2 oceanfront resorts up for grabs in Hawaii

Real Estate Alert, March 3, 2004

Outrigger Hotels & Resorts is offering two Hawaiian resorts with a combined value of about $245 million.

The Honolulu firm has tapped Eastdil Realty to market the 545-room Waikoloa Beach Marriott, on the Big Island, and the 521-room Wailea Marriott, on Maui.

There are no asking prices, but market players say both hotels should command bids in the neighborhood of $230,000/room. That would value the Waikoloa at $125 million and the 521-room Wailea at $120 million. Investors can bid on either or both properties.

The hotels have been performing exceptionally well as of late, benefiting from a resurgence in Hawaiian tourism. The oceanfront properties are not subject to management contracts, so hotel operators, such as Hilton Hospitality and Intercontinental Hotels, are likely to be among the bidders.

The Waikoloa Beach property, on the Big Island's Kohala Coast, has an occupancy rate of about 85%. Room rates range from $195 to $300. The property includes two restaurants, a lounge, a salon and spa, a 36-hole championship golf course and a fitness center, as well as significant meeting and banquet space.

The Wailea property, which sits on a 22-acre parcel, has maintained an occupancy rate of more than 90% in recent months, with room rates starting at $228. A buyer could create timesharing units either by converting rooms or expanding the property. The resort has more than 45,000 square feet of meeting and banquet space, as well as 60,000 sf of outdoor-function area. There is a spa and salon and a "kids club" with supervised activities for children. The property, which also includes three restaurants, was the first resort built in Wailea.