Direct flights, high demand boost occupancy

According to one industry source, Kaua‘i’s June hotel occupancy rate was 81.3 percent, highest among the counties and 10 percentage points higher than the state average.

Another industry source put Kaua‘i in second place in June hotel occupancies, at 75.1 percent behind Maui’s 78.7 percent.

The two sources, both deriving information from polls of hundreds of properties holding thousands of hotel rooms totaling 75 percent or more of the state’s total room inventory, also conflict about whether Kaua‘i’s occupancy rate was down or up from the same month in 2002.

The Smith Travel Research and Hospitality Advisors LLC (limited liability company), gleaned from 160 properties, some 50,300 rooms representing 75 percent of statewide hotel inventory, that put Kaua‘i’s June hotel occupancy at 81.3 percent, up from 76.2 percent in June of last year.

Statistics from PKF-Hawaii, a Honolulu accounting and management firm, show Kaua‘i’s hotel occupancy figure for June this year (75.1 percent) down slightly from 74.3 percent in June of 2002.

“I think Kaua‘i is just a strong draw, a market with a lot of appeal,” said Joseph Toy, president of Honolulu-based Hospitality Advisors LLC. “Kaua‘i is a very strong destination.”

The success of the timeshare industry on the island has not only done much to increase knowledge of Kaua‘i as a destination, but has worked to decrease the supply of available hotel rooms. That acts to boost hotel-occupancy figures which don’t include timeshare units, he said.

“Those timeshare units that were previously sold as hotel units are now being sold out, taken out of the hotel inventory,” so the island is seeing a “shrinkage” in rooms actually sold as hotel units, Toy added.

A pair of large groups in June, at the Hyatt Regency Kauai Resort & Spa, resulted in some sold-out periods there, said Jerry Gibson, general manager.

Normally, big-group business doesn’t book during summer months, he observed.

A federal-court conference resulted in one week of total “buy-out” of every room in the hotel. The sold-out condition at the Hyatt caused a phenomenon called “compression,” meaning business the Hyatt couldn’t accommodate was moved to other South Shore properties, he said.

Another group booked 1,500 rooms in June, too.

“The compression probably went a lot further than the South Shore, and was good for the whole island,” said Gibson.

“The other thing that really helps is these direct flights. They are incredible, and they’re coming in full,” Gibson said. “June, July and August look terrific for us.”

The direct flights have made all the difference, said Charldon Thomas, general manager of the Sheraton Kauai Resort in Po‘ipu.

United Airlines has three daily nonstop flights into Lihu‘e Airport from California, and American Airlines operates two daily nonstop flights to Lihu‘e from Los Angeles.

“I always attribute on Kaua‘i the drive of occupancy as a result of increased (seat) inventory” and stagnant room inventory.

If airlines don’t drive seat inventory to Kaua‘i and Hawai‘i, occupancy increases won’t happen,” Thomas said.

“The airlines made it happen for travel to hit its recovery in summertime.

“We’re the beneficiaries of all this pent-up demand (for travel), and a lot has to do with people not flying internationally now. I think we’re still enjoying that stay-at-home sense of mind,” said Thomas.

It will take some time before confidence in the safety of international travel returns, he predicted.

Among individual hotels, mid-priced and economy hotels did well not only in June, but for the first half of this year, Toy said.

“The stronger performance in mid-priced and economy hotels for the first half of the year reflects the value-driven market that has characterized the current economic recovery,” said Toy.

During the mid-1990s, Hawai‘i’s economy and mid-market hotels also started the market’s recovery from the prior industry downturn, Toy recalled.

The upper end of the market accelerated during the late 1990s, fueled by double-digit growth in corporate meetings to Hawai‘i and a booming economy, Toy continued.

“The recovery has been relatively consistent since the fourth quarter of last year and into the first half of 2003. Hopefully this will form the basis of a sustained recovery for the remainder of the year and into 2004,” Toy said.

“If this pace holds, we would have the best July occupancy since July 2000,” Toy stated.

Business Editor Paul C. Curtis can be reached at pcurtis@pulitzer.net or 245-3681 (ext. 224).

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