The record air passenger arrivals and the increasing popularity of timeshare and resort residential developments have boosted recent interest in building new resorts in Hawaii. New, exciting concepts from family-oriented to ultra-luxury resorts are entering this market with plans on widening the breadth of service offerings for the island’s visitors.
Topping this list is the recent announcement of Disney Resorts selecting Ko Olina on the island of Oahu for its first stand-alone hotel development not associated with a theme park. Its plans are to build an 800-unit hotel that encompasses the Disney Vacation Club timeshare concept that has more than 350,000 members. Disney paid $144 million to acquire the property, which is situated on 21 acres of oceanfront land. This is a unique concept for Disney and a great opportunity for Hawaii to benefit from Disney’s marketing and brand name.
On the other side of the hotel development spectrum are the plans by Starwood Capital Group to build an upscale Baccarat Resort. Capitalizing on the Baccarat crystal and jewelry luxury brand, the planned resort will demolish the former Wailea Rennaissance Hotel on Maui and replace it with 193 one- to four-bedroom residences. All units will have ocean views and include access to personalized concierge services. Architectural design and interiors are being directed by HKS Hill Glazier Studio and by world-renown interior designer Yabu Pushelburg. The planned opening of the Wailea Baccarat is 2010.
Similarly, an affiliate of Montage Hotels and Resorts purchased 122 acres on the North Shore of the island of Kauai. Overlooking picturesque Hanalei Bay, Montage has no immediate plans, but intends on eventually building an ultra-luxury resort.
Most hotel and resort developments are focused on the luxury marketplace as rising construction costs and land prices dictate the need for higher hotel room rates. In fact, most resort developments have had to incorporate a timeshare/fractional ownership component as well as a resort residential component to subsidize the development of a hotel.
Timeshare sales continue to be healthy with projects in Waikiki, Ko Olina, Wailea, Kaanapali, Kapalua, Waikoloa and Poipu on the drawing boards. Developers are capitalizing on the บาคาร่า Hawaii brand and its unique appeal. In fact, many timeshare operators realize the importance of a Hawaii location as a way to bolster their appeal to timeshare investors, many of whom are willing to pay a premium for a vacation resort in Hawaii.
Hotel Transactions Record Volume
Hotel revenue and operating success bred increased interest from institutional investors seeking prized resort properties for investment. Sales transaction volume for commercial real estate increased fivefold from $850 million to a 2005 record of $4.3 billion. For 2007, hotel properties constituted the majority of the total transaction volume by contributing nearly $1.4 billion in activity. Topping the list were two major properties – the Hyatt Regency Waikiki sold for $475 million and the Makena Resort on Maui sold for $575 million. On the market and projected to close in the near term are two Resort Quest Hotels and the Fairmont Orchid on the Big Island of Hawaii.
Hawaii Hotel Market Analytics
For year-to-date October 2007, the Hospitality Advisors LLC industry report noted that Hawaii’s hospitality industry continued to post solid RevPAR and ADR gains. Average hotel room rates rose from $186.17 to $198.82 as RevPAR grew from a statewide average of $150.24 to $151.33 in the past year. Overall, Hawaii’s hotels ranked second in RevPar growth only to New York City. Percentage increases in the past year in average daily room rates for mid-priced hotels surpassed luxury and upscale hotel brands by posting an 11 percent increase, compared to 5.5 percent and 7.7 percent, respectively.
Despite these financial gains, hotel occupancy rates fell from the prior year. As of October 2007, the year-to-date occupancy rate for Hawaii’s hotels decline from 80.7 percent to 76.1 percent. This decline coincides with increased economic concerns over the drop in residential home appreciation rates, rising fuel costs and decreased personal income being encountered in the United States.
After growing to 7.5 million air passenger arrivals for 2005, capacity constraints limited our growth in 2006 and 2007. Both Hawaii’s hotel inventory and airline seats reached a level near capacity. After 4 solid years of robust growth in air passenger arrival counts and visitor spending, Hawaii’s hospitality industry posted only marginal growth in the past year.