InsightThe Honolulu City Council unanimously approved Kyo-ya Hotels & Resorts' $700 million redevelopment proposal for its Princess Kaiulani and Moana Surfrider properties Aug. 18.

Kyo-ya plans to demolish the eight-story, 140-room Diamond Head Tower annex immediately east of the Moana Surfrider's Banyan Wing. A 26-story luxury tower consisting of both hotel rooms and whole-ownership residences would go up at the annex's present site and would be the first new, oceanfront hotel built in Waikiki in decades.

Kyo-ya also plans to tear down a pair of aging buildings at the Sheraton Princess Kaiulani and substantially upgrade the property's 28-story Ainahau Tower. A new, 33-story Pikake Tower is planned for the location and would also feature both condo hotel units and whole-ownership residences.

Plans to include the new residential units at both properties initially didn't sit well with the hotels' union employees. Unite Here Local 5, representing about 900 workers at the Princess Kaiulani and Moana Surfrider, sued Kyo-ya in the spring over concerns about a loss of jobs linked to the redevelopment plan.

"The union had originally opposed our plan for the Princess Kaiulani redevelopment that included condo hotel units," said Greg Dickhens, executive vice president for Kyo-ya. "So over the last few months we've worked with the union leaders, as well as our employees directly, to determine what product mix works for them as well as us and ensures that the project can actually proceed and is financially viable. We recently negotiated a settlement, and we're very happy with the outcome."

That deal was reached in time for union leaders to testify in support of Kyo-ya's redevelopment plans before the City Council in August.

Dickhens noted that most of Waikiki's hotel rooms were built in the 1960s and '70s, and said upgrading those products is absolutely essential.

"If Waikiki wants to retain its position as a leading visitor destination in a world environment, we need to reinvest in our hotel inventory," he said. "Kyo-ya has spent over $250 million renovating the hotel product on Waikiki Beach in the last five years, and the Princess Kaiulani and the Diamond Head Tower will [mark] the completion of Kyo-ya's redevelopment efforts in Waikiki."

Dickhens said actual construction work wouldn't begin on either project before April 2012.

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