As US visitors and spending surpass all prior records, there’s still a huge cloud hanging over Hawaii travel’s horizon that is worth noting, and that might work to visitors’ advantage. While February hotel data remained promising and unrelenting, we see significant softening in demand ahead this summer and more, which could bring hotel, rental car and even prices back down while airfare continues to rise.
Looking back quickly to the last month for which we have data (February 2023), hotel revenue was up an additional 17% compared with 2022, which was already up significantly from the prior two years. But it comes with 6% less demand on average over 2019. That is based on an average daily rate of $387 before taxes and fees. This is per the state’s February Hawaii Hotel Performance Report, attached below. The HTA report covers over 47k rooms or 86% of all 20+ room properties statewide. Vacation rentals aren’t included in this report.
- Maui: $655 average nightly rate – a whopping 50% increase from 2019, but occupancy is down 9%. Wailea averaged $1,004 nightly, up 55% from 2019, but occupancy was down 25%.
- Kauai:$418 average, up 38% from 2019.
- Big Island: $432 average, up 52% from 2019.
- Oahu/Honolulu: $266 average, up 13% from 2019.
Lack of forward Hawaii hotel bookings bears scrutiny.
Even while February showed great promise, and a two-month result that was even better with a nearly 30% increase in numbers compared with last year, there were already signs of big trouble on the horizon for Hawaii that could open deals for visitors.
Here are the indications:
- There was less than a stellar Hawaii travel performance during the holiday period of December.
- The booking window for Hawaii travel has contracted substantially. In other words, visitors are no longer committing to Hawaii during traditional high-travel, high-spending periods where they normally book from months up to a year in advance.
You have longed blessed Hawaii with predictable visitor behavior. One could also anticipate that the state would reach sold-out conditions at high rates for peak periods of summer and other holidays.
A bust summer in Hawaii?
The industry is still hoping that in the next month, they will see indications that the demand for Hawaii travel will continue through summer and beyond. But if not, this will be a bust summer here in the islands. The coconut wireless (word on the street in Hawaii) is that advance bookings for traditionally stellar July are currently off by up to one-third.
In looking throughout the state this morning, we couldn’t easily find one hotel that was sold out for the week of July 1-8, which is typically one of the peak weeks of the year, and has traditionally sold out well in advance.
Where are Hawaii visitors going instead?
Europe especially will benefit from this change. After being on hold for what seemed like a Covid eternity, US visitors to Europe are growing by astronomical numbers. So much so that some places have issued warnings, such as to avoid some of the most popular destinations in Italy and elsewhere during the peak of summer 2023.
Not only that. Hawaii has now equaled or eclipsed the cost of a European vacation, something that has frankly never happened before.
The reversal in travel booking order has hurt Hawaii’s numbers.
In the past, visitors booked their Hawaii airfare first. But that’s no longer the case. Instead, Hawaii-bound travelers are getting their first dose of sticker shock when looking at Hawaii accommodations and Hawaii car rentals. Perhaps at that point, the world atlas emerges, and other options become more attractive. Airlines don’t even have a chance to sell their overpriced wares. And as we said the other day, the airfares are, for the most part, also ridiculously overpriced to Hawaii. Your editors are finding the cost of airfare to get out of Hawaii this summer so expensive that we are just saying what our commenters have called” a hard no.”
For those seeking tropical destinations like Hawaii, there are many other options globally, including arguably less costly, nearby Mexico and the Caribbean.
The situation was confirmed by, among other people, Jerry Gibson, BOH editors’ long-time friend and current president of the Hawaii Hotel Alliance. He indicated that the entire Hawaii marketing mess has also made it difficult for the state’s awful HTA and its marketing partners to compete globally. Jerry said, “It’s extremely important for us to have a good summer for all of us on every island. Maybe we are getting a little worried early because the booking window is a little shorter, but it’s not shaping up like we were hoping for.”
Some of the big issues looming include the following.
Trying to figure out what will occur next in Hawaii travel is challenging in still uncertain times.
- People have already revenge traveled. How much more is left?
- The concept of throwing caution to the wind and paying any amount has prevailed. But can that continue too?
- Inordinately high Hawaii prices, taxes, and fees. You see that hotel rates are up 50%, and that started with a base that was already very high. The enormity of taxes and fees add insult to injury.
- Car rentals also went up by about 50%.
- Unknown prospects for the US economy. That always remains a concern for discretionary travel such as Hawaii.
- Too high airfares exacerbated by fuel prices.
- Availability and cost of labor in Hawaii and throughout travel. It isn’t improving.