Investment Market Remains Quiet
The Hawaii hotel investment market is relatively quiet with only two properties being actively marketed and a couple of off-market transactions in progress. Meanwhile, lenders are working with borrowers by continuing the forbearance that started in the second quarter of 2020. The lenders' patience is supported by banking regulators and partially motivated by their unwillingness to take back properties with negative cash flow. While we have many clients looking to place rescue capital, few owners appear ready to make use of these funds.
Below are some of our insights on Hawaii visitor arrivals compiled by Erik Kloninger.
Arrivals Up But Not Meeting Expectations
The last week of 2020 saw Hawaii visitor arrivals rise to about 33% of December 2019 levels. While this was an improvement over the recent drop-off in visitor arrivals, it is still below what many in the industry had been hoping to see. Meanwhile, US travel volume, as measured by the TSA, is running at just under 40% of 2019 volume.
A Different Visitor Experience - Length of Stay Up
In addition to Hawaii welcoming far fewer visitors compared to the previous year, the visitors who did travel to the state experienced it differently in 2020. In November 2019 the average Hawaii visitor stayed in the state for 8.4 days. In November 2020, the average length of stay in the state was 12.5 days. This likely reflects several trends, including fewer visitors making very short trips, given the added complexity of traveling to Hawaii and the phenomenon of people visiting Hawaii for vacation/remote work.
Changes in the Choice of Accommodation
During November 2020 37% of Hawaii visitors planned to stay in a hotel, compared to 60% during the prior year. While hotels’ market share decreased, the market shares of accommodation types that offer larger living spaces and kitchens all saw growth. Condos (21% up from 16%), Timeshare (14% up from 9%), and Vacation Rentals (16% up from 11%) all achieved higher shares of the lodging market during November.
More People Visiting Friends & Relatives
While still the dominant market segment, vacationers made up a smaller share of arrivals during November 2020 compared to the prior year, 77% vs 84%. People visiting friends or relatives (“VFR”) made up 20% of arrivals, compared with 8% last year.
