Tourism is the core of O'ahu’s economy. Attracting more visitors than any other island in the state, O'ahu offers a Hawaiian experience in a relatively urban setting, particularly in Honolulu. While occupancy declined in 2006 and 2007, ADR grew from 2006 to 2008, as hotel operators raised rates to maintain RevPAR. However, occupancy fell again in 2008 and 2009, as the Great Recession led to a contraction in destination travel. Heavy discounting to attract visitors prompted the ADR declines in 2009 and 2010. Hotel occupancy generally recovered from 2010 through 2015, with the exception of 2013, due in part to the large increase in demand from Asian markets. In 2015, travelers to Europe and South America were displaced to this market, as terrorist activity and the Zika virus, respectively, affected the perception of those markets as tourist destinations, causing a minor increase in occupancy. Occupancy declined in 2016 given the entrance of new supply and continued to decline in 2017, attributed primarily to the renovations and rebranding of several properties within the Waikiki submarket, recovering slightly in 2018. ADR generally strengthened year-over-year from 2011 through 2018, aside from a slight decline in 2015. In 2019, tourism reached an all-time high, with visitor arrivals surpassing 10.4 million for the state of Hawaii that year, and both occupancy and ADR increased.

The greater Hawaii market was devastated by the COVID-19 pandemic in 2020. A mandatory two-week quarantine for all travelers was implemented in March 2020; thus, most hotels temporarily suspended operations. Demand began to trend upward in June as the quarantine was lifted for interisland travel. The quarantine for inbound travelers was eased in October, contingent upon a negative COVID-19 test result; in response, lodging facilities began to reopen in October and November. Occupancy remained relatively flat in early 2021, attributed to large outbreaks of COVID-19 in major feeder markets. A distinct shift occurred in the spring of 2021, as occupancy began to rebound along with strong leisure demand. RevPAR approached pre-pandemic levels over the summer, but demand was affected by the Delta and Omicron variants in the latter half of 2021. Performance metrics rebounded notably in 2022, with RevPAR nearly reaching the pre-pandemic peak that year despite relatively limited international visitation. All metrics illustrate growth in 2023, and the near-term outlook remains optimistic, as tourism from international sources (most notably Japan) should improve. However, domestic tourism, which supported the recent gains in ADR, has begun to moderate, with some softness in demand noted in the booking patterns for the summer of 2023.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

ADR, Demand, Occupancy, RevPAR, and Supply Projections:

Change In Value For Market:

Oahu Island RevPAR Change

Oahu Island RevPAR

For more information, please contact:

John Berean Senior Vice President, Hawaii and Northern California Region Leader Valuation, Market & Feasibility Consulting [email protected] +1 281 381-3456 (w)