Hawaii Investment Property
Hotel Investment Market in Hawaii – Commercial Real State In Hawaii
Western real estate business provides a look into the varying landscapes of western offi ce, industrial, retail and multifamily markets.
Hawaiian Hospitality
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.
Timeshare Development
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 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.
Forecast 2008
Investors continue to remain enamored with Hawaii’s hotels and resorts. Shortage of prime vacation resort properties worldwide attracted institutional investors throughout the world to Hawaii’s shores. Japanese, Korean, Chinese and Australian as well as North, Central and South American firms are scouring the islands for attractive resort investment opportunities. The recent purchases of resort land bode well for increasing Hawaii’s hotel inventory and allow for continued growth in air passenger arrivals and visitor spending.
Despite Hawaii’s isolated location, it is not immune to the subprime woes and credit crunch that stirred concerns of a possible U.S. recession. Many transactions are likely to be re-traded or be faced with increased scrutiny of financial statements and projections by lenders. Investment sales transaction volume will slow through 2008 as investors reappraise their asset allocations into real estate. Those institutional investors willing to capitalize on this lull in activity by conducting thorough due diligence will find that Hawaii hotels and resorts remain a lucrative investment opportunity.
Full Article Resourse: markbratton.com/blog/
About the Author
Mark Bratton is President of Bratton Realty Advisers, Ltd., and exclusively contracted with Colliers Monroe Friedlander, Inc., Hawaii commercial real estate organization. Specializes in the sale of investment properties in Hawaii. Visit http://markbratton.com for more info.
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Hawaii Hotel $798.67 Hawaii Hotel is located on the beach in Miami Beach’s Miami Beach neighborhood, close to Bal Harbour Shops. Other points of interest are Lincoln Road Mall and Haulover Park Marina. Hotel Features. The hotel serves a complimentary Continental breakfast. Hawaii Hotel features multilingual staff, concierge services, and self parking. Complimentary wireless Internet access is available in public areas. Other property amenities at this Art Deco property include tour assistance. The front desk is open during limited hours. Guests have access to a partner property’s business facilities. This is a smoke free property. Guestrooms. 38 air conditioned guestrooms at Hawaii Hotel feature safes and windows that open. Accommodations offer city views. Beds come with pillowtop mattresses and Egyptian cotton linens. Bathrooms feature shower/tub combinations, complimentary toiletries, and hair dryers. In addition to desks, guestrooms offer phones. Televisions have cable channels. Guests may request irons/ironing boards, extra towels/bedding, and wake up calls. Housekeeping is available daily. Guestrooms are all non smoking. Notifications and Fees:There are no room charges for children 12 years old and younger who occupy the same room as their parents or guardians, using existing bedding. Some properties have extra fees for amenities or services that may apply even if you do not use them. Government fees or taxes also may be charged to you when you check in or check out. This property told us they will charge you for the following: In room safe fee: USD 2.14 per day We have included all charges provided to us by the property. However, charges can vary, for example, based on length of stay or the room you book.The following fees and deposits are charged by the property at time of service, check in, or check out. Self parking fee: USD 10.70 per night (in/out privileges)Deposit: USD 50.00 per staySpring Break deposit: USD 100.00 per stay (cash only)Cleaning deposit: USD 100 per day The above list may not be comprehensive. Fees and deposits may not include tax and are subject to change. Notifications and Fees:There are no room charges for children 12 years old and younger who occupy the same room as their parents or guardians, using existing bedding. Some properties have extra fees for amenities or services that may apply even if you do not use them. Government fees or taxes also may be charged to you when you check in or check out. This property told us they will charge you for the following: In room safe fee: USD 2.14 per day We have included all charges provided to us by the property. However, charges can vary, for example, based on length of stay or the room you book.The following fees and deposits are charged by the property at time of service, check in, or check out. Self parking fee: USD 10.70 per night (in/out privileges)Deposit: USD 50.00 per staySpring Break deposit: USD 100.00 per stay (cash only)Cleaning deposit: USD 100 per day The above list may |