Kalia Tower
reopening delayed

Star-Bulletin Staff

Hilton Hawaiian Village, Waikiki's largest hotel, has pushed back the reopening of its Kalia Tower, where the hotel closed guest rooms in July 2002 because of extensive mold.

Hilton plans to reopen the 24-story Kalia tower in the third quarter of this year, sometime between July and September, and not in the second quarter as previously planned, the company said.

The hotel had to schedule several lifts of equipment by helicopter during times that would have the least impact on business, spokesman George Hayward said.

Hilton is in the final stages of investigating and correcting the mold problem, said Peter Schall, senior vice president of Hilton Hawaii and managing director of Hilton Hawaiian Village.

"We recognize the unusual nature of the activities involved, and have notified our residential neighbors as well as other hotels and businesses," Schall said in a statement. "In addition, we are working closely with Pacific Helicopters and their personnel to keep any potential inconveniences to an absolute minimum."

When Hilton closed the Kalia tower, the hotel said it also found less extensive mold at its time-share Lagoon Tower, which has remained open.

The Kalia tower, one of six towers at Hilton Hawaiian Village, first opened in May 2001, and cost $95 million to build.

The total cost of fixing the mold problem at the hotel is projected to hit $56 million, including $35 million in capital expenses this year and a $21 million charge last year. The charge covers $17 million for remediation at the Kalia tower and $4 million for remediation at the Lagoon tower.

Despite the charge, profit at parent company Hilton Hotels Corp. rose 19.3 percent last year to $198 million from $166 million in 2001.

Hilton Hawaiian Village is working on the mechanical plant and air-conditioning systems at the Kalia tower, where high humidity caused the mold. Liability and insurance coverage is being reviewed, Hayward said.

Meanwhile, Hilton Hawaiian Village is converting 138 guest rooms at the Kalia tower to 72 time-share units, because of strong demand for time-share at the 264-unit Lagoon tower, Hayward said. The change affects six floors at the Kalia tower.

Hilton Hotels, the third-largest U.S. hotel company, owns, manages and franchises more than 2,000 hotels, resorts and time-share properties worldwide.

The Beverly Hills, Calif.-based company recently cut its forecast for first-quarter and 2003 profit because of the negative effect the Iraqi war is having on business and consumer travel. Hilton expects to earn 1 cent a share in the quarter that ends Monday, down from a 5-cent forecast two months ago.

For the year, profit is expected to be in the high 30-cent range, less than the mid to high 40-cent range Hilton had forecast.

Hilton Hawaiian Village has seen no significant impact on business because of Iraq, Hayward said.

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