Owner to close Ilikai Hotel


POSTED: Wednesday, July 08, 2009

The storied but money-losing Ilikai Hotel will close tomorrow after more than 45 years of hosting Waikiki vacations for millions of travelers, many of them repeat visitors to Hawaii.

Current guests have been told they will receive other accommodations, as will travelers with future reservations.

New York-based iStar Financial Inc. said the hotel operation would close tomorrow, that its subsidiary would take possession of the property Friday and that it continues to evaluate possible uses for the property that will address community needs.

The number of employees that will lose their jobs is unclear, as conflicting numbers were provided by parties involved, ranging from 65 full-time employees to as many as 142 members of Unite Here Local 5. It has 75 members working at the hotel full time each day, said Cade Watanabe, Local 5 community and political organizer. Calls to the hotel were not returned.

When it was previously threatened with closure in February, an estimated 150 full- and part-time employees would have been affected. At that time, iStar refused to pay for ongoing operations, noting losses of more than $300,000 a month since October.

Andrew G. Backman, iStar's senior vice president of investor relations and marketing, said yesterday in a statement that iStar could not identify sufficient cost savings and operating efficiencies to allow continued operations, and that it had not been able to stem operating losses.

It had explored “;all available options”; to avoid closing the hotel, it said, “;and recognizes the impact such a decision will have on the community, condominium owners and residents, hotel employees and guests.”;

Backman also said the closure would not directly affect operations of the other 806 condominium and time-share units or common areas of the Ilikai.

Word of the closure came as Local 5 was spreading the word about a vigil in support of Ilikai workers at the hotel at 3:30 this afternoon.

The union intended the display to “;call publicly on iStar to meet, reach a deal and make sure workers get rehired at the hotel,”; Watanabe said before learning of the closure.

The union had initial communications with iStar “;early on”; in legal wranglings surrounding the property but had not secured meetings with the hotel's new owner.

The closure “;is really sad for the community and the workers, many of them longtime employees,”; said Murray Towill, president of the Hawaii Hotel & Lodging Association.

“;We all associate the Ilikai with 'Hawaii Five-O,' and it helped usher in the era of popular, mass tourism to Hawaii. ... I hope that we come out the other end of this process with a strong property there and ultimately a strong industry.”;

iStar subsidiary iStar FM Loans LLC bought the 203-room, 16-commercial-space hotel operation for $51 million in May at a foreclosure auction.

Original developer Chinn Ho, who broke ground in 1961 and opened the hotel in 1964, received $35 million for the entire property when he sold it in 1974.

Developer Brian Anderson's Anekona LLC paid $218 million for the property in July 2006, with plans to sink $60 million into redeveloping the aging icon into an upscale condominium hotel. The deal included 343 of 1,009 hotel rooms, commercial areas and the parking garage. Most rooms are privately owned.

The hotel's current operator is Hawaii Hotel Management LLC, owned by Anderson, who has been beset with lawsuits since the 2006 purchase. He recently filed bankruptcy for Anekona LLC as well as Anekona W LLC.