The Aloha State’s biggest resort area has seen ebbs and flows in its popularity over the years, but with recent major investments, it continues to demonstrate an ability to reinvent itself.
The Hilton Garden Inn Waikiki Beach opened in 2016 on Kuhio Avenue.
The Hilton Garden Inn Waikiki Beach opened in 2016 on Kuhio Avenue.
It was peak holiday tourist season for Hawaii in 2016 — the week between Christmas and New Year’s Eve — when Barack Obama, days from the end of his second term, put the presidential stamp of approval on a budding renaissance in Waikiki.
Accompanied by the first lady, Obama dined with Facebook CEO and founder Mark Zuckerberg at Mahina & Sun’s, a restaurant from James Beard-nominated chef Ed Kenney in the freshly opened Surfjack Hotel and Swim Club.
For more than three hours, two of the most influential people in the world ate in an area of Waikiki that had once been the target of pejorative descriptions like “seedy,” “a dive,” “run-down,” “trashy” and “derelict.”
“Ten years ago, if you had said that the president and one of the 10 richest people in the world would be dining on Lewers [Street] and Kuhio [Avenue], people would have laughed at you,” said Ben Rafter, who worked on developing the Surfjack while president and CEO of Aqua-Aston Hospitality until 2015. He now oversees several Waikiki properties as the CEO of OLS Hotels and Resorts.
The Kuhio Avenue corridor, long confined to the shadow of the parallel but glitzier Kalakaua Avenue, was entering a phase of metamorphosis. The Surfjack celebrated its grand opening in March 2016. Five months later, the International Market Place, a 50-year-old shopping and entertainment hub, emerged from a $500 million, two-year reinvention, boosting the areas surrounding it along both Kuhio and Kalakaua.
In the previous five years, beyond the Kuhio corridor, investment had poured into Waikiki, notably augmenting the variety of offerings.
Waikiki is as important as ever to tourism, the Aloha State’s No. 1 industry. In 2018, the resort area accounted for half of all of the booked hotel nights in the state, according to the Hawaii Department of Business, Economic Development and Tourism.
Reinvestment in Waikiki has coincided with a market that is scurrying to adjust to future demographics and anticipated travel trends. Hotels are ramping up experiences, improving technology and engaging in collaborations with local attractions and businesses. By 2015, hotels were already adapting to the growing influence of social media, and today, hardly a property opens without touting its “Instagram-friendly” features, including living walls, colorful murals and massive art pieces.
Waikiki has also benefitted from two recent turns of events. In June, the Honolulu City Council enacted new regulations on short-term rentals. This was followed by the state legislature doubling down on Waikiki as Hawaii’s tourist heart with a $13 million commitment to fortify the beach.
A big round of investments
Waikiki’s recent boom of renovations and remakes has transformed the landscape of the state’s tourism nucleus.
Since 2015, more than $1.5 billion has been invested in the resort area. There have been brand new projects such as the Ritz-Carlton Residences Waikiki Beach, massive rebrandings such as the Pacific Beach Resort’s conversion to the Alohilani Resort Waikiki Beach and thorough revamps of existing properties such as the Queen Kapiolani Hotel.
In 2019, the pace continued with the introduction of the Waikiki Beachcomber by Outrigger and two luxury properties.
“It’s normal business practice to renovate rooms every eight to 12 years, and some of this current cycle follows that normal business need,” said Sean Dee, Outrigger Hotels and Resorts’ chief marketing officer. “However, in my opinion, the recent overall scope and scale is unprecedented for this destination.”
Waikiki development has historically come in cycles.
In the early 1990s, Honolulu mayor Jeremy Harris led several rounds of public investment totaling $70 million in the resort area, which made Waikiki more inviting, with new pathways and public spaces, including the Waikiki Historic Trail, a vision of Hawaiian historian and author George Kanahele.
A decade prior to the current cycle, the Beach Walk area was rejuvenated with the $200 million Trump International Waikiki and a series of Outrigger projects, including multiple hotel renovations and a new commercial center, totaling more than $500 million.
The International Market Place has now been at the center of two growth cycles in Waikiki. Opened in 1957, two years before Hawaii became a state, it was led by Donn Beach, who opened Hawaii’s first Don the Beachcomber tiki bar within the complex. Duke Kahanamoku’s nightclub, trendy restaurants and myriad new shops quickly made it a magnet for locals and tourists alike. Don Ho, before achieving popularity on the mainland, performed regularly at the International Market Place.
Eventually, the shine wore off, and the entertainment options moved elsewhere. By the early 2000s, the property owner, the Queen Emma Land Co., was looking for a partner who would lead a rebirth and manage the center.
“Waikiki is cyclical, and a lot had happened around the Market Place since it had opened,” International Market Place general manager Breana Grosz said. “The Kamaaina [Hawaii residents] were not coming down to Waikiki as much, and really, they had been talking about renovating the property for many years.”
When the Market Place reopened in 2016, the beloved, 160-year-old banyan tree still stood at its center, but nearly everything else was new. The plaza was anchored by Saks Fifth Avenue (the first in Hawaii) and featured a range of shops and dining choices. It also offered cultural programming, such as a customized hula show that tells the story of Waikiki, including about Duke Kahanamoku, Don Ho and Queen Emma.
A 700-stall parking lot was also added. “The parking and dining have been the No. 1 thing for folks when they say they are coming back,” Grosz said.
In 2019, the International Market Place received a Global Award of Excellence from the Urban Land Institute for its strategy of preserving original elements, modernizing the facility and serving as a community resource.
Peter Apo, who grew up in the area, went on to serve as a state legislator and later worked as a hospitality cultural advisor on the International Market Place team.
“The expression of Hawaiianism is subtle,” Apo said. “You look around and find items here and there, plaques explaining the history or the statue of Don Ho. It has the sense of place. … There’s a kid’s splash area there with a Hawaiian design that reflects the star system above Waikiki, and the waterfall on the Kuhio Avenue side represents the headwaters of the stream up in Manoa valley.”
The current wave of investment can be traced to a $100 million renovation of the Hyatt Regency, which was unveiled in 2015, but it started to crest in 2016. Along with the International Market Place, the Ritz-Carlton Residences Waikiki Beach opened its first tower, and the Surfjack and the Hilton Garden Inn Waikiki Beach were inaugurated.
Since then, the Ritz-Carlton Residences has opened its second tower; the Laylow, Autograph Collection, opened on Kuhio; the Alohilani Resort Waikiki Beach was launched; the Hyatt Centric debuted; and the Queen Kapiolani Hotel underwent a $35 million remake.
In 2019, the Waikiki Beachcomber by Outrigger wrapped up its $35 million revamp, and the Sheraton Waikiki committed a reported $110 million to renovate its 1,636 rooms.
“This is not your parents’ Waikiki any more,” Outrigger’s Dee said. “A lot of development has been purpose-built to attract millennials and a younger demographic. There’s strong retail offerings. It’s been a major investment across the board, and it has rejuvenated the room stock in Waikiki.”
Waikiki also got two new luxury properties in 2019: Halepuna by Halekulani; and Espacio, the Jewel of Waikiki, a new concept from Aqua-Aston Hospitality that has broken the mold of upscale offerings with an inventory of just nine three-bedroom suites going for $5,000 per night.
Companies with multiple properties, including Marriott, OLS, Outrigger and Halekulani, have announced upcoming projects and investment in the next three to five years.
“I believe Waikiki needs to continue reinventing itself, and accelerate doing so,” OLS’ Rafter said. “The visitors of the ’60s, ’70s and ’80s are traveling less frequently, and it’s still unclear if the next generation will adopt Hawaii and Waikiki as much as the previous and current ones. I’m not sure we have a handle on the 25- to 30-year-old traveler with a family thinking about twice-a-year family vacations.”
Kuhio rebirth mirrors tourism trends
Many of the projects have injected new vitality into the formerly debilitated Kuhio Avenue, which a decade ago was known more for dive bars and loading docks than for celebrity chefs and midcentury modern boutique hotels.
Apo observed that “Kuhio used to be considered the backlot of the area, and there was a definite need to bring it up to speed so it wouldn’t be so trashy of a place to hang out. One thing International Market Place did was it opened up that back end, and it transformed that whole area of Kuhio.”
Across the board, properties are paying more attention to experiences and buzzworthy restaurants. The International Market Place has partnered with former “Top Chef” contestant Brian Malarkey, James Beard Award-winner Michael Mina and legend of modern Hawaiian cuisine Roy Choi. Iron Chef Masaharu Morimoto helms two restaurants at Alohilani.
“I wasn’t here at the time, of course, but I think it does feel like some of that energy of the ’50s and ’60s has returned to the area,” International Market Place’s Grosz said. “I say that as a resident of Waikiki, as well. Six years ago, there were not as many restaurants, and it wasn’t as diverse from a cuisine standpoint. Now there’s a next generation of chefs coming in, and there’s been a real food renaissance.”
Not everyone can have a spot on high-rent Kalakaua Avenue, and developers are thinking in new ways and diversifying their products along Kuhio Avenue to meet a range of tourism currents, including travelers who prefer top-of-the-line pampering and budget-conscious millennials who want to explore more of the island than the 2-mile-long resort corridor.
“It’s created a broader appeal for Waikiki,” Rafter said. “The next generation of travelers is going to be less satisfied with sitting on a beach and shopping. They are more satisfied getting outside of Waikiki and seeing other parts of the island. I think it’s created more space for the 1,000-room Marriotts and the 125-room boutiques to coexist. Before, Waikiki did have boutique products, but not on this level.”
At the Hotel Renew, a 72-room property a couple blocks off Kuhio Avenue operated by OLS, a recent rebrand and redesign focused on wellness and sustainability, with a curated slate of off-site programming.
“Renew is a relatively small property stuck between 800-room, large-flag properties,” Rafter said. “We wanted to do something that completely made it different from neighbors and attracted an underserved audience who wants to experience something else. … Renew doesn’t have public spaces, so we made Oahu the public space. Our yoga is in the park or on Magic Island. Fitness is hiking.”
Outrigger, which was purchased by KSL Capital Properties in 2016, is steadily moving forward with projects to rejuvenate its catalog, including along Kuhio Avenue. The company’s Waikiki plan calls for $200 million in investments over the next four years, including an upcoming renovation of the Ohana Malia. Later in 2020, the Outrigger Reef will be revitalized, including new suites, room renovations and a new restaurant.
Dee said, “At the end of the day, younger travelers travel more, spend more and, on the qualitative side, have higher expectations. They want experiences. They want to explore the island. They want to sample new types of food.”
Waikiki will have to summon all its reinvention prowess in the coming decades as it confronts an evolving market, shifting traveler demands and environmental pressures. There will be no shortage of effort, however, since a 2016 study determined the 3.5-square-mile resort area contributes $2.2 billion to the state economy each year.
First, climate change issues will require their own creative thinking and collaborations. Waikiki, which originally was a marshy, agricultural region with a network of taro patches and fish ponds, has been irrevocably shaped by humans. The beach is almost entirely man-made, and the state has been buttressing the shoreline in one form or another for at least a century.
Contributing to erosion, however, are hotel towers that nudge against the coastline, sea walls and interrupted streams that once naturally replenished the beaches. In May 2017, a surging king tide flooded Waikiki’s streets and beachside properties, offering a glimpse of a future shaped by rising sea levels.
“There needs to be a balance between managing and marketing tourism,” Dee said. “There are pressures on the beaches and infrastructure, and I think we need to work together for private and public solutions. There’s a massive need for sustainable approaches to preserve our beaches and watershed.”
In 2012, the state completed a $2.4 million Waikiki Beach restoration project, and during its 2019 session, the legislature allocated $13 million to fortify the coastline.
Among Hawaii residents, positive feelings about tourism have declined in recent years as the state has crept toward 10 million annual visitors.
On Oahu, largely driven by complaints from residents about the changing nature of the neighborhoods and the cost of housing, the local government approved new restrictions on short-term rental units in June. Immediately, demand for vacation rentals in Waikiki, where rules are looser thanks to resort zoning, jumped 28%.
Apo said the state’s tourism is part of its aloha legacy.
“Absolutely, if Waikiki fails to continue to attract a variety of visitors it will impact outside communities more,” he said. “We as a people embrace aloha. We welcome strangers. It’s in our DNA. At the same time, it’s really painful to see what used to be a really sacred place kind of morph into a mainland model of tourism, like Miami, a very urban, high-density model. Waikiki over the years has totally lost its Hawaiian sense of place.”
Apo called George Kanahele, the author and historian, a mentor and said more projects like his Waikiki Historic Trail are needed. While Kanahele, who died in 2000, is often cited as a visionary, much of that vision has so far gone unrealized. The trail was just one of 140 ideas he offered in his 1994 report “Restoring Hawaiianness to Waikiki.”
“It involved public policy, design changes, physical natural sense of place as well as activities,” Apo said. “The document got some attention. We didn’t come close to realizing a lot of the stuff, but it started the conversation.”
Apo said he realizes there’s no turning back the clock on Waikiki’s urban character, so he would like to see investment in areas such as Hawaiian hospitality training and partnerships with local artists, musicians and businesses.
“It’s one of the most globally attractive beach resort destinations,” he said. “It used to be one of a few, but now it’s one of many. There are questions to be answered about our ability to compete with other sun-and-sand, tropical destinations and keep the same market share.”
One thing everyone seems to agree on is that Waikiki will need to continue its self-reflection and embrace continued innovation in order to continue thriving as the state’s tourism center.
“Sometimes you can be a victim of your own success,” Rafter said. “Waikiki has high-80s occupancy and high rates. It makes it easy not to have to reinvent properties if you can say you’ll do well if you renovate in two years or 10 years. I think we have to force ourselves to reinvest in these products. We need to already be thinking about the next renovation and whom it’s targeting.”