Sturdy July positive factors in Hawaii lodges will not maintain if the unfold of COVID-19 continues

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Hotel occupancy in Hawaii almost reached its 2019 high in July, while other leading indicators rose well above the July 2019 results.

Travel demand from domestic markets exceeded pre-pandemic levels in July; However, the loss of international and group business for hotel properties dependent on these markets could not be fully offset.

Tennessee-based STR reported Wednesday that the statewide occupancy hit 82.4% in July. The results were 2.8 percentage points below June 2019 when the pre-pandemic occupancy was 85.2%.

Demand for Hawaiian hotels in July also helped the statewide average daily room rate (ADR) and revenue per room available (RevPAR) increase double-digit compared to the same month in 2019. RevPAR is considered by many in the hospitality industry to be the key performance metric because it is the price that a room is rented for regardless of occupancy status.

Hawaii has the most travel restrictions of any US state, but they didn’t dampen the surge in domestic travelers earlier this summer. On July 8, the state began offering vaccination exemptions to domestic travelers flying to Hawaii on transpacific flights.

Still, July results in the islands were mixed.

The occupancy rate of Maui in July was just below the same month in 2019, while ADR and RevPAR increased significantly. Kauai and the island of Hawaii did better in all performance categories last month than they did in July 2019.

Hotels in Oahu held the highest occupancy, ADR and RevPAR of the statewide destinations on STR’s top 25 hotel list. The Norfolk / Virginia Beach and San Diego markets were the only other destinations on the list to hit over 80% occupancy in July.

The hotels on Oahu, which are more dependent on international travelers than the neighboring islands, lagged behind July 2019 in all hotel service categories.

Sean Dee, executive vice president and chief commercial officer of Outrigger Hospitality Group, said the overall visitor trend in July was in line with expectations of strong mainland demand, driven by the increase in flights and seats on most airlines flying to the islands including many new routes.

“This was positive news for the neighboring islands, but Oahu is still hampered by the complete lack of international visitors, who typically make up nearly 50% of the traffic and over 50% of the tourism revenue of this island economy,” said Dee. “This resulted in lower occupancy and a lower RevPAR for Waikiki hotels than in 2019.”

Dee said the results are still strong enough to allow Outrigger to reopen Ohana Waikiki East by Outrigger on August 1 and get the majority of its staff back to work.

“All of our properties in Hawaii are now fully open,” he said.

While the July results were good, Keith Vieira, director of KV & Associates, Hospitality Consulting, said they are unlikely to be sustainable. Vieira said demand for Hawaiian hotels is expected to decline somewhat as schools start and the highly transmissible Delta variant of COVID-19 causes a wider spread.

Vieira said he had already seen signs of falling demand at some hotels in Hawaii and Maui.

“It dropped 2,000 nights a week in late June and July, but once the cancellations were taken into account it dropped to 700 or 800 a week in the later half of July and August,” he said.

Vieira said the lower bookings and higher cancellations are partly related to the uncertainty of the recent COVID-19 surge, which could lead Hawaii to tighten COVID-19-related travel and other safety rules.

Mufi Hannemann, president and CEO of the Hawaii Lodging & Tourism Association, said travel anxiety during the recent surge could also be detrimental to Hawaiian tourism.

“We’re heading for a kind of slowdown. The 85% occupancy is unlikely to last through September and October, ”he said.

Dee said that the mood for travel waned from week to week as the delta variant rises on the mainland. Given kids are back to school, Outrigger is forecasting a softer third quarter than 2019.

“We are closely monitoring the resumption of travel from international markets such as Japan and Canada for potential business (fourth quarter), while Oceania is likely to remain closed until (second quarter) 2022, hindering our overall visitor market recovery,” said Dee.

Hotel performance in July 2021 by Honolulu Star Advertiser

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