Hawaii hotels post highest room revenue in four years

By Shane Nelson
InsightHawaii hotels generated $2.87 billion in room revenue during 2011, an increase of more than 12% year over year and the largest annual total since 2007.

Statewide occupancy also grew last year, climbing 3.4 percentage points to a year-end average of 73.4%, and average daily room rates (ADR) across the islands finished 2011 up 8.5% at $189.62 a night, according to a Feb. 8 report by Hospitality Advisors and Smith Travel Research.

Benefiting from the increased ADR and occupancy figures, Hawaii’s statewide revenue per available room (RevPAR) figure jumped 12.6% in 2011, to $139.27 a night.

“Hawaii’s hotel industry improved significantly in 2011, which is actually remarkable given the impact following the tragic March earthquake in Japan and the economic concerns that arose in the second quarter,” said Joseph Toy, president and CEO of Hospitality Advisors. “The increase in visitor arrivals, which regained momentum during the second half of the year, has given the market renewed confidence in its recovery from the steep downturn of the past several years.”

Hawaii hotels saw room revenue bottom out at $2.34 billion in 2009, a plunge of 17.5% year over year and more than $780 million short of the industry peak set in 2006.

“The recovery for our market began in 2010, but it was all about heads in beds and room demand,” Toy said, noting that most of Hawaii’s hotels offered a range of substantial room discounts throughout the year. “Room revenue in 2010 was purely occupancy driven, and the increase in demand more than offset the discounts in terms of increasing room revenues. In 2011, two-thirds of the increase in room revenues was driven just by the rate increases.”

Luxury properties across Hawaii saw the largest ADR percentage increase, climbing 7.6% year over year, to more than $270 a night, while hotels in Waikiki enjoyed the highest occupancy, finishing the year up 2.5 percentage points at 82% in 2011.

Toy cautioned, however, that the industry’s recovery remains uneven despite signs of improvement from the neighbor islands.

“This year the recovery also began to strengthen in Maui, but we still have the Big Island lagging way behind,” he explained. “There’s a difference of 25 percentage points between the Big Island and Oahu in terms of occupancy. …You’re not into a full recovery until you have all the markets at a pretty consistent level.”

Hawaii’s 2011 occupancy rate was good enough for fourth among the nation’s top hotel markets, finishing behind only New York (81.2%), San Francisco (79%) and Miami (75.6%).

The Aloha State was second nationwide in terms of ADR and RevPAR, trailing only New York’s daily rate of $244 and its revenue per room figure of $198.
 
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