Hilton goes after
time-share market

The hotel chain plans to close
its apartments in Waikiki for
a $35 million yearlong renovation

By Russ Lynch
Star-Bulletin

Faced with a soft market for unfurnished rental apartments in Waikiki, Hilton Hotels Corp.plans to close the 235-unit Hilton Lagoon Apartments on Jan. 31, spend $35 million on a yearlong renovation and reopen it in 2001 as a time-share operation.

It will be marketed to what Hilton and other big hospitality companies prefer to call the vacation ownership market -- a name change that reflects the legitimacy they brought to what in the 1970s had been a fast-buck business rife with exaggerated promises of returns on investment.

Bernie Caalim, a Hilton spokeswoman in Hawaii, said the property will be managed by Hilton's vacation ownership arm, Hilton Grand Vacations, which will also market it to short-term leisure visitors.

Caalim said that faced with a long, dusty and noisy renovation, the company had no choice but to ask its long-term tenants to leave so the building can be shut down.

Hilton spent a year consulting with design professionals and decided the work that needed to be done would create "intolerable living conditions," she said.

A large inventory of empty condominium units offered for rent in Waikiki has depressed the rental market, Caalim said.

The 24-story building, in a prime location on the Hilton Hawaiian Village's landscaped 2.5-acre property at Waikiki Beach, was completed in 1967. It has always been a rental property, catering to upscale renters willing to pay the price for the scenery and location next to the restaurants and entertainment offered at the hotel. Some units, however, have been used for short stays by hotel guests.

Time-share, in which investors become partners in the purchase of a unit and get to use it one or two weeks a year, has become increasingly popular in recent years.

Purchasers enjoy the opportunity to swap time in their unit for time in other units around the world held by other time-share investors.

Increased regulation and self-policing, new public awareness and the entry of major companies into the business have erased the stigma the business once had.

Examples of major time-share investments in Hawaii include the Kauai Marriott Resort, which has 356 hotel rooms and 232 time-share units, the all-time-share Embassy Vacation Resort Poipu Point on Kauai and Embassy Resorts Maui.