Challenges and Contrasts: Hawaii’s Hotel Industry Dynamics

In October 2023, Hawaii‘s hotel industry showed promising signs of growth, with the statewide average daily rate for hotel rooms increasing by 2 percent to $347. Revenue per available room also saw a substantial uptick of 5.2 percent, reaching $258, and overall hotel room revenues statewide surged by 5.7 percent to $447.8 million compared to the previous year.

However, the positive trends take a downturn in the aftermath of fire-related issues, particularly affecting the West Maui area. This has resulted in a year-over-year decline in the average daily room rate, revenue per available room, and overall revenue, as highlighted in a recent report.

The report reveals that the average daily rate for Maui hotels in October 2023 was $506, reflecting a 3.2 percent decrease from the same period last year. Similarly, the revenue per available room decreased by 2.5 percent, settling at $336.

Looking ahead, the hotel reservation landscape in Hawaii appears uncertain. While December shows a 3.3 percent decrease, January sees a slight increase of 0.5 percent year-over-year. However, by February 2024, reservations are down by 5.6 percent compared to the previous year. Figures for the rest of 2024 through October indicate a substantial decline of 26.8 percent, according to data analyzed by the Hawaii Visitors and Convention Bureau (HVCB).

Though there are pockets of positive movement, such as a 1.6 percent increase in Maui hotel room reservations as of November 5, these are overshadowed by declines of 3.6 percent for December and 1.4 percent for January. By February 2024, room reservations in Maui are expected to drop steeply by 26.1 percent, reaching a significant 46.8 percent decline by October.

The challenges extend beyond hotel reservations, as HVCB’s analysis of airline data reveals a downward trajectory in non-stop air seats from key U.S. source markets. Statewide, there was a 3.2 percent decline as of November, and a further 8.1 percent decrease is anticipated for December. Looking into January 2024, a 4.7 percent decline in air seats is projected.

Notably, Maui is expected to experience a 16 percent reduction in airline seats, while Kona faces a 3.6 percent decline, Hilo anticipates a 100 percent decrease, and Kauai sees a 7.4 percent reduction. In contrast, Oahu is set to witness a 1.5 percent increase in seats, according to a report by the Honolulu Star Advertiser.

Jeffrey Eslinger, senior director of market insights at Hawaii Visitors & Convention Bureau, emphasized that the ongoing impact of the Maui wildfires continues to significantly influence travelers’ decisions, potentially deterring them from vacationing on the islands.