Joseph Toy, who tracks the financial status of Hawai'i's lodging industry at Hospitality Advisors, put out a special report Monday, a week ahead of his regularly scheduled Flash Report on occupancies, room rates and revenue, The Maui News reported.

The message was bleak: Business during the normally busy summer just past was $136 million less than during the summer of 2007.

"I didn't want that message to get lost" when the August numbers come out, he said.

"The losses reflect a sharp fall in room nights sold (minus 10.5 percent) and visitor arrivals (minus 14.9 percent)," he wrote.

"Unfortunately we can expect these losses to continue through the end of the year as the market decline in the off-season is expected to be far greater than usual.

And that was written before the stock market took another swan dive Monday.

The Dow Jones, Standard & Poor and Nasdaq indexes all finished the day down about 4 percent, although at one point the Dow industrial average had dropped 800 points — a record point drop although not a record percentage drop.

Stocks in New York rallied late, for a net fall of 370 points in the Dow. Overseas markets, closing earlier, did far worse. The Russian and Brazilian exchanges dropped so far that regulators closed them.

On Maui, as elsewhere, gold sales rose as worried people looked for something safe.

Richard Dan, owner of Cash for Gold in Wailuku, said his sales of gold bullion are way up. "The dollar is fiat money," he said. "The politicians have turned the printing presses on high, but there's nothing behind it.

"I am selling to a lot of people who are scared."

However, Dan said, he also is buying a lot more gold than usual. He declined to give exact numbers.

The reason, he said, is that his shop is dealing with both "haves" and "have-nots."

Haves are people with assets that were in something other than precious metals - stocks, bonds, real estate. "They don't want to be in a weak dollar," Dan says.

The have-nots are not the never-hads but people who were formerly doing well: real estate agents, mortgage brokers, lawyers. During flush times, they bought Kruggerands, Maple Leafs and other gold coins from Dan.

Now, with the income drying up but expenses continuing, they are unloading to cover payrolls and other expenses.

"You wouldn't think lawyers would be affected, but they are," he says.

Gold provides "instant liquidity," he says. People who have gold can get cash "right then and there."

So there are both anxious buyers and desperate sellers.

One thing that puzzles him is that gold has gone down in price since a couple of weeks ago. Since then the stock market has had a 778-point drop in a day and, at least briefly, an even bigger drop Monday.

Gold, a refuge in gyrating markets, has not simply gone up, though. It was over $900 two weeks ago, dropped as low as $820 last week and rallied to $865 an ounce Monday.

"I've said it before and I'll say it again," Dan says. "We'll see gold at $2,000 before we see it at $650 again."

Toy says he looks primarily at measures of consumer confidence in order to forecast the health of Hawai'i's hotels.

"There is a lag of six months," he says. Consumer confidence measures (which are kept by such organizations as the Conference Board) turned down earlier this year.

The fall in visitor traffic and consequently resort revenues was predictable, therefore. With only two months left in this year, Toy sees no possibility of a bounceback, and now that confidence is being hammered again, he cannot expect any recovery though the first quarter of next year, either.

The low returns over the summer were disappointing, because that is normally the second-busiest time of the year for the island visitor industry.

The year began on a positive note, although only slightly over a weak first quarter in 2007. The downturn began in April, when Aloha and ATA stopped flying. Total revenues were down $20 million in April and May.

The rot really set in after that. Toy attributes that to rapid deterioration in air capacity, economic instability, drooping consumer confidence and rising fuel costs.

Oil prices dropped below $90 last Monday, but the drop was attributed to a contracting world economy, so it was a mixed blessing at best.

According to the figures submitted voluntarily by a majority of Hawaii's room renters, the drop-off in revenues has been rapidly accelerating.

The take was down $38.5 million statewide in June, $50.9 million in July and $46.4 million in August.

The number of room nights sold showed a less steep decline, suggesting discounting. The number of sold nights dropped by 154,000 in June, by 148,000 in July and by 135,000 in August.

"The decline in the off-season is expected to be far greater than usual," he warned.

Posted room rates are not going to show such big falloffs. Hotels have been making large investments in renovations and even rebuilding.

For every $1,000 reinvested in a resort, the managers need to be able to add something like $1.50-$2 a night to their rates — and keep their occupancies up.

Because their costs are higher, Hawai'i resorts need to run higher occupancies to break even than most places on the Mainland. Toy says he hears this discussed at conventions he attends on the Mainland, but he does not have very firm estimates.

Generally, he thinks, Mainland hotels probably need to have occupancies "in the 50s," but Hawaii results have to operate "north of that." At a rough guess, maybe 10 to 15 percentage points higher.

Hawaii hoteliers learned a hard lesson in the downturn in the early '90s, when they reduced rates to try to keep up occupancies. "It took about seven years for the industry to regain any real ADR (average daily rate) growth," he reported.

As a result, hoteliers are keeping their posted rates up and discounting through perks like free meals or spa visits.

He thinks operators are managing their troubles more effectively than they did after the triple whammy of the first Gulf War, Hurricane Iniki and the sharp decline in Japanese tourism in the early '90s.

Productivity has increased, thanks to new management techniques and systems that predict staffing needs better and help improve yield management.

That has only lessened, not forestalled, the effect. Over the summer, room revenue has dropped by $92 million (a million dollars a day).

Other revenues were down by $44 million. This reflects the customary division of income at Hawaii resorts, where for every two dollars in room rental, hoteliers typically take in another dollar from restaurants, bars, shops, spas and services such as weddings and meetings.

For more Maui news, visit www.mauinews.com.