The recent acquisition of the leasehold of the Courtyard by Marriott Waikiki Beach hotel for $75.3 million is only the latest in a series of creative deals in the hot hotel market in Hawaii.
Maryland-based RLJ Lodging Trust said Tuesday it was buying a 99-year lease on the 399-room property from Highgate Holdings Inc. In April, Highgate bought the hotel and the land under it for $125 million from Rockpoint Group LLC, according to Bloomberg News. Highgate sold the lease but will continue to manage the property, Bloomberg said.
The sales price works out to about $189,000 per room.
“It’s astounding what deals are in play just in the first half of this year and the level of creativity that we are seeing investors use to find and create more value,” said Joseph Toy, president and CEO of hotel consultancy Hospitality Advisors LLC.
Recent deals involving Hyatt Place, the Hyatt Waikiki Beach Resort and Spa and the Marriott Waikoloa show the level of interest in Hawaii, Toy said.
“We had a lot of cash parked on the sidelines during the downturn,” he said. “We’ve seen a lot of acceleration. In particular, Waikiki is such a strong destination with great dynamics, including the diversity of demand, low inventory, little supply-side risk and the ability to create value.”
According to Toy’s latest estimates, hotels in Hawaii earned $276 million in room revenues in April and also set monthly records for revenue per available room and average daily room rates. Hotels on Oahu were 80.9 percent full, surpassing the 80 percent mark for the first time since 1990.
“Waikiki is attracting a lot of investor interest,” said Rick Egged, president of the Waikiki Improvement Association. “There are many people who would like to be here.”
RLJ’s purchase has allowed the company to expand into Hawaii for the first time. The company owns 148 hotels with more than 22,300 rooms in 22 states and the District of Columbia.
“The hotel’s strong brand affiliation and prime location in Waikiki will allow us to capitalize on the strong lodging fundamentals in Oahu,” said Thomas J. Baltimore Jr., RLJ’s president and CEO, in a news release. “We are excited to increase our presence in the west and expand our geographic footprint into another gateway market,”
RLJ’s news release said Marriott-branded hotels are underrepresented in Waikiki. The company expects to benefit from the hotel’s prime location, which is close to the most visited tourist attractions. The hotel is at 400 Royal Hawaiian Ave. between Kuhio Avenue and Manukai Street, about two blocks from Ala Wai Boulevard.