Hoteliers take advantage of tourism surge in Hawaii
Hoteliers take advantage of tourism surge in Hawaii
13 JANUARY 2017 9:16 AM

With new openings and renovations, Hawaii’s hotel industry is poised for growth in key and emerging markets. 

REPORT FROM HAWAII—The Hawaii hotel industry is riding a wave of tourism growth that reached a crest in September 2016, when the Hawaii Tourism Authority reported visitor spending in the state increased by 10.4% to $1.2 billion compared to the year before.

Hotels statewide reported an 11% year-over-year increase in revenue per available room to $185 in September, according to data from STR, parent company of Hotel News Now. This represented the highest year-over-year RevPAR growth since June 2015.

RevPAR growth that month was helped by an 8.1% year-over-year increase in average daily rate to $235.65 and a 2.7% year-over-year increase in occupancy to 78.5%.

“September has been performing like a summer month due to new citywide and Hawaii Tourism Authority initiatives, as well as the Labor Day compression,” said Paul Richardson, COO of Outrigger Enterprises Group, based in Waikiki. Outrigger Hotels and Resorts announced its acquisition by Colorado-based KSL Capital Partners in December.

Performance growth has slowed somewhat since, but RevPAR and ADR growth remained positive in October (+4.9% and +4.5%, respectively) and November (+3.9% and +4.8%), despite occupancy leveling out (growing 0.4% in October and dropping 0.9% in November). November year-to-date figures showed an average of 79.2% occupancy (+0.7% compared to 2015), and average ADR of $249.52 (+3.7%) and RevPAR of $197.63 (+4.4%).

Meanwhile, demand for hotel rooms (+1.3%) slightly outpaced supply (+0.7%) in November year-to-date comparisons for the state.

Hoteliers here see a trend in the numbers, and they are taking advantage.

Tourism-driven growth
Hilton Worldwide Holdings nearly doubled its hotels in Hawaii during 2016, from six properties on three islands to 11 on four islands. Its openings included the Hilton Garden Inn Kauai Wailua Bay and the Hilton Garden Inn Waikiki Beach on Oahu, both in June. In September, Hilton opened the Grand Naniloa, part of its DoubleTree brand, in Hilo Bay on Hawaii Island, as well as the Hampton Inn and Suites Kapolei, near the new Ka Makana Ali’i Mall in west Oahu.

“As a significant visitor increase correlates to an increase in spending, there’s now a higher demand for lodging,” said Jerry Gibson, area VP at Hilton. “Hence, the addition of four new Hilton hotels varying in price and range and amenities, strategically located in emerging destinations.”

Tourism is driving that growth, Gibson said. For example, “there is an opportunity for continued growth in the historic town of Hilo, the gateway to Volcanoes National Park, as interest in national parks spiked with the National Park Service’s year-long centennial celebration,” he said.

The Hawaii Lodging & Tourism Association reports visitors and visitor spending are entering a sixth-consecutive year of growth. In addition to consistent tourism from North America and Asia, much of that traffic has come from Japan and growing Chinese markets, according to a statement from HLTA President and CEO Mufi Hannemann.

“The vibrant tourism industry, combined with a supportive government, has led to the completion of several new hotels, such as the Ritz Carlton (Waikiki Beach) and Hilton Hawaiian Village,” Hannemann said. “Investors have and are renovating or refurbishing a number of older properties on all islands, while on Oahu, we’re encouraging the expansion of our room inventory in Ko Olina, location of Disney’s Aulani (resort) and the Four Seasons.”

Outrigger’s Richardson said the company notices infrastructure improvements, particularly around airlift.

“Outrigger continues to take advantage of increased lift from legacy markets and incremental lift from new markets,” Richardson said. “We are well-positioned for growth on Oahu and Maui with potential for growth on Kauai and Hawaii Island due to increased direct lift and compression on Oahu.”

Gibson said infrastructure and airlift improvements go hand in hand with tourism trends. He said the islands can expect another surge of travelers from Japan this year, with Hawaiian Airlines’ newly inaugurated nonstop service from Tokyo’s Haneda International Airport to Kona International Airport on Hawaii Island.

“Hawaii is in a phenomenal place for hoteliers in terms of accessibility, safety and potential for growth,” Gibson said. “Each island offers a unique experience, which makes it a tourist destination for nearly any kind of traveler. Oahu as the social butterfly, Hawaii Island offering endless adventure, Maui a favorite among honeymooners, and Kauai a relaxing retreat. …

“Easily accessible to stateside travelers, the islands are a tropical getaway that doesn’t require a passport.”

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