Maui Hyatt purchased
Host Marriott will pay
$321 million for the
Kaanapali Beach hotel
Host Marriott Corp. has agreed to buy the 806-room Hyatt Regency Maui and the 37 acres of Kaanapali Beach land it stands on for $321 million.
That is $4 million less than a Japanese investor paid for it in 1987, but about $120 million more than the present owner, privately owned Blackstone Real Estate Advisors, paid for it in January 2001.
The Hyatt name will stay and Hyatt Corp. will continue to manage the property, said Greg Larson, a spokesman at Host Marriott's headquarters in Bethesda, Md.
"We own 120 hotels but we don't manage them. We always hire somebody else to manage our hotels," Larson said.
It is the first Hawaii hotel purchase for Host Marriott, which is a completely separate company from Marriott International, a company well known in Hawaii for its hotel and time-share management.
Host Marriott sees Maui as a strong market where it would be difficult to develop a new hotel. The Hyatt Regency is one of Maui's best performing hotels and is expected to make a profit of $33 million this year, before interest expense, taxes, depreciation and amortization.
That is very attractive compared to what has been happening on the mainland, Host Marriott said. "We've been in a three-year slump, with declining revenues and profits," Larson said.
The Hyatt Regency Maui was opened in 1980 and was acquired by VMS Realty. In 1987 KM Hawaii, a unit of Japan-based Kokusai Jidosha, bought it from VMS for $325 million. KM Hawaii invested some $12 million in improvements but sold it to Blackstone in 2001 for $200 million, after the burst of the Japanese investment bubble.
Publicly held Host Marriott sees the $398,000 per room it is paying as a good investment, about 20 percent below the current replacement cost.
Hawaii is a strong market and a place where it is difficult to build new hotels, Host Marriott said. The hotel is in excellent physical condition after recent renovations and there are possibilities for more development on the land, the company said.
"This investment is another example of our strategy of acquiring high quality hotels in difficult-to-replace locations at a discount to replacement cost," said Christopher J. Massetta, Host Marriott president and chief executive, in a news statement.
Massetta said that Maui hotel-room inventory has actually dropped because of conversions to time-share.
One of those conversions is the neighboring Maui Marriott, where Marriott International is putting 391 rooms into time-share and planning two additional time-share towers. The hotel originally had 720 rooms.
Host Marriott, which had revenues of $3.7 billion last year, owns 120 luxury hotel properties, most of which are operated under the Marriott, Ritz-Carlton, Four Seasons, Hyatt and Hilton brands.
While it does own some hotels managed by Marriott International (none of them in Hawaii), the company has no other connection with Marriott.
The former Marriott group was split in 1993 into two independent businesses, with the real estate and hotel ownership side becoming Host Marriott and the hotel operating and management business being spun off into Marriott International.
