May saw the state increase RevPAR by 5% over last year, our strongest showing in quite some time. Oahu was flat while the neighbor islands had big gains, with Maui up 12%, Kauai up 9%, and Hawaii Island up 7%. Maui did it by increasing occupancy while Kauai and Hawaii Island did it with rate. Meanwhile, luxury and upper upscale properties outperformed their lower rated brethren.

The lower end of the Oahu market had another rough month, down nearly 10% in revenue. Let’s hope RIMPAC (June 24th to July 31st) helps these Oahu hotels.

The headline state numbers mask a widening split. Strip Oahu out and the picture is genuinely strong. Hotels in the lower half of the Oahu quality spectrum were down more than 9% in RevPAR for the month and are off about 7% year to date.

Luxury, meanwhile, continues to outperform, and the gap between the top and bottom of the market keeps getting wider. The lesson holds: in this market, quality is doing the work.

Total arrivals jumped 4% for the month, but the composition is more interesting than the top line. Japan came in up 16%, a continuation of the international recovery we’ve been tracking, while Canada was down just 1%, which is better than recent performance. Year to date, arrivals remain 3% ahead of last year, so the fundamentals are intact.

The forward outlook tells the more useful story: capacity for the period ahead is up 4%, with domestic up 7%, but that increase is benefitting the neighbor islands while Oahu sputters. Kahului, Kona, and Lihue are all seeing strong outlook gains; Honolulu is flat.

International, meanwhile, is heading the wrong direction across the board. Japan, Canada, Korea, and Oceania are all down, some of them sharply.

Last month we covered some of the hotels on the market, but we have exclusive listings on two excellent boutique hotel opportunities and a Kailua-Kona development site we’d like to share.