Hotels ended 2010 with higher rates, occupancy

By Allison Schaefers
Article from: Star-Advertiser

Hotel Occupancy and room rates in December helped push Hawaii’s hotel room revenue to $2.55 billion in 2010, according to hotel consultancy Hospitality Advisors LLC.

While the 8.7 percent year-over-year gain was good news for the beleaguered industry, room revenue was still well below the 2006 peak of $3.12 billion.

“What we saw in 2009 and 2010 was that the revenues essentially evaporated from the market, dampening profitability and short-circuiting debt services,” said Joseph Toy, Hospitality Advisors’ president and CEO.

In mid-2010, Hawaii’s hotel industry began to turn around, Toy said. After two years of discounting, Hawaii hoteliers finally saw the statewide average daily room rate (ADR) increase during four of the last six months of 2010, Toy said.

December provided a strong finish to the year, he said.

In December, statewide occupancy rose 6.8 percentage points to 69.4 percent. At the same time, ADR increased 3.8 percent to $203.56, and revenue per available room (RevPAR), a key measure of profitability, climbed 15 percent to $141.88.

For the year, Hawaii’s statewide occupancy rose 5.9 percentage points to 70.7 percent, earning it the nation’s third-best occupancy behind New York City and San Francisco. Hawaii’s year-end ADR fell 1.56 percent to $174.33, but the state’s nightly rates came in second only to New York. The state’s year-end RevPAR, which also lagged only New York, rose 7.39 percent to $123.25.

Hawaii’s hotel industry might have held its own against other U.S. destinations; however, it has a long way to go before matching the peak levels of several years ago.

“The occupancy has returned to more normal levels, but the average rate is still down about 15 to 20 percent from the peak and costs have risen 5 to 10 percent,” said David Carey, president and CEO of Outrigger Enterprises Group. “Hotels and their owners continue to be squeezed.”

Factors such as rising oil prices, increased labor and operational costs and loan terms could make or break some hotels this year, he said.

Hawaii’s tourism recovery gained momentum in 2010 as hoteliers regained some of the nearly 25 percent in revenue per available room that was lost during the industry downturn in 2008 and 2009. However, Toy said that most of the improvements were related to occupancy gains from price discounting. Moving forward, the challenge for hoteliers will be to sustain consistently high enough occupancies to achieve lasting rate growth, he said.

“When we see occupancies that are sustained above 78 percent, we’ll see hoteliers with the ability to raise rates,” Toy said.

For instance, hoteliers raised rates 21.9 percent from 2005 — the year occupancy peaked at 81.8 percent — to 2008 when statewide ADR topped out at $202.64.

While Hawaii hoteliers are hoping this year to continue building on the strides made during the latter half of 2010, soaring rates are still far away, said Keith Vieira, senior vice president and director of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia.

“We are still six years away from even achieving the profitability of 2006 and 2007,” Vieira said.

Save for Hawaii’s highest-demand periods, consumers probably will see similar prices this year, Vieira said.

“We’ll probably take away some of the value-adds like free breakfasts and room nights, but it’s hard to drive prices without consistent yield,” he said.

In addition, commitments that were made last year when the market was down to travel wholesalers and package providers will lock about half of the state’s hotel inventory into softer prices through December, Carey said.

“It’s hard to respond quickly when the market changes,” he said.

While some sought-after properties in Waikiki and Maui are seeing pockets of high occupancy now, Toy said statewide recovery is uneven. Waikiki hotel rates likely will recover next year, followed by Maui, he said. The Big Island and Kauai probably won’t see significant gains until compression in Waikiki and Maui sends more travelers their way, Toy said.

“It could be 2013 or longer before the state’s entire hotel industry begins to regain rate,” he said. “Profitability is even longer out.”

Study: Landfill gases could be used as energy source

February 13, 2011 – By ILIMA LOOMIS, Staff Writer
Article from: The Maui News

WAILUKU – Converting those stinky gases from the Central Maui Landfill into electricity could create enough energy to power the equivalent of up to 3,000 Maui homes per year, according to a county-commissioned study.

The 2010 study by engineering consultant A-Mehr Inc. estimated it would cost around $12.6 million to develop a 3.2-megawatt gas-to-energy facility at the landfill or around $8.6 million for a smaller, 1.6-megawatt facility. The report will be reviewed by the Maui County Council Infrastructure Management Committee on Monday, at a meeting that also will include a presentation by the county Department of Environmental Management.

The county already has installed a system to collect and control gas emissions from the Central Maui Landfill, and officials now are evaluating alternatives for using the gases as a renewable energy source, the report notes.

Landfill gases can be used in a variety of ways, including electrical generation and conversion into a high-BTU fuel, according to the report. In addition to providing a source of renewable energy, harnessing the gases is beneficial because it reduces greenhouse-gas emissions and can generate revenue from the sale of the electricity.

According to the study, if waste continues to be disposed of in the landfill at current rates, the gases could generate from 1.6 to 3.2 megawatts, equivalent to the energy use of 1,500 to 3,000 typical Maui homes, the report says.

But if refuse were diverted to a waste-to-energy facility in 2015, as proposed in the county’s Integrated Solid Waste Management Plan, landfill gases would generate less energy – from 0.7 to 1.6 megawatts, or about what it would take to power 700 to 1,500 Maui homes.

The county could develop the gas into a resource either by producing its own electrical power right at the landfill, or by selling the gases to a third party, the report says.

It notes the only known potential buyer on-island would be the Hawaiian Commercial & Sugar Co. mill at Puunene. The company would need to invest in an expensive retrofit of its boiler systems in order to use the new energy source, but HC&S has expressed interest in potentially participating in an electric-power-generation project, according to the report.

The consultants recommend that the county move forward with a project to convert landfill gases into energy, but only after it determines whether the county will operate such a facility itself or work with a third party on the project.

The Infrastructure Management Committee will meet at 9 a.m. in eighth-floor Council Chambers of the Kalana O Maui building.

8,200 new jobs forecast for ’11

By Alan Yonan Jr.
Article from: Star-Advertiser

The number of jobs generated by Hawaii’s economy is poised to grow this year for the first time since 2007, helped by the launch of Oahu’s rail project and a modest acceleration of overall economic activity, a group of University of Hawaii researchers reported today.

Businesses are expected to add 8,200 positions this year, including 1,100 jobs related to the $5.5 billion mass transit line and other construction projects, according to a quarterly economic forecast from the University of Hawaii Economic Research Organization. The increase in payroll jobs forecast by UHERO follows three years of declines in which job losses totaled more than 35,000.

UHERO had not included the impact of the rail project in previous economic forecasts because of an uncertain start date. That changed last month when the project got the green light from the Federal Transit Administration and Gov. Neil Abercrombie. The city said it expects to break ground on the project in March.

“Rail transit work will accelerate what would otherwise be a very anemic construction upturn, contributing to a gradual broadening and deepening of Hawaii’s economic recovery,” according to the report.

As a result of the rail project, UHERO revised its job growth estimate upward by 1,000 in 2011, 2,000 in 2012 and 3,500 in 2012, said Carl Bonham, the organization’s executive director.

“At the peak of rail spending in 2014 to 2015, the project brings down the unemployment rate by a half of a percentage point,” Bonham said.

In addition to the increase in construction jobs this year, UHERO is forecasting employment increases in the hospitality, health care and retail sectors. State and local government jobs are forecast to decline for the third year in a row, while federal positions are projected to shrink for the first time since the recession.

The broadest measure of Hawaii’s economic activity, state gross domestic product, is forecast to grow by 2.7 percent this year, up from 1 percent in 2010. State GDP had contracted by 0.1 percent in 2009 and 1.5 percent in 2008.

The strengthening of the broader economy will help take the pressure off the tourism industry, which carried much of the load in 2010, Bonham said. Visitor arrivals and spending will continue to grow this year but at a slower pace than last year, he added.

The forecast calls for visitor arrivals to grow by 3.8 percent this year after climbing by 8.2 percent in 2010. One of the reasons the increase appeared so pronounced last year was that arrivals in 2009 had been so weak.

“Visitor arrivals in 2011 will grow a bit slower. I wouldn’t be surprised if it even came in lower than our forecast. The wild card to some extent will be the impact from APEC,” Bonham said, referring to the Asia-Pacific Economic Cooperation leaders meeting in November, which will bring heads of state from the 21 largest economies in the Asia-Pacific region to Hawaii.

Despite the acceleration of economic growth, inflation will remain subdued, according to the report. The consumer price index for Honolulu is forecast to fall slightly to 1.4 percent in 2011 from 1.7 percent in 2010.

Real personal income is forecast to grow to 2.2 percent this year from 0.2 percent in 2010.

Business / In Brief • Feb. 9, 2011
* Hawaii

Excerpts from: Maui News

Oahu single-family home sales increase

HONOLULU – Oahu home sales increased in January while prices fell slightly compared to a year ago, the Honolulu Board of Realtors reported Tuesday.

There were 199 single-family homes sold during the month, up 11.2 percent from January 2010. There were also 265 condo units sold during the month, an increase of 9.5 percent, the board said.

The median price of a single-family home dipped 4.2 percent from $595,000 to $570,000, while condos fell 2.7 percent to $291,000.

Brian Benton, immediate past president of the Honolulu Board of Realtors, said he’s seeing a shift in sales from condos to single-family homes, which is a good indicator of returning consumer confidence.

Single-family homes were listed for an average of 38 days, down from 43 days a year ago. However, condos are taking longer to sell, with an average listing period of 49 days, up considerably from 36 days in January 2010.

*****

Hawaii enrolls more kids for insurance

HONOLULU – The federal government is reporting that Hawaii has one of the sharpest increases in children enrolled in the Children’s Health Insurance Program and Medicaid.

The Centers for Medicare and Medicaid Services said Hawaii child enrollees rose nearly 15 percent between the 2009 and 2010 fiscal years, the fifth-highest increase in the nation.

That represents a jump of 18,000 additional children signed up for the CHIP and Medicaid programs.

In all, nearly 142,000 children were enrolled in either of the programs in 2010.

Only Alabama, Montana, Oregon and North Carolina had larger yearly increases.

The enrollment data were included in the annual report of the Children’s Health Insurance Program Reauthorization Act of 2009, which is designed to give states more opportunities to improve program access.

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