NAIOP Hawaii Kukulu Hale Awards 2013
Recognizing Excellence in Hawaii's Commercial Real Estate Industry
(page 3 of 9)
Lifetime Achievement - Holo Pono Award
Melvin Y. Kaneshige
From Waikiki to the beaches of Bali and beyond, Mel Kaneshige has been a key player in the growth and repositioning of Outrigger Enterprises Group’s real estate portfolio. As executive vice president of real estate and development, he has worked on such high-profile projects as the Waikiki Beach Walk redevelopment and has been instrumental in the company’s expansion beyond Hawaii into the Asia-Pacific region.
Prior to joining Outrigger in 1995, Kaneshige was a partner in the law firm of Chun, Kerr, Dodd & Kaneshige for 20 years with a practice concentrated in real estate development, acquisition, financing, management and disposition. He lends his considerable experience to a variety of professional associations and nonprofit boards, including vice chairman and past chairman of the Waikiki Improvement Association, director and past chairman of the Hawaii District Council of the Urban Land Institute, member of the Board of Governors of Iolani School and director of Girl Scouts of Hawaii.
NAIOP Hawaii caught up with Kaneshige to ask him about his career highlights.
Q: During your 17-plus years with Outrigger, which projects stand out for you?
MYK: Easily the most significant was the Waikiki Beach Walk project because of its impact on both Waikiki as well as our company. When I joined Outrigger in 1995, Waikiki was on a downward spiral from both a performance as well as a physical standpoint. Buildings were getting older and older and not being renovated or replaced, so visitors were going to the new resorts on the Neighbor Islands that had been built in the Japanese bubble days of the late ‘80s.
Comparisons with the earlier decline of Miami Beach were prevalent and something had to be done to save Waikiki. After some investigation, it became clear that the culprit was the City’s zoning code which essentially stopped all meaningful renovation and rebuilding dead in their tracks.
At the time Outrigger had 11 hotels and 3,100 hotel rooms spread over eight acres in the Lewers/Kalia area, which were a major part of Outrigger’s assets, which also represented over 10 percent of all of the hotel rooms in Waikiki and thus were important to the long-term future of Waikiki. Outrigger’s holdings were old and needed to be redeveloped. The best course was to tear everything down and build anew but it wouldn’t work economically given the restrictions of the zoning code.
To make a long story short, we set out on a long journey of working to amend the City’s zoning code to make it more investment friendly while at the same time preserving the best of what made Waikiki ‘Hawaiian’. We were fortunate to have mayors and city council members who understood the importance of a strong and vibrant Waikiki. Over time, the Waikiki zoning code was amended to allow owners to invest over $3 billion in their properties and thoroughly revitalize Waikiki.
It took ten years from the time we started to the time we broke ground for Waikiki Beach Walk, through the Asian financial crisis, the Russian ruble crisis, the tech stock crash, the second Gulf War, SARs and more. It took a long time, but for Outrigger this work was vital to its long-term future as well as to the future of Waikiki.
Q: How do you approach each new development or acquisition opportunity for the company?
MYK: We have articulated strategies that are established in twice yearly corporate planning sessions that guide everything that we do, so we look at each opportunity through that lens. We have a relatively small executive committee and a flat decision-making structure that allows us to move quickly as deals come up. Strategic location, adherence to brand standards, capital requirements and return analysis are some of the key factors that we consider.
Q: What have been some of the challenges and rewards of Outrigger’s expansion to the Asia-Pacific region?
MYK: We now have properties in Australia (4), Guam, Fiji, Thailand (two in Phuket and one in Phi Phi), Mauritius, and two under development in Hainan Island, China and Quy Nhon, Vietnam. We are also investigating opportunities in Danang, Vietnam; the Maldives; and Okinawa.
The challenges of entering a new arena are learning to navigate the new geographies, people, culture, laws, and ways of doing business, but the big reward is that we are establishing ourselves smack dab in the midst of the area which will, for the foreseeable future, experience the greatest growth in population and income.
The emerging economies in Asia-Pacific are producing more people with more disposable income than the world has ever seen and we will be there with opportunities for them to relax and enjoy themselves in the very best vacation destinations in their own back yards. It’s a great opportunity to “fish where the fish are” and to introduce them to the Outrigger brand of hospitality which they can also enjoy when they venture to Hawaii.
Q: Where do you see Outrigger expanding in the next decade?
MYK: For sheer numbers, there will likely be more opportunities in the Asia-Pacific region as many more destinations start to come on line so I expect that we will continue to be active in that area. We are a Hawaii-based company and we continue to look for opportunities right here in our back yard. Recently, however, the extremely strong operating performances of Hawaii’s hotels have made it a seller’s market and it makes no sense to buy at what looks like the peak of the market. Over time, this will reverse itself and there will be opportunities to acquire at that time.
There are potential opportunities for us to expand to the U.S. mainland as well, and we will be looking at warm weather beachfront resort locations in California and Florida. We would also look at Caribbean locations.
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