Hotel Occupancy Dips in January, But Vacation Rentals May Not Be To Blame

Feb 25, 2019

Credit Hawaii Tourism Authority

Statewide hotel occupancy dropped to its lowest January level in four years, as every major island began the year with fewer occupied hotel rooms. According to a report from the data and analytics firm STR, statewide occupancy dropped 3.4% to 79.5% when compared to January 2018.

It's the lowest January occupancy since January 2015, when Hawaiʻi hotels were 77.5 percent full.

‘The largest occupancy declines for the month were on Kauaʻi, which had a 9.5% drop to 74.9% occupancy compared to January 2018. And Hawaiʻi Island, which fell 7 percent. Hotel occupancy in Maui County dropped 5.1% to 75.3 percent, and Oʻahu’s by 0.7 percent to 82.6%.

Some visitor industry leaders say the popularity of vacation rentals has affected the hotel market. But Jan Freitag, Senior Vice President of STR, says it's difficult to tell the effect of the rentals on hotels.

"If you're looking at the occupancy in 2015, you know, year-end is 78.8%. In 2016, 79.3 percent. 2017, 80.3 percent. And then last year, 2018, 79.9 percent," said Freitag. "So it seems to me that the occupancy hasn't really moved at all. So what's the impact of AirBnB is really hard to say."

One explanation, Freitag points out, could be a decline in room demand, and no new rooms added to the state's inventory.

"For the first month of this year, yeah, demand has been down," says Freitag. "But that could just be because there was an event last year that didn't take place this year or something unrelated. I would not look at the demand decline as a one-to-one impact of more AirBnB units."

Freitag says the dip in hotel occupancy for January is not a big concern because a 79% occupancy rate is "still very, very high."

Senate Bill 1292, which aims to strike a balance between collecting vacation rental taxes and deterring illegal operations, is advancing in the Legislature. The Senate’s Judiciary and Ways and Means Committees are scheduled to vote on the measure tomorrow.