Waikiki hotel rates hit all-time high

By Justin Fujioka
Published On: Oct 10 2013 03:53:00 PM HST

Hotel rates in Waikiki are at an all-time high as room supply dwindles and the destination demand remains attractive. But how much are visitors willing to pay and what's the tipping point?

Finding a spot on the sand at Kuhio Beach Park can be a little difficult on a sunny day.

"We're used to bigger beaches where we live," said Lisa Potts, a visitor from Sarasota, Fla. "So we have a lot less space here to find somewhere to sit."

She and her husband Nick are visiting Waikiki for the first time and were shocked to find out a room in the area averages $224.

Click here to see Justin Fujioka's report.

"If it were much more than it is right now, I wouldn't come," Nick Potts said.

But Oahu rates are still the cheapest statewide, according to new data from Hospitality Advisors LLC.

"I think the price is because it's so competitive in Waikiki," said George Szigeti, Hawaii Lodge & Tourism Association President and CEO.

Waikiki's hotel occupancy was 90.8 percent in August, but that number's been slowly dropping.

"It's a sign that we've reached the point where there's some rate resistance in the market," said Waikiki Improvement Association President Rick Egged. "So I think any additional increases in rates are going to be much lower than over the past couple of years and those increases will result in a lower occupancy."

Szigeti said, "Where the pricing point is too high, we'll find that out. But I think right now, the visitors are telling us we're priced right. I mean there's a demand for us to look at expanding if we're going to get above that 8.3 million visitors we have coming."

In the short term, Waikiki will actually lose room space with some major hotels closing for renovations, including the Sheraton Princess Kaiulani.

In the long term, industry experts say there will be small increase as mostly high-end properties like Ritz-Carlton come up, pushing the average room rate up even more.

"But can the room rates for similar properties continue to go up? I think the increases will be much smaller than they have been in the past," Egged said.

Industry experts also said a better balance with the neighbor islands is critical to the long-term success of Hawaii's No. 1 moneymaker.

Pick up Friday's Pacific Business News for more on this story.

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