Kahala Mandarin
sold to local hui

The hotel will continue to be
operated by Mandarin Oriental

The Kahala Mandarin Oriental Hawaii hotel, known by old-timers as the Kahala Hilton, has been sold to a local investment group.

Trinity Investments LLC is buying the luxury hotel for an undisclosed price through an affiliate named Kahala Hotel Investors LLC, of which Jon Miho is listed as an agent.

The hotel will continue to be operated by Mandarin Oriental Hotel Group International Ltd., a Hong Kong-based hotel management company 75 percent owned by trading conglomerate Jardine Matheson.

"For now it's business as usual," said Ruth Ann Becker, spokeswoman for both the seller and the buyer. "The Mandarin Oriental has a (management) contract with the hotel and Kahala Hotel Investors has agreed to assume the collective-bargaining agreement that is in place," she said.

The deal is expected to close within the next several months.

Of the 700 employees, some 500 are members of UNITE HERE Local 5, a hotel and restaurant employee union.

"It's pleasing to be able to have an ownership entity that is local, that hopefully we can engage in discussions as needed, and is committed to be an active part of the community going forward," said Eric Gill, union president.

The union contract at the Kahala Mandarin and most major Oahu hotels, expires June 30, 2006.

"This particular acquisition cuts against the trend," Gill said.

"The trend has been for ownership of hotels increasingly to be big global investment funds that treat the hotel acquisition as if it were a real estate exchange and we've seen that problem increasing across the country. It affects everything including our bargaining," he said.

Over the years the union has been able to negotiate new contracts locally, " but that is increasingly not so," he said.

In 1993 the 368-room hotel was sold by William Weinberg's WKH Corp. of Los Angeles to Japan-based Kahala Royal Corp. and local developer Bill Mills for an estimated $50 million. In 1996 the hotel was renamed after a 40 percent investment by Mandarin Oriental. Kahala Royal redeemed the investment for $94 million earlier this year, an amount which included a repayment of $10 million to Mandarin Oriental's subsidiary. Mandarin Oriental realized a $48 million pretax gain on the sale.