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FL MORRIS / FMORRIS@STARBULLETIN.COM
Cafe-style areas offer views of the architecture. "Everyone loves something new -- tourists and visitors alike," said retail analyst Stephany Sofos.
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The Place To Be
The Tourist District Once Attracted Kamaaina, Too
Decades ago, kamaaina flocked to Waikiki.
"It was the place to be," said Carol Pregill, president of the Retail Merchants of Hawaii. "We used to go there on dates."
Pregill has seen glimpses of that past in Outrigger Enterprises Group's $535 million Waikiki Beach Walk project. The largest private development project ever to be undertaken in Waikiki, the face lift has transformed a once-tired 7.9-acre area into what many are hoping will become the showcase of the visitor district.
Outrigger's redevelopment has spruced up a crowded portion of Waikiki, the most prominent symbol of Hawaii's tourist industry. The promise of more high-spending visitors has enticed new restaurants, retailers and hotel properties. An outdoor entertainment plaza also provides a place not only for retailers to draw in the customers, but also for local musicians to perform.
Though Outrigger's renovation initially resulted in the closing of some businesses and has created traffic-flow problems for other retailers, ultimately the change will be good for Waikiki, said retail analyst Stephany Sofos.
"Everyone loves something new -- tourists and visitors alike," Sofos said.
Outrigger factored in the same amount of retail space, 140,000 square feet, for the project but cut the number of establishments to achieve an open, pedestrian-friendly marketplace. Outrigger also has created a venue for local entertainers on the plaza at Waikiki Beach Walk.
While the redesign actually added only about 12,000 square feet of open space to the complex -- for a total of about 91,000 square feet -- most of that space is now consolidated in public areas instead of scattered among private courtyards.
"It's going to draw more pedestrians, which will create more retail traffic and give store owners and restaurants a boost," Sofos said.
The new retail, food and beverage and hotel properties will create greater diversity and spark renewed interest in an area that in many people's minds had seen better days, she said.
"This project will cater to the wine-and-cheese crowd, the sushi-and-sake crowd and the beer-and-burger crowd," Sofos said. "It has all the elements of success."
The Beach Walk project, along with other Waikiki renewal projects, is starting to increase property values for the neighborhood by turning an aging and congested portion of central Waikiki into a combination of new and refurbished upscale time-share and hotel accommodations, said Walt Flood, who sits on the Waikiki Neighborhood Board and also owns Walt Flood Real Estate.
Sofos said the increase in real estate values could price the little guys out of the market as rents rise and retail space becomes more compressed. The project, for better or for worse, has changed the makeup of one of Waikiki's most eclectic neighborhoods, known for catering to the budgets of kamaaina and economy travelers, she said.
However, the upgrade also has started to attract higher-spending visitors and increase hotel room rates, said Joseph Toy, president and chief executive officer of Hospitality Advisors LLC.
"There's been more acceptance of paying higher prices in Waikiki," Toy said, adding that consumers accepted the price change when the Aston Waikiki Beach Hotel and the Waikiki Beach Marriott renovated their hotels and substantially raised rates.
As the product continues to improve, it will have greater appeal for the upscale market, he said.
The improvements will better position Outrigger and Oahu, which has been losing ground to destinations -- like Las Vegas, the Caribbean, Mexico and the neighbor islands -- that have poured money into new visitor properties, said Barry Wallace, vice president of hospitality services for Outrigger.
"Waikiki has been hurt by the growing number of destinations that offer better-quality hotel rooms," Wallace said. "The creation of a more upscale product might make people who are contemplating trips to other destinations take a second look at Waikiki."
GEORGE F. LEE / GLEE@STARBULLETIN.COM
"This project will cater to the wine-and-cheese crowd, the sushi-and-sake crowd and the beer-and-burger crowd. It has all the elements of success." — Stephany Sofos, Retail Analyst
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Indeed, if Waikiki wants to be competitive, it is going to have to offer visitors more than sun, sand and surf, said Chris Cooper, chairman of Tourism Management at the University of Queensland.
Cooper, who spoke at a recent University of Hawaii tourism conference, said today's travelers are discerning and want an empowered experience.
"What I'm seeing at Waikiki is old-fashioned tourism such as going to the beach and sitting around the pool -- that's not really what's happening in the marketplace anymore," Cooper said.
Cooper urged Hawaii tourism officials to start moving away from reliance on the beach and to promote the state's historical and cultural heritage.
Both Outrigger's changes and the nearby Royal Hawaiian Shopping Center renovation are geared to creating a place where both locals and tourists can enjoy Hawaii's culture, said Anne Murata, marketing director for the Festival Cos., which manages the Royal Hawaiian Shopping Center.
"Our history, the culture that is Waikiki, is a huge part of all the new development," Murata said. "Waikiki is a very spiritual and cultural place. We came in and we built brass and glass on top of it, and now we're all trying to change that."
Bob Finley, chairman of the Waikiki Neighborhood Board, says the response so far has been positive.
"This area was pretty much a 1950s gaggle of buildings that was dragging Waikiki down and causing visitors to go to the neighbor islands," Finley said.
"There's been a lot of improvement in the neighborhood, and I've only gotten one complaint."
