Shane Nelson
Shane Nelson

InsightA slowing of average daily room rate (ADR) growth at Hawaii hotels appears to have helped properties across the destination end a lengthy streak of monthly occupancy declines.

Although statewide occupancy climbed less than a percentage point in May, to 72.7%, that slight year-over-year improvement was the first growth for the Aloha State in 12 months, according to a monthly industry report by Hospitality Advisors and STR.

Meanwhile, ADR across the Islands was $218.64, an increase of just under 4%.

“Given the record highs that Hawaii enjoyed last year, the moderation in Hawaii’s visitor industry was expected,” Joseph Toy, president and CEO of Hospitality Advisors, said in a statement. “[And] room rate growth has slowed to roughly half the pace achieved through May 2013.” ShaneNelson

Through the first five months of 2014, occupancy was down year over year on every major Hawaiian island except Kauai, a trend many in the industry attributed to sagging bookings figures from North America hampered by the growing cost of an Aloha State vacation.

“Since Q1, we have seen hotels steadily reducing rates as demand for the destination continued to wane,” David Hu, president of Classic Vacations, said of the Hawaii market. “As we got closer to summer, the reductions got increasingly more aggressive. As we look into fall, we’re seeing similar rate reductions persist into the shoulder season, [and] we expect that for the balance of 2014 and Q1 2015, we will have much more moderated rates both for the hotel and airfare.”

Hu said many of Classic’s hotel partners on the neighbor islands have been particularly aggressive in their pricing as Oahu hotels drew many more guests arriving to Hawaii from international destinations.

“The contrast between Oahu and neighboring islands has been persistent for the last two years,” Hu explained. “With the resurgence of Japanese and Australian tourists, Oahu has seen a disproportionate share of the rebound in inbound visitors. This year has been no different, where we consistently hear Oahu partners with occupancies in the 90-plus percentage range and other partners in neighboring islands barely sustaining 65%.”    

Hu also noted that the increasing cost of interisland airfares have reduced the number of multi-island vacations Classic is selling.

“On a year-over-year growth basis, we’ve definitely seen the neighboring islands bearing the brunt of the demand decline,” Hu said. “We expect [and] hope that as transpacific airfares moderate, as we have seen in the last 60 days, the overall package price points will be attractive enough to entice consumers to book.” 

Hawaii’s statewide May ADR figure was the highest in the nation, according to the Hospitality Advisors and STR report.
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