Some Movement in Air Seats to Hawaii
During the past couple of years, domestic airlift to Hawaii has exceeded pre-pandemic levels by a wide margin, while international airlift has lagged 2019 levels. This continues to be the case during the first months of 2023, with statewide domestic air seats running 20%+ ahead of pre-pandemic levels, while international seats were 30% to 40% below 2019. As shown in Erik Kloninger’s chart below, domestic airlift as a percentage of 2019 levels are expected to decrease in March and April, while still greatly exceeding pre-pandemic levels. Airlift from Japan will increase in March and April, finally exceeding 50% of pre-pandemic levels in April.
During the first four months of this year, the neighbor islands will continue to enjoy more airlift than they had in 2019, while Honolulu will continue to lag pre-pandemic levels due to the slow pace of the return of Japan flights. Service to Kahului exceeded pre-pandemic levels by the widest margin among the state’s airports during the first quarter, fueling strong room demand on Maui. In April, American and Delta will be reducing their Kahului service from Dallas, Atlanta, and Salt Lake City, bringing Maui’s airlift closer to 2019 levels. Lihue will see an increase in airlift in April, as Alaska and Southwest increase service from the West Coast. 
Waikiki Booking Strategies
Elizabeth Churchill constantly tracks the rate strategies of the big beachfront Waikiki hotels which gives us a view of future demand. She reports that these hotels have been trying different pricing strategies with some success in pushing rates up at the last minute when demand rises late in the booking cycle. Waikiki hotels have been lowering rates for February, March, and April and are holding steady for May. Most have increased or held rates for the summer travel months which may be a sign of optimism. We may not know the depth of summer demand until we get into April and May since the booking window continues to be extremely short for FIT travel.
ALIS Takeaways - Cautious Optimism and Investors Keeping Their Powder Dry
The good news is that group business has returned, and RevPARs are up along with concern about a coming recession. Meanwhile, investors are hoping for the Fed to calm capital markets by limiting future rate increases. Unsteady debt markets have been responsible for many hotel deals cratering. Investors are also preparing for the possibility of distress. The maturity of a substantial percentage of hotel loans over the next 18 months will be a challenge for owners and an opportunity for investors when more capital is needed to shore up lower debt proceeds.
 
Hawaii Hotel Investment Market Activity
Properties testing the market include the Hyatt Centric, sister properties Airport Honolulu / Best Western, the Pacific Marina Inn, and the Kauai Beach Resort. Meanwhile, the DoubleTree Hilo is still in foreclosure. We anticipate the pace of offerings to increase over the next few months especially if the Fed can help calm capital markets.
Data Source: Hawaii Tourism Authority
1189 Waimanu Street, Suite 2405
Honolulu, HI 96814
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