Waikiki could see its first new oceanfront resort in more than 30 years thanks to a plan approved unanimously Aug. 18 by the Honolulu City Council.
All told, Kyo-ya Hotels & Resorts is looking to spend $700 million on its Waikiki redevelopment project and is proposing major changes at its Moana Surfrider and Sheraton Princess Kaiulani properties, including a 26-story, luxury beachfront tower.
"When you look at the visitor industry product, or the hotel product in Waikiki, this would be a significant improvement over what currently exists," said Greg Dickhens, executive vice president for Kyo-ya. "Most of the products were built in the 1970s or the 1980s, and [the new luxury tower] would be an upscale product with larger guestrooms [and] larger bathrooms."
Kyo-ya is planning to demolish the eight-story, 140-room Diamondhead Tower annex immediately east of the Moana Surfrider's Banyan Wing and replace it with the new luxury tower featuring hotel rooms and whole ownership units.
The upgrades at the Sheraton Princess Kaiulani also call for the demolition of two buildings, while an extensive renovation is planned for the property's 28-story Ainahau Tower. A proposed 33-story Pikake Tower would also be built at the location and include both hotel and residential units.
"Princess Kaiulani was built in the 1960s and 1970s," Dickhens said. "Some of the guestroom product is dated and in need of a renovation, but given the size and orientation of some of those guestrooms, we think the best use would be to replace those buildings."
Thumbs up, thumbs down
Kyo-ya's initial plan, however, was not well-liked by the company's union hotel employees. Unite Here Local 5 leaders, representing nearly 900 workers at both the Sheraton Princess Kaiulani and the Moana Surfrider, sued Kyo-ya earlier this year over worries about lost jobs resulting from the proposed redevelopment.
"The union had originally opposed our plan for the Princess Kaiulani redevelopment that included condo hotel units," Dickhens said. "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."
Spending money to upgrade their Waikiki product certainly doesn't seem to have been too big a problem for Kyo-ya execs. In the past five years, the company has spent a total of $270 million on renovations at three of its Waikiki properties: the Royal Hawaiian, the Moana Surfrider and the Sheraton Waikiki.
Those upgrades have been warmly welcomed by many of Hawaii's tour operators, who say the improvements help Waikiki compete with both its international and domestic competitors.
"As a company, we sell so many other destinations [where] there is so much new build going," said Melanie Lucardi, vice president at Flight Centre USA and LibGo Travel. "In the case of Waikiki, it's been a really good thing to see so many hotels step to the plate with overall room enhancements, added amenities, changes to restaurants, pool area expansions. It's been a very good thing."
According to Dickhens, work on both the Moana Surfrider and Princess Kaiulani redevelopment is not scheduled to begin before April 2012.