Booking Trends
Data collected by Elizabeth Churchill indicates that Waikiki hotel revenue managers are continuing their aggressive pricing increases and that those increases are slowing only marginally. In the last two months asking prices on rooms in Waikiki have increased by 30%. One school of thought is that the current travel boom is only temporary. Others say that the return of Japanese visitors (probably early in 2022) and the eventual return of group business means we are set up for a few more good years. We hear that retailers are doing well on neighbor islands but not so well in Waikiki as they look forward to the return of Japanese visitors. It is a more raucous crowd that has been making Waikiki look more like a spring break destination.
Hotel Investment Market - Out of the Woods?
The projected wave of foreclosures has not materialized. One Hawaii hotel lender said, “If the owner made it this far, they are probably going to be fine.” We are also seeing owners testing the market with aggressively priced properties including the Ambassador, Hotel Renew, and the Ridley (aka Waikiki Pearl). Some owners will need capital to replace their interest and FF&E reserves and to do those postponed renovations.
Bad Policy Decisions
The supporters of Maui County’s proposed moratorium on hotel construction are claiming the moratorium will mitigate climate change and lower the impact of visitors on the Maui community while they “study” the problem for two years. The growth of illegal vacation rentals over the past few years is a source of local distaste for the return of tourism. Hotels have the infrastructure, such as parking, retail, and F&B. Illegal vacation rentals have none of these, thereby negatively affecting local infrastructure more significantly than hotel lodging guests. The moratorium will result in less TAT revenue, is shortsighted, and will probably cause the opposite of its intended goals.
HB 862 CD1 passed by the Hawaii State Legislature allows the counties to levy their own Transient Accommodations Tax and significantly reduces funding to the Hawaii Tourism Authority. HTA’s funding is needed to continue to brand and market Hawaii as a world-class visitor destination.
Meanwhile, hotels struggle to find workers, especially in F&B, as Hawaii continues to reward sitting on the couch with an unemployment bonus that will likely last until September.
