High Rates Help Keep Neighbor Island Hotels on Par with 2019
“Stay Away” continued to have a negative effect on occupancy but higher rates helped the neighbor islands in October. The State saw a 24% drop in occupancy to 55% but a 20% increase in rate to $308 which resulted in a 17% drop in RevPAR to $169. Oahu took the brunt with a 34% drop in occupancy and a 7.5% drop in rate resulting in a 45% drop in RevPAR. Maui had a 42% increase in ADR but a 16% drop in occupancy resulting in a 12% increase in RevPAR. Hawaii Island saw a 39% increase in ADR, a 10% drop in occupancy for a 21% increase in RevPAR. Kauai’s RevPAR was up 15% as a result of a 23% increase in ADR and only a 4% drop in occupancy.

October Visitor Statistics Compared with 2019
Visitor spending in October 2021 was $1.12 billion vs $1.33 billion (-15.3%) reported for October 2019. Visitor spending was down on all islands led by Oahu at a 23% decline.

550,781 visitors arrived to the Hawaiian Islands in October 2021, mainly from the U.S. versus 796,191 visitors (-31%) in October 2019. All of the islands were down with Oahu down 45%, Maui down 20%, Kauai down 18% and Hawaii island down 28%.

As we move into the holiday season, air seats from November to January are only 3.7% down from pre-pandemic levels. Honolulu seats are down 20% but Kahului, Kona and Lihue are all up over 20%. The Thanksgiving holiday was robust with visitor arrivals at 97% of 2019. Pre-bookings are doing well with strength continuing for the neighbor islands and a corresponding weakness for Oahu. We expect these trends to continue well into the first quarter of 2022.

Other Trends We are Experiencing
Some of our recent assignments give a clue as to what’s happening in the Hawaii hotel investment market.
When will the hotel foreclosures begin?
In the dark days of the pandemic, with the State’s visitor industry shut down, it looked like every Hawaii hotel might fail. A combination of PPP, loan forbearance and a late recovery made it look like the hotels would survive. While the Governor’s August (that’s the month, not an adjective) attempt to keep visitors away didn’t help, there has been a strong recovery. Nevertheless, we are not yet back to 2019 performance, as we await the return of visitors from Asia and more specifically Japan.
 
We are hearing that hotel foreclosures will pick up dramatically on the mainland shortly after the new year and lenders will need receivership services. It’s believed the activity will be limited to meeting and convention-focused hotels. Unless there is another setback, Hawaii hotels should be able to survive until the return of visitors from Asia. The State’s Safe Travels Program has recently welcomed Australians and hopes to include Japan and South Korea in the coming months.
 
However, if there is another jolt to our visitor industry, Powell & Aucello, in conjunction with industry veterans Erik Kloninger and Elizabeth Churchill have a team ready to handle hotel receiverships. For a quick summary, visit: https://www.powellaucello.com/receivership-services
Hotel Investment Market Happenings
  • The 72-room Hotel Renew was sold to an affiliate of the MacNaughton Group in early November for just under $28 million. Fee simple Waikiki for under $400k / key is a safe bet.

  • The 463-room, Royal Lahaina Resort will remain in kamaaina hands when the sale to BlackSand Capital closes. The Hogan family will still stay active in the hotel business as owners of the Royal Kona Resort, Hogan Hospitality Management and Marin Management.

  • ASAP International is buying the 177-room Maui Seaside Hotel for $60M with plans to convert it to a Tapestry Collection by Hilton brand. We expect a big PIP.
Data Source: Hawaii Tourism Authority
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