Waikiki hotel
goes condoThe Waikiki Terrace joins
the list of area hotels being
converted to residential properties
Renovations are under way on an $11 million upgrade converting the Waikiki Terrace Hotel into an upscale condominium.
Ownership of the property, which is adjacent to Fort DeRussy Park at 2045 Kalakaua Ave., is slated to change in December from Max Holdings Inc. to Waikiki Terrace LLC, a newly formed Honolulu-based limited liability company whose members include affiliates of the National Housing Corp., Brian Anderson and Max Holdings. Terms of the sale were not disclosed.
The Waikiki Terrace Hotel is just one of many hotels in Oahu's prime tourist district to be converted into condominiums recently, inspired by the booming residential real estate market. The properties, many with ocean views, are attracting investors, as well as owner occupants and those looking for long- and short-term rentals.
When the visitor market dropped and beachfront hotels cut rates, more tourists began choosing to spend their dollars on luxury beachfront properties. As a result, some older off-beach Waikiki properties saw revenues drop. But many of these property owners have discovered low interest rates and a shortage of rental units have created the ideal conditions for conversions.
Owners of the Waikiki Terrace Hotel plan to convert the 242-room hotel into a 217-unit condominium comprised of 186 studio suites, 29 one-bedroom suites and a couple of two-bedroom suites. Renovations, which will include new furnishings and fixtures, are expected to be completed by June 2004. Plans also call for exterior painting and renovations to the lobby, mezzanine level, fitness room and pool deck.
Kevin Showe, manager of Waikiki Terrace LLC, said extensive renovation of the hotel, which was built in 1971, is likely to spur a revival of other aging Waikiki properties.
"If we do this significant renovation and it's well received by the market, other property owners will take notice," he said. "A lot of people are going to be watching our property and making decisions about what they should do with their own hotel investments."
The hotel will be rebranded the Outrigger Luana Waikiki in April 2004. Plans are to market the property under Outrigger's Condominium Collection, which consists of 10 condominium resorts on Oahu, Maui, Kauai and the Big Island.
Rental and purchase prices for the converted condominium units have not yet been disclosed, Showe said.
While the property is undergoing renovations, it will remain open for hotel business, likely at reduced rates, said Jim Austin, spokesman for property manager Outrigger Hotels and Resorts.
Outrigger also manages the Waikiki Shore condominium, adjacent to Fort DeRussy, and if the hotel to condominium conversion trend continues, Austin said it is likely Outrigger may be involved in managing more Oahu properties.
"There's nothing definitive yet, but chances are we may continue to add more properties to our collections," Austin said.
In an earlier report, Outrigger Senior Vice President Mel Kaneshige said additional Outrigger properties also could be candidates for conversion, although no decision has been made to do that.
"There are some down on Lewers that may work better as condo-tels. But if they were converted, they would be converted to (individual) hotel rooms that Outrigger would manage," he said.
Kaneshige also said the cost to repair and maintain older hotels can be a factor contributing to the willingness to sell and convert.
"It points out that the off-the-beach hotels are having a more difficult time penciling out because the amount of repair and maintenance to keep them in good shape is enormous," Kaneshige said. "Some buildings also have obsolesce issues that that can't be resolved by new paint and carpet."
