Hilton mold cost The eradication of mold growth at Hilton Hawaiian Village in Waikiki may cost $20 million. Hilton Hotels Corp. reported yesterday it took a second financial charge of $10 million, doubling the price it expects to pay for the work of correcting the problem.
hits $20 million
By Tim Ruel
truel@starbulletin.comHilton is investigating the root cause of the mold, which will be a factor in deciding who will be liable for the infestation at Waikiki's largest hotel.
Hilton has said high humidity was responsible for the mold, which prompted the closure of Hilton's 453-room Kalia Tower in July. The tower cannot be reopened until spring or summer, Hilton said. The Kalia Tower opened last year at a construction cost of $95 million.
The newest charge, which hit Hilton Hotels' third-quarter earnings, follows a charge of $10 million in the second quarter for the same problem.
"Actual costs incurred in future periods may vary from the estimates, given the inherent uncertainties in evaluating these types of situations," Hilton said in a press release.
Since September, Hilton Hawaiian Village has been throwing away furniture, drapes, carpeting, appliances, wallpaper and other materials in Kalia Tower, where the mold was found by housekeepers earlier in the year. Fourteen tower employees reported minor symptoms of mold exposure, but there were no reports of major disease, according to a health survey paid for by Hilton.
Hilton disclosed the mold problem in July and was hit by union complaints that mold had been found in Kalia Tower rooms as early as March. Peter Schall, senior vice president and managing director of Hilton Hawaiian Village, has maintained he did not know about the problem until June.
Hilton also found mold in its time-share Lagoon Tower, but it was isolated to corridor ceilings on the third floor.
Despite the $10 million pre-tax charge, Hilton's parent company said net income more than doubled in the third quarter to $48 million. Hilton's stock rose 4 cents on Wall Street yesterday to $12.04. Hilton -- a Beverly Hills, Calif.-based company that owns, franchises or manages more than 2,000 hotels -- said third-quarter revenue edged down to $934 million from $942 million last year. Occupancy at Hilton Hawaiian Village in the third quarter was strong enough to prompt Hilton to rank Honolulu as one of its top markets.
