate for the first nine months of the year ranked third among major U.S. destinations. New York was first at 80.9 percent, followed by San Francisco at 76.2 percent.

Hawaii’s $172.71 average daily room rate was second highest, sandwiched between New York at $217.06 and Miami at $146.08.

The Aloha State also ranked second in revenue per available room, at $122.89. New York was No. 1 at $175.59, while Miami was third at $102.41.

The September Hawaii data were derived from a survey of 162 hotels representing 47,767 rooms, or 83.6 percent of all lodging properties in the state with 20 or more rooms.