Revenues in Hawaii have risen 7.1% so far this year

Hawaii hostelries, led by Maui, continue to scramble back toward financial health, but although they have come a long way, they have yet a long way to go.

In the Hospitality Advisors report for the first three quarters, released Monday, revenues statewide were up 7.1 percent to a total of $1.9 billion for nine months.

But that was still 20.6 percent lower than for the first nine months of 2006, the visitor industry’s best year.

Hospitality Advisors President Joseph Toy said Hawaii, New York City and San Francisco are leading the industry nationally. Maui is leading statewide, and the Big Island is trailing.

This is expectable. As the travel market collapsed in 2008, hoteliers first began to try to attract customers by “adding value, by adding a day or a room.” Operators hate to lower posted rates, because they learned by experience in the 1990s that travelers quickly become accustomed to cheaper prices and resist when they go back up again.

But when a downturn is as deep and long-lasting as this one, price discounting is sooner or later forced on operators. There is really nothing they can do to resist, Toy said, and not much they can do to prepare to put rack rates back up.

Operators everywhere face the same pressure, he said.

Through September, Maui’s hotel occupancy rate is way up, by more than 10 percentage points, from 59.9 percent in January-September 2009 to 68.9 now. A sustained rate under 60 percent had been unheard-of in Maui County, though it was common fare for Big Island resorts.

Oahu’s occupancy did not fall so low in 2009, and it has not recovered as fast as Maui’s, but it is up from 72.1 percent to 78.3 percent.

Discounting is not so obvious on Oahu, either. Posted rates this year have averaged $147, less than $3 below 2009 rates. By contrast, Maui’s posted rates of $225 are $15 lower than last year.

During a downturn, Toy said, rates tend to compress. The lowest don’t fall as much as the highest, and from the customers’ point of view, two things happen.

One, the traveler becomes more price conscious, choosing a cheap price over a more highly regarded lodging. On the other hand, some customers maintain the same level of expenditure but are able to trade up to a more fashionable resort.

With bigger inventories and a wider selection of places to stay, Oahu and Maui have a better chance of selling a room to either sort of buyer.

The smaller islands lag the larger ones in good times and bad, and especially in bad. Kauai’s occupancy rate this year has risen slightly, from 58.9 percent to 61.0 percent; and its operators have dropped average rates from $189 to $184. The Big Island occupancy is up slightly, too, from 54.5 percent to 56.5 percent; and rates are down from $184 to $182.

However, other things also are going into the mix, Toy noted.

Larger numbers of visitors encouraged airlines to add more seats to Maui, and more seats encouraged more visitors. Seats from Maui’s biggest catchment area, the western states, are up by 12.8 percent. From Canada, seats are up 39 percent.

The object of all this maneuvering is total take, and revenue per available room (RevPAR) is up by $11 to $155 on Maui.

It is up by $7 to $115 on Oahu, by less than a dollar to $112 on Kauai and by $2 to $103 in Hawaii County.

Owners – usually not the managers nowadays – continue, however, to struggle. Many, perhaps most, Hawaii resorts are more or less in default on their loans, but for the most part lenders are not rushing to foreclose.

The situation is different now from what happened in the mid-1990s, Toy said.

Then, owners were typically Japanese with little to no experience in the lodging business, and many properties were seriously deteriorated. In order to straighten things out, ownership had to change.

Today, the physical problem is not as acute, although capital infusions are going to be needed, and lenders are more willing to try to work with owners to restructure debt. It’s called putting the note into “special services.”

The statistics are compiled for Hospitality Advisors by Smith Travel Research, although Las Vegas does not participate in the voluntary surveys.

Of the destinations that do, Hawaii is holding up comparatively well.

In occupancy this year, the top five markets are New York City, 80.9 percent occupancy; San Francisco, 76.2 percent; Hawaii, 71.2 percent; Miami, 70.1 percent; and Boston, 70.1 percent.

The top five in average daily rate are New York City, $217; Hawaii, $173; Miami, $146; Washington, D.C., and surrounding areas, $143; and Boston, $140.

As usual, luxury properties are taking in half or more of all the lodging dollars in Hawaii: $1.09 billion so far this year.

Luxury resort revenue is up 9.1 percent.

The budget class (which does not exist on Maui) shows the same relative gain, up 9.7 percent, but its effect is negligible in the big picture: only $77 million.

The compression shows in the revenue gains of the sandwiched classes: Upscale resorts have taken in 4.8 percent more ($384 million); as have economy ($86 million). In the middle, midprice resorts have moved up the least, 2.5 percent, with a total of $264 million.

Maui firm owes residents $10M

The Mortgage Store Inc., a Kihei-based business established in 1996, has filed for Chapter 7 bankruptcy liquidation, owing more than $10 million to more than 100 Maui residents. The company lists debts of nearly $14.7 million, and assets of about $14 million, mostly in personal property and real property.

The company was “not doing that much mortgage business,” said Ryther Barbin, attorney for the company. “People were lending money to the Mortgage Store … and they were taking the money and investing it, doing very well.”

The company “started getting into trouble when values started to go down on properties and there were not enough assets to cover all the liabilities, so they shut down and that’s when they came to me,” Barbin said.

Most of the creditors are holding unsecured promissory notes that were to have given them a 7 percent rate of return, he said.

However, “there are substantial assets … and creditors will get substantial returns,” though it is not likely they will receive 100 percent, Barbin said.

The assets to be liquidated are primarily real properties in Texas “where the economy is in pretty good shape, and so the trustee will liquidate the assets and then pay the money out.”

Both the state Securities and Consumer Protection offices confirmed that securities-related complaints had been filed against the company, but the complaints are just being investigated and are unresolved.

Habitat home off the grid

Molokai house first to be powered by photovoltaics

A couple of firsts were celebrated on Molokai.

Lifelong renters David and Liz Kaai and their four children now own their own home; and it is the first “off-the-grid” home built for Habitat for Humanity anywhere in the nation.

“To have the opportunity to show Hawaii we can build an affordable off-the-grid home is truly wonderful,” said Emillia Noordhoek, resource development director for Molokai Habitat for Humanity.

She said the Kaais’ Hoolehua home is equipped with a SunPower photovoltaic system that generates the electricity for the 1,200-square-foot house, so there will be no electricity bills to pay, saving the Kaais at least several hundred dollars a month. The home cost around $112,000 because of the upgrade. Habitat homes on Molokai usually cost around $75,000 to $85,000, Noordhoek said.

A dedication and blessing was held Friday for the 19th home built by Molokai Habitat for Humanity. Through volunteer labor and donations of money and materials, Habitat builds and rehabilitates simple, decent houses with the help of the homeowner (partner) families. Habitat houses are sold to partner families at no profit, financed with affordable loans.

The homeowners’ monthly mortgage payments are used to build still more Habitat houses. In addition to a down payment and the monthly mortgage payments, homeowners invest hundreds of hours of their own labor – sweat equity – into building their Habitat house and the houses of others, according to Molokai Habitat’s website.

“We wanted more for ourselves and our children, so Habitat was the way to go,” said Liz Kaai, a homemaker, whose husband is a bus driver. “Habitat was the ‘bomb,’ and we love the volunteer process because it has allowed us to contribute sweat equity to a home we can call ours,” she added.

The Kaais plan to move into their new home in a few weeks.

Community assistance also played a role in bringing the photovoltaic system to the Kaais’ home. RevoluSun, an Oahu-based residential solar company, donated time and labor for the installation of the system, which generates 21 kWh of electricity per day and is backed up by three days of battery storage.

“We are glad to have the opportunity to give back to the community,” said Eric Carlson, one of the owners of RevoluSun.

He said the donated time and labor would normally cost $10,000 to $15,000. The Kaais also were given a discounted price of $44,000 for the system. Carlson added that the $44,000 was $14,000 higher than the $30,000 the Kaais would have needed to pay for a conventional electrical system but said there will be savings in the future.

“It is definitely cheaper in the long run. They will not have a continuing rising electric bill for the life of the home,” he said.

In addition to the battery backup, a diesel generator system that can be turned on when there are prolonged periods of cloudy days will be installed.

Noordhoek said even though the photovoltaic system cost more upfront, the Kaais opted for the system because the Hawaiian Homelands subdivision they were building in does not have complete utilities. That’s why the conventional electrical installation costs would have been so high.

Carlson said that even though his company is only 2 years old, it has already given out two systems for free in addition to helping out with the Kaai home.

“Honestly, it’s a way to spread the message, and it’s an opportunity to get more solar out there. It’s a feel-good thing. We are local here and want to give back to the community.”

He added that he and his company want to show that there is an alternative to fossil fuel power generation. Not only is it clean, but he thinks it’s a smart way to go financially.

Carlson said the project also received help from Young Brothers, which shipped the system for free, and from Solar Supply on Oahu for the logistics and design of the system.

Noordhoek said Habitat would like to do more homes that are off the grid, as costs on Molokai are extremely high compared to other places in Hawaii.

She added that there is another home being built that is “completely of the grid” that includes the home’s own well and catchment system and photovoltaic system.

Since 1998, Molokai Habitat for Humanity has been an affiliate of Habitat for Humanity International.

To be chosen for a home, families need to have incomes between 25 percent and 60 percent of the gross median income for Maui County; have the ability to repay a 20-year, zero interest loan; and contribute 700 “sweat equity” hours toward building their home as well as the homes of other Molokai Habitat families.

Facebook unveiled a new messaging platform Monday that takes aim at one of the Internet’s first applications, e-mail.

Although blogs had been speculating that Facebook would announce an e-mail service to rival Google Inc.’s Gmail and others, Facebook said e-mail was just one component of its plans.

Declaring e-mail past its prime in the age of texts and instant messages, CEO Mark Zuckerberg said the company doesn’t believe e-mail is going to be a modern messaging system. The first Internet e-mail system arrived in the early 1970s.

“If we do a good job, some people will say this is the way that the future will work,” Zuckerberg said.

Zuckerberg dismissed notions that “Project Titan,” as its service is called, is the “Gmail killer” it’s been dubbed as in the press. But he also said that just as high school students are forgoing e-mail in favor of shorter, more immediate chats, more people down the line will send IMs and chats because it’s simpler, “more fun” and more valuable to use.

Though e-mail is still a primary form of communication for older adults, recent studies suggest this is not the case for young people. Text messaging has surpassed face-to-face contact, e-mail, phone calls and instant messaging as the primary form of communication for U.S. teens, according to a 2009 survey from the Pew Internet and American Life Project.

E-mail use was the lowest — only 11 percent of teens said they use it every day to interact with friends, compared with 54 percent who said they text daily and 30 percent who said they use landline phones.

The popular social network unveiled its plans in San Francisco on Monday, a day before Zuckerberg speaks at the Web 2.0 Summit in San Francisco.

Underscoring the enormity of the project, Facebook’s director of engineering, Andrew “Boz” Bosworth, said 15 Facebook engineers worked on the project for 15 months.

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