Visitor Arrivals and Spending

Visitor arrivals for November were roughly the same as last year (up 0.2%) with domestic arrivals down 7% and international arrivals up 43%. Maui experienced a 30% drop while Oahu was up 12%, Hawaii Island was up 6% and Kauai was up 5%. For the year to date, the State was up 4% with a 3% decline in domestic arrivals and an 80% increase in international arrivals. By island, Oahu grew 17%, Hawaii Island and Kauai were up 6% while Maui was down 14%. 

Total visitor expenditures for November were down 2% over last year. By island Maui was down 17%, Oahu was down 12%, Kauai was up 32% and Hawaii Island was up 34%. Year to date, visitor expenditures were up 6% overall with Oahu up 4%, Maui flat, Kauai up 23%, and Hawaii Island up 12%.

Hotel Performance

The month of November saw Kauai take its first RevPAR drop since the post-pandemic recovery. Air seats to the Garden Island have been dropping lately and it finally showed up in a 6% drop in occupancy. The RevPAR drop was only 2% but there might be a little softening as projected air seats are down for the next few months. Oahu was up 11% in RevPAR driven by both rate and occupancy increases. As expected, Maui Island is down 6% in RevPAR because of a 10% drop in ADR. Meanwhile, Hawaii Island had a 5% increase in RevPAR driven by a 9% increase in ADR. Statewide, occupancy drove RevPAR nearly 3% higher despite a slight decline in ADR.

Air Seats

Air seats for the State for the January to March period are projected to be 0.3% above the same period a year ago driven by a 5% decrease in domestic seats and a 23% increase in international seats. Japan led the way with a 65% increase over last year but still 29% below pre-pandemic. Honolulu will be up 11%, Kahului will be down 20%, Kona will be down 2% and Lihue will be down 6%.

Investment Market

In December, the ground lease for the 251-room Ohia Hotel in the center of Waikiki was extended. Ben Rafter's Sandbox Venture brought in a new capital partner to finance a substantial renovation. Otherwise, the investment market has been quiet with very few properties on the market.

Outlook

Looking ahead, we expect Maui to continue to underperform for the foreseeable future. Kauai seems to have peaked (but what a run it was) and we might see some retreat in hotel revenues. Prebookings for Waikiki hotels for January and February are behind expectations but the slow return of Japanese visitors should provide a backstop. Hawaii Island should hold up and continue to outperform the other islands.

Powell & Aucello At Your Service

Since late last year, P&A has seen increased demand for our Broker Opinions of Value (BOV). We are actively working on a new hotel sale listing and expect to bring it to market in the coming weeks. Another of our listings is pending county approvals and is expected to close in the first quarter. In 2023, we wrapped up consulting assignments for several hotel projects on Oahu and the neighbor islands. We're always looking for more work, so keep us in mind for any brokerage, consulting, management/brand RFPs, and Tim's favorite, expert witness testimony! Please be sure to look for us at the ALIS hotel investment conference later this month.