Hotel occupancy in the four major Hawaiian hotel markets of Oahu, the Big Island, Maui and Kauai increased 4.5% in the first six months of 2005 compared the first six months of 2004. Over the same period, average daily room rates (ADR) increased 6.8%, according to data supplied by Smith Travel Research. Nationally, occupancy increased 2.8% and ADR rose 4.8%.

"Hawaii is enjoying its strongest economy since the early 1990s, and is seeing significant increases in vacation travel to the islands," says Michael Fishbin, national director of E&Y's Hospitality Services Group. "With a projected increase in air travel to the islands next year and a rapidly expanding cruise industry, we see no signs of diminishing performance in the local hospitality market."

Girding the expectations are continued strong performance in the local economy and a projected 10% increase in tourist visits this summer over last. Hawaii continues to be a heavily favored destination for both US and foreign visitors. Foreign investors are taking advantage of the continuing weakness of the US dollar, according to the report.