Castle to manage W hotel


POSTED: Friday, January 09, 2009

Castle Resorts & Hotels took over management today of the troubled W Honolulu-Diamond Head hotel, which is facing foreclosure by its lender.

The 51-room boutique hotel, previously managed by Starwood Hotels & Resorts Worldwide Inc., was renamed today The Lotus at Diamond Head.

Castle plans to reposition and rebrand the hotel at the foot of Diamond Head across from Kapiolani Park in the upcoming months to refine hotel products and services, said Alan Mattson, Castle's president and chief operating officer.

First Hawaiian Bank filed in October a lawsuit to foreclose on the W Honolulu-Diamond Head Hotel owned by troubled Big Island developer Brian Anderson, who bought the W Honolulu in 2004 from Los Angeles-based investment firm Colony Capital Inc.

Anderson and his company, Anekona W LLC, defaulted on a $5 million loan issued in August 2004. The embattled developer also is embroiled in numerous lawsuits involving a failed attempt to redevelop the iconic Ilikai hotel.

The hotel will continue to honor existing and new room bookings, though it will not participate in any Starwood sponsored programs, including Starwood Preferred Guest, airline partners or other partner affinity programs as of today, according to its Web site.

In recent years, Anderson repeatedly has failed to sell the property at 2885 Kalakaua Ave., which sits on leasehold and fee-simple land.

Earlier this year, the developer was slapped with a $72.6 million foreclosure on the Ilikai by New York-based iStar FM Loans LLC, in addition to a number of complaints filed by investors and condominium owners.