Strong demand allows hotels to fill more room and raise rates

The U.S. hotel industry posted increases in all three key performance measurements during July 2010, according to data from STR Global. STR provides data and analysis relating to the hospitality industry.

In year-over-year measurements, the industry’s occupancy was up 7.0 percent to 67.9 percent. Average daily rate ended the month with a 1.3-percent increase to $99.14. Revenue per available room for the month rose 8.5 percent to finish at $67.35.

According to STR president Mark Lomanno, the July 2010 data shows the U.S. hotel industry is performing well above 2009 levels with strong demand. Rooms rates, particularly in the higher end of the market, are beginning to recover.

Only one of the Top 25 Markets reported a decline in occupancy. All other markets reported growth and eight top markets reported growth rates above 10 percent.

Detroit, Michigan, led the occupancy increases, gaining 20.9 percent to 61.5 percent. Honolulu was the second best with a gain of 15.9 percent to hit 89.6 percent occupancy. New Orleans, Louisiana increased by 13.1 percent to 72.6 percent.

Phoenix, Arizona, the only loser with a decline of 1.4 percent to 43.6 percent.

Average daily rate 
New York City achieved the highest average daily room rate increase of 11.6 percent to $204.68. Maui is not counted in the Top 25 but Maui’s average room rate of $223.84 is much higher than New York City.

Dallas, Texas, reported the largest ADR decrease, falling 4.1 percent to $77.72, followed by Nashville, Tennessee which lost 3.3 percent with an ADR of $82.94, and Houston, Texas (-3.2 percent to $83.12).

Five top markets experienced RevPAR increases of more than 15 percent: Oahu Island (+20.8 percent to $139.58); New Orleans (+17.9 percent to $77.82); Detroit (+17.7 percent to $45.57); New York (+16.3 percent to $170.67); and Denver, Colorado (+15.6 percent to $74.03). Phoenix posted the largest RevPAR decrease, falling 4.2 percent to $31.91, followed by Houston with a 1.7-percent decrease to $46.03.

Maui’s revenues per available room was the highest in the state, averaging $154.10 for the first six months of 2010. Kauai posted a RevPAR of $109.36 and the County of Hawaii had an average RevPAR of $101.92 for the first half of 2010.

Global tourism recovery—continued from page 1

to post the fastest growth—up 18.0% compared to June 2009. This is based on a strong regional economy and the ability to attract long-haul traffic through the region’s hubs.

Asia-Pacific carriers recorded the most significant demand improvement at 15.5%. China continues to be the region’s growth engine.

US air carriers grow 11% 
North American carriers posted growth of 10.8%, comparable to the 10.9% recorded for May 2010. Strong growth and the industry-leading load factor of 86.6% are contributing to strong second quarter financial results being announced by the region’s carriers.

European carriers reported 7.8% growth, down slightly from the 8.3% recorded in May. While annualized growth of 6.2% is in line with the industry average, it is clear that the recovery in Europe is lagging behind the rest of the world.

Latin American carriers showed a 14.7% increase in passenger traffic compared to June 2009. This reflects a more normal growth rate than the 23.6% recorded in May when results were heavily skewed by the Influenza A(H1N1) crisis which centered on the region in May last year.

African carriers posted a 21.3% increase in traffic in June, positively impacted by activities surrounding the FIFA World Cup.

Air seats to Hawaii in 2010 are expected to reach 9.2 million, an increase of 6% over the 8.7 million seats in 2009. Alaska Airlines entered the Hawaii market in late 2007 and will fly over 613,000 to Hawaii in 2010. The air carrier expects to be flying 800,000 seats to Hawaii

The increase in seats is strong evidence of growing demand for travel to Hawaii, as airlines only add seats when more people are flying and flights begin to sell out.

Hawaii lost nearly a million seats in 2008 when Aloha and ATA went bankrupt and the financial crisis cut business and leisure travel. ATA carried 770,000 passengers. Aloha blamed the shutdown on the airfare war with Mesa Go! and Hawaiian Air, the high price of oil, increases in airport fees charged by the state.

The State of Hawaii also lost $15 million in airport fees paid by ATA and Aloha Airlines. In addition, 1,900 Aloha Airline workers lost their jobs, leading to a loss of as much as $100 million in wages, taxes, and other economic activity for the state.

ILWU Tourism caucus —continued from page 3

were built and existing hotels were bought by new operators such as Fairmont, Ritz-Carlton, Marriott, Prince, and KSL. The Council of Hawaii Hotels disbanded in 1995 and the ILWU had no choice but to negotiate individual contracts with each hotel and golf course.

Today, nearly all ILWU hotels and golf courses meet and negotiate separately with management. This process allows the union contract to meet the unique needs of the members of each hotel or golf course, but it can also lead to different levels in wages and benefits, depending on the strength and solidarity of unit members. A strong and active unit may win higher wages and benefits, while a weaker unit may agree to lower wages and benefits.

ILWU full-time officers serve as the union spokesperson in negotiations, and they try to maintain the core provisions of the contracts in their Division. However, ILWU democracy gives members the final vote on their contract and different standards have begun to emerge among ILWU tourism units.

Solidarity and unity 
The ILWU’s top officers have long recognized the need to build more unity among ILWU members in hotels and golf courses and to maintain the highest standards in ILWU contracts. Nearly all the tourism units are in the Hotel Industry-ILWU Pension Plan and a growing number of hotels provide medical benefits through the ILWU Health and Welfare Trust Fund.

The officers held the first statewide meeting of all ILWU hotel units on March 29-30, 2006, at the Maui Prince Hotel (see the March 2006 Voice of the ILWU). A second tourism conference was held meeting in June 2007 (see the May 2007 Voice). The goals set by these conferences were: negotiate stronger job security language; reduce or eliminate the members’ share of medical premium by getting more hotels into the Health and Welfare Fund; increase contributions into the Pension Fund; eliminate or limit favored nation language in some contracts; maintain highest standards of ILWU wages and benefits.