United States -  Oahu Island

O'ahu maintains its status as a top-tier tourism destination, evidenced by its seventh record year of RevPAR performance in 2017, only trailing New York in RevPAR. Market-wide occupancy declined seven basis points in 2017 from the level registered in 2016, attributed to a moderate increase in new supply, as well as a number of renovations and rebranding projects throughout Waikiki. Average rates continue to register growth; except for 2015, ADR increased year-over-year from 2011 through 2017. Given the island’s dependence on the tourism industry, demand is susceptible to contraction during challenging economic periods, and typically rebounds to prior peak levels during prosperous economic periods. Fortunately, the strength of the domestic economy, coupled with increasing visitation from Asia-Pacific countries, such as South Korea, Taiwan, China, Australia, and New Zealand, bodes well for the O'ahu market.

According to Hawaii's Department of Business, Economic Development & Tourism (DBEDT), visitor arrivals are forecast to increase year-over-year through 2021, albeit at a slower pace than experienced in 2017 when visitation increased by 5%. Since the 2008 implementation of a visa-waiver program, arrivals to Hawaii from South Korea have grown approximately 580% (from roughly 38,000 visitors in 2008 to 258,000 in 2017). Despite the anticipation of new supply, significant improvements in airlift throughout the Hawaiian Islands is expected to generate strong demand in the near term. However, ADR growth is anticipated to moderate as price-sensitive travelers begin to seek alternative accommodations and destinations.

Despite O'ahu’s status as the most expensive place to build in the U.S., many new hotel projects are currently in the pipeline. Approximately 15 hotel projects (roughly 3,000 rooms) are proposed for the O'ahu market, with half of the developments located in Honolulu, and the remaining projects in West O'ahu. However, only two of these hotels are currently under construction—the Ritz-Carlton Residence East Tower in Waikiki and the Residence Inn by Marriott in Kapolei. Recent openings include the Embassy Suites by Hilton in 2017, as well as the redevelopment of The Laylow, an Autograph Collection Hotel (formerly Aqua Wave Waikiki) and the 'Alohilani Resort (formerly Pacific Beach Hotel). Despite new supply entering the market at a moderate pace, O'ahu hotel values are anticipated to increase modestly over the next two years before stabilizing. The sheer amount of development throughout the island, in terms of both residential and retail space, suggest that there is a large amount of pent-up demand; hence, new supply is expected to be easily absorbed.

Transaction activity in O'ahu remained relatively stable in 2017. The sale of the Turtle Bay Resort in December 2017 for $735,000 per room represented the top single-asset sale last year. Other sales throughout the year include the leasehold interest in the recently redeveloped Surfjack Hotel & Swim Club, a majority interest in the leasehold interest of the 'Alohilani Resort, and the fee simple interest in the Ambassador Hotel Waikiki. Strong sales activity continued during the first quarter of 2018, with the Hotel Renew by Aston, Aston Waikiki Beach Hotel, and the Hilton Garden Inn each transacting for more than $300,000 per room. Given the market’s high barriers to entry and strong RevPAR performance, investor interest continues to be strong, with high-price transactions also occurring on the neighboring islands of Maui, Kaua'i, and Hawai'i. The overall outlook for Hawaii is positive given the robust increases in international visitation, as well as the expectation that domestic visitation will remain stable.

* 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.

Change In Value For Market:

Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Oahu Island RevPAR Change

Oahu Island RevPAR

Year RevPAR
2007 $128.16
2008 $126.34
2009 $109.45
2010 $117.71
2011 $133.76
2012 $155.79
2013 $174.42
2014 $182.51
2015 $187.33
2016 $191.63
2017 $193.89
2018 $202.66
2019 (f) $210.80
2020 (f) $218.21

For more information, please contact:

Adam Lair, MAI
[email protected]
  • +1 415 896-0868 (w)
  • +1 504 231-2651 (m)
John Berean
[email protected]
  • +1 281 381-3456 (w)