Maui's visitor industry rallied in the first quarter, as measured by occupancy rates.
According to Hospitality Advisors, for the first quarter occupancy was 72.5 percent, up from 64 percent the year before.
The numbers are not stellar but a lot better than they have been. In the first quarter of 2007, which turned out to be a record year, Maui had an occupancy rate of 79.4 percent.
"My response is one of cautious optimism," said Terryl Vencl, executive director of the Maui Visitors Bureau. "While we certainly are encouraged by the gains that Maui made in all visitor areas in the first quarter, it is not time to celebrate."
Statewide, occupancy was at 70.8 percent for the first quarter of this year, up from 66.7 percent in 2009. Occupancy rates have now improved for two straight quarters.
During the past three months, the average room rate for Maui was $232, about $30 below where it was in 2009, and even that concealed discounting provided through such extras as free breakfasts. Statewide, the average room rate for the first quarter was $175, down from $189.
Fact Box
"There are some positive indicators that we are moving in the right direction. But I'm still skeptical."
- Terryl Vencl
executive director of the Maui Visitors Bureau
Tourism is reviving across the state, with Maui leading the way. Statewide occupancy, as tracked by Smith Travel Research for Hospitality Advisors, was 70.6 percent for the month of March, up from 65.2 percent in March 2009.
Vencl said Maui is benefitting from increased air service, especially renewal of links to secondary California locations like Sacramento and Orange County that have usually been good sources of business. Visits from Canada were up nearly 20 percent, but with warmer weather those snowbirds "will be going away," she said.
"There are some positive indicators that we are moving in the right direction," she said. "But I'm still skeptical of the consistency of those indicators coupled with the stiff competition we face."
Hospitality Advisors cited two negatives that it regarded as positives: Both room rates and revenue per available room, known as RevPAR, are still declining, but the rates of decline are slowing.
For Maui, the average daily rate was $231 in March, down from $254 last year. Because Maui's traffic revived so much, RevPAR rose $8 in March to $168. However, for the quarter RevPAR is up just pennies on Maui, from $167.80 to $168.27, while for the state as a whole RevPAR is down about $2 to $124.
But while traffic is picking up, overall lodging income is even lower than it was last year. In the first quarter of 2009, room revenue was a disastrous $635 million, down 24.3 percent from the year before - the first quarter of 2008 had been a very good one, coming just before the failure of Aloha and ATA airlines and the cascade of bad news from Wall Street that cost millions of Americans their vacations and thousands of Hawaii residents their jobs.
This first quarter, statewide room revenue was $630.8 million, or $4.2 million less even than the year before.
The first three months of 2008 were exceptional, but even taking the first three months of 2007 - good but not as good as January to March 2008 - island hoteliers are seeing about $1,750,000 less per day than they were before the downturn.
That kick in the cash flow explains why so many Hawaii resorts are behind on their debt payments. Most owners loaded up on debt in the 2006-07 period, when interest rates were low.
Now, with so many hundreds of millions of dollars less coming in, many are not servicing their debt, even though Hawaii ranks high in occupancy, prices and RevPAR. In fact, Smith Travel finds Hawaii ranks third nationally in each measure.
But Hawaii hotels, because of high land costs and high-operating expenses generally, have always had to run higher occupancies than Mainland operations to break even. So Hawaii's apparently impressive 70.8 percent occupancy is not really as strong as it looks against New York City's 72 percent or Phoenix's 67.8 percent. Miami is tops this year at 77.9 percent.
And competition, as Vencl noted, is stiff. Even top-ranked Maldives, a tiny Indian Ocean destination, which has an average room rate more than double the next destination's (Bahamas), slashed its rates by 21.6 percent this year. By contrast, Maui's rates have been cut only 11.5 percent (not counting the hidden discounting of perks and freebies).
Maui is still a lot cheaper than Maldives, $232 per night on average vs. $726.
Occupancy rates are nearly the same: 72.5 percent here, 73 percent there.
Maui's rate cutting was the most extreme in the state. While Maui operators lopped $30 off their prices, Kauai operators cut rates by only $10 and Big Island operators by only $9, although both those Neighbor Islands are enduring occupancy rates under 58 percent.
Oahu operators also cut posted rates about $10 on average, but like Maui they enjoyed a good boost in occupancy, up from 71.5 percent to 76.2 percent.
Joseph Toy, president of Hospitality Advisors, said: "After 24 consecutive months of room revenue losses, the rise in monthly occupancy rates during March was finally able to outpace room discounting for a modest revenue gain."
However, the gains, like the price cutting, have been uneven, which Toy said is "typical in this early phase of the (recovery) cycle."
"The recovery will be a long process," he said.
* Harry Eagar can be reached at heagar@mauinews.com.
