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The Honolulu Advertiser
Posted on: Saturday, November 7, 2009

Hotel rates likely to keep falling


Advertiser Staff and News Services

Hawaii news photo - The Honolulu Advertiser

Hotel occupancy along Waikiki Beach is up slightly from the same time a year ago, but those visitors are spending considerably less than the year-earlier guests.

ADVERTISER LIBRARY PHOTO | 2001

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U.S. hotel rates will fall in 2010 for the second straight year as owners discount rooms to attract visitors, PricewaterhouseCoopers LLP said.

Average daily rates are likely to drop 8.8 percent this year and 1.8 percent in 2010, while revenue per available room will decline 16 percent in 2009 and 0.7 percent next year, the firm said in a report today.

"Signs of recovery in hotel pricing are not yet evident," PricewaterhouseCoopers said. "It is expected that the steepest declines in average daily rates have passed, but that year-over-year average daily-rate levels will continue to decline."

Hotel owners are struggling to attract customers as the recession deters vacationers and forces companies to slash travel budgets. Occupancy may fall to 55 percent this year from 60 percent in 2008, then rise to 56 percent in 2010, according to the report.

Hyatt Hotels Corp., which raised $1.09 billion in an initial public offering this week, said occupancy at the chain has stabilized, even as it expects "continued pressure" on rates.

Starwood Hotels & Resorts Worldwide Inc., the owner of luxury brands including St. Regis and W, said last month that third-quarter profit fell 65 percent as demand for expensive rooms fell.

Marriott International Inc., the biggest U.S. hotel chain, reported a third-quarter loss in October after a $752 million pretax charge for its timeshare business.

In Hawai'i, lower hotel prices have been cited as one reason why visitor industry expenditures continue to be off while visitor arrivals increase.

Last month, Hospitality Advisors LLC reported Hawai'i's hotel industry lost an estimated $238 million in total revenue — rooms, food and beverage and retail sales — during the summer when compared with the same period in 2008.

At the same time, it reported average daily room rates on O'ahu, the state's most-visited island, fell 15.7 percent in August compared with a year earlier, to $177.36.

The loss was worse on Maui, where room rates were down by nearly one-fifth.

The island of Hawai'i's rates in August were off 8.6 percent compared with the year before.

Kaua'i's rate was down 12.1 percent from a year prior.

Bloomberg News Service contributed to this report.