Room revenue for Hawaii's hotel industry fell by 2 percent to $1.5 billion during the first six months of the year because of softening demand, according to the latest report by Hospitality Advisors LLC.
The decline in room revenue marks the first decline in half-year revenue since 2002.
The report said Hawaii hotels achieved a record average daily rate of $198.68 in the first six months, but could not overcome a 6 percentage point drop in occupancy to 74.6 percent.
State tourism liaison Marsha Wienert said the decline in occupancy reflects a shift in visitors' preference for alternate accommodations. More visitors are choosing to stay at time-shares, condo-hotels, bed and breakfasts, and cruise ships than at traditional hotels.
"It's a sign of what's going on in the lodging industry. There are a lot of different choices out there, no matter where you go," she said.
Weinert said hotels may need to shift their marketing strategy and target first-time visitors because they tend to stay at traditional hotels.
Statewide revenue per available room, a key industry measure known as "RevPar," slipped by 1.1 percent to $148.20.
While performance has eased since 2006, the industry still compares favorably to other U.S. markets, ranking second behind New York City in room rate and RevPar, and fourth in occupancy.
"We're still doing quite well, and we are in the top five industry categories nationally," said Joseph Toy, president and chief executive of Hospitality Advisors. "We are predicting that 2007 will approximate 2005 levels."
Properties across the islands showed declines in occupancy, while the daily rate continues to climb.
For the first half of the year, Oahu had the largest decline of 7.1 percentage points to 75.8 percent, but room rates increased by 6.7 percent to $164.70.
Maui's occupancy dropped by 6.1 percentage points to 76.1 percent, but achieved a 7.2 percent gain in room rates to $264.29.
Kauai's occupancy fell by 2.5 percentage points to 72.5 percent with the rate increasing by 8.6 percent increase to $201.97.
The Big Island reported a 4.2 percentage point occupancy decrease to 69.2 percent with a 6.7 percent daily rate gain to $203.57.
The hotel survey is compiled by Smith Travel Research in conjunction with Hospitality Advisors. The survey included 147 properties representing 46,765 rooms, or 81.4 percent of all lodging properties with 20 rooms or more in Hawaii, including full service, limited service and condominium hotels.