The Honolulu Advertiser reports that Hawaii's hotel occupancy rate plunged by nearly 10 percentage points in December to 60.9 percent, the lowest level since the months following the Sept. 11 terrorist attacks. December's occupancy rate was the lowest for any month since December 2001 when it was 57.4 percent, according to Hospitality Advisors LLC. Occupancy was 70.4 percent in December 2007. Although 2008 started strong, the third and fourth quarters steeply declined.
In nearly 25 years of analyzing hotel data, Joseph Toy, Hospitality Advisors president and CEO says, "I've never seen such quick and steep declines. Toy noted that total room revenue fell by $206.7 million in 2008 to $2.91 billion. For the year, statewide occupancy averaged 70.4 percent, down 4.6 percentage points from 2007. "The troughs in the market are like nothing I've ever seen before," says Toy.
Statewide room demand started out strong in 2008, registering increases in January and February of 1.1 percent and 3 percent. But the slide began with modest room demand decreases in March, April and May. Demand fell sharply in the last seven months of the year, with double-digit decreases in six of the final seven months.
Among the top 25 U.S. lodging markets, Hawaii ranked fifth in occupancy behind New York City, San Francisco, Miami and Los Angeles. In 2007, Hawaii's occupancy ranked second, trailing only New York City.
Toy also notes that lowest-price budget properties and the highest-priced luxury properties were least affected. Oahu's budget market was the only segment in Hawaii that reported gains in occupancy of up 3.1 percentage points.
The state's priciest rooms, the luxury segment, achieved the second highest occupancy in 2008, at 73.5 percent, down from 2007's 77.7 percent occupancy.
Oahu led the Islands with a 68.2 percent occupancy, which was off 5.1 percentage points compared with December 2007. Occupancy fell despite hotels' efforts to fill rooms by discounting. The Big Island's occupancy averaged 48.2 percent for the month, down 12.5 percentage points from December 2007's 60.7 percent occupancy. Maui produced the state's highest average daily rates, at $302.88 for the month, compared with $292.65 the prior year, at an occupancy of 56.8 percent, which was 14.4 percentage points down compared with the prior December. Kauai's occupancy was 52.5 percent in December, off 15.3 percentage points for the month.