Prices climb as heightened demand, willingness to spend converge.

Navigation: Main page

Author: Merlino, Diane

These days, the right customer for Hawaii is somebody who is willing to spend a little more to visit the Islands. The surge in demand and visitor counts coupled with other market dynamics is pushing prices up in all of Hawaii's supplier sectors, continuing a climb that began two years ago.

"Everything went up," said Angie Borrelli, a Hawaii specialist with Peak Travel Group in San Jose, Calif., "and to be honest, I can't blame them because the demand is there."

The price increases, which Borrelli believes will continue, are not affecting her Hawaii bookings so far.

"It's not preventing people from going," she said. "I had a family of five come in. I told them the airline tickets are $700 a pop, and they said, 'Oh, no, it can't be.' Then they said, 'Here's my credit card.'"

Hawaii's hotel and resort rates increased between 7% and 10% in 2006, following 2005 increases of 7% to 14%, depending on the property and the location, said Albert Herrera, vice president of hotels and resorts with Virtuoso, the upscale-agency marketing group.

Herrera said Hawaii remains competitive, even with the price increases, adding that "the shoulder season actually shrank, as well, so there is not as much room now for flexibility."

"We've seen hotels tighten up their pricing during the shoulder period. There used to be extremely big swings in rates in the off time; sometimes it used to be as much as 50%, and now it's more like 20%."

Herrera noted that while the increased accommodation prices in Hawaii "can come as sticker shock to a lot of consumers, it's actually stabilizing things to where we should have been taking into account the decreases in 2001, 2002 and 2003. It's really coming back to where it should have been."

Frank Haas, vice president of tourism marketing for the Hawaii Tourism Authority, said demand isn't the only factor fueling hotel price increases.

"Hawaii's hotel rates have gone up partly because the product has been refurbished," he said. "There have been renovations to some of the major hotels, and some of the more budget-oriented hotels have been demolished to make space for newer rooms, especially in Oahu."

According to Rob Solomon, senior vice president of sales and marketing with Outrigger Hotels and Resorts, "If you look at a given building, it's economically crazy to have bottom-end, mass-market hotel rooms that you are selling for $69 or $79 per night.

"So that part of the market is going away, but that's a good thing, because as the real estate is redeveloped, there is a lot of investment taking place, and the investment is resulting in a better and more satisfying product."

David Preece, vice president of travel-trade marketing with Classic Vacations and a former executive with the Hawaii Visitors and Convention Bureau, sounded a note of caution about Hawaii hotels' rate increases.

"Prices are often going up at a rate faster than investments in facilities, quality and service," Preece said. "That can lead to a 'value gap' that ultimately may result in lower guest satisfaction."

PHOTO (COLOR): The faces of kids at a Hilton hotel luau reflect fun, but fun doesn't come cheap.

~~~~~~~~

By Diane Merlino