Shane Nelson
Shane Nelson

Hotels across the Aloha State generated $1.43 billion in total revenue during the first quarter, an all-time Q1 high and a 1.5% increase over Q1 2014.

Room revenue accounted for $967 million of the total, with the remainder from food and beverage, retail sales, parking and other sources, according to a monthly survey conducted by Hospitality Advisors and STR.

The new first-quarter revenue peak was driven by an increase in average daily room rates (ADR), which climbed 3.4% year over year to a statewide average of $251.74. Occupancy was down slightly across the Hawaiian Islands, however, slipping less than a percentage point to 80.1%.

“The increases in average daily rate are slowing dramatically, especially when we compare it with 2012 and 2013, when we were well into a double-digit growth,” explained Joseph Toy, president of Honolulu-based Hospitality Advisors. “Obviously, those weren’t sustainable, so we figured we’d be moderating at the tail end of last year and into this year, and that’s exactly what’s happening.”

Toy noted that along with the diminishing percentage-based growth in Hawaii ADRs, the market also saw booking windows shorten across the state in the first quarter.

“Whenever you have a shortening of the booking window, that typically is indicative of a softening market,” he added. “That being said, we actually had some good numbers for the first quarter. I don’t know when I last saw the Big Island in the mid-70% range for occupancy in the first quarter.”

The neighbor islands of Maui, Kauai and the Big Island of Hawaii all posted occupancy and ADR growth year over year in the first quarter, but Oahu saw its occupancy drop 2.2 percentage points, to 83.4%, hampered in part by weakening Japanese arrivals impacted by the strong U.S. dollar.  

Looking forward, Toy said concerns about the U.S. economy may be responsible for the shorter booking windows hoteliers are seeing across the Hawaiian Islands, which have lead to a recent increase in room deals.

“There have been some concerns about the economy, and some are speculating about whether or not we’re in a bubble period,” Toy explained.  “Are assets, and therefore savings, a bit overstated because of inflated real estate prices? I think in some cases there’s some truth in that.

“If confidence comes back, we’ll start to see a lengthening of that booking window,” he continued. “If confidence starts to erode, then we’ll see that shortening. Right now it’s been getting shorter.”

Hawaii’s $251.74 ADR figure was tops in the country during the first quarter, nosing out second place Miami-Hialeah, Fla.’s $250.56 average and outpacing third-place San Francisco’s $208.26 figure.

The Aloha State’s 80.1% occupancy rate was only good enough for fifth in the U.S., though, falling behind first place Miami-Hialeah at 84.9% and other markets like Orlando, Tampa-St. Petersburg and Phoenix.

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