Waikiki Redux

New, exciting renovations up and down Waikiki mean a lively future for the once-tired resort area

January, 2003

Gigantic tiki torches, day-glo green surfboards, bamboo lamps, hula beads and rooms done in lava flow red and pineapple yellow. Gidget Goes Hawaiian meets Crayola?

Actually, it’s something called Hip Hawaiiana, an “urban, yet nostalgic Hawaiiana feel.” This is the design philosophy behind the multimillion dollar rejuvenation of the ASTON Waikiki Beach Hotel.

“Our intention is to capture the nostalgia of when tourism was very young in Hawaii and give it a contemporary look,” says Steve Townsend, general manager of the ASTON Waikiki Beach Hotel.

Townsend says that Hip Hawaiiana is attracting a young demographic, 25- to 45-year-olds, mainly from the Mainland West Coast.

ASTON took over management of the hotel at the Diamond Head end of Kalakaua Avenue in July 2001, and renovation plans were set in motion shortly thereafter. Roughly $30 million and a large palette of colors later, the once run-down, Japanese-owned hotel has not only been significantly upgraded but also repositioned. Previously, approximately 85 percent of the hotel’s business was comprised of inexpensive group tours from Japan. The remaining 15 percent were westbound budget travelers. Today, those ratios have been reversed, and the room rates have increased.

“The hotel was in such bad shape so that’s what they could attract,” says Townsend. “The previous owners weren’t in the position to do the renovations that needed to be done.”

According to Joseph Toy, president and CEO of Hospitality Advisors, what happened at the ASTON Waikiki Beach Hotel is happening throughout Waikiki. This rejuvenation will greatly contribute to the long-term health of the resort area, which accounts for nearly half of the visitor industry’s room revenue of $2.5 billion and half of its jobs.

“In the next 12 months, there is no question in everyone’s minds that tourism will be soft or at best a question mark,” Toy says. “But long term, I’m very bullish on Hawaii. Despite the problems that we’ve had, I continue to see investor interest in Hawaii, which is rejuvenating the destination.”

Toy also notes that Waikiki has benefited from a rare “alignment of the planets,” a confluence of private and public monies being invested in the area. The beautification of Kalakaua, the revitalization of Kapiolani Park and the Sunset on the Beach and Brunch at the Park programs, have moved foot traffic and spending further down the street. The Waikiki Beach Marriott Resort, next door to the ASTON, is in the final stages of a $60 million renovation that began when Marriott acquired the hotel in November 2000.

“The sale of this hotel was contingent on the city’s redevelopment of Kalakaua. The new owner was very specific about that,” says Kelvin Bloom, president of ASTON Hawaii. “Today’s travelers are more savvy than they have ever been, and they are looking for new experiences.”

ASTON tested out its Hip Hawaiiana concept on a much smaller scale at the nearby ASTON Aloha Surf Hotel. The $3 million renovation of the dated and primarily Asian-driven property pushed up occupancy rates into the 70 percentile, an improvement of approximately 15 percent. In the process, the Aloha Surf began attracting mainly westbound visitors.

According to Toy, these upgrades are more than just a needed facelift for a couple of tired properties. For more than a decade, Waikiki developed an unhealthy product gap. The area’s luxury properties weathered the economic hard times throughout the 1990s as did the budget hotels. But the upper- to mid-market properties, many of them owned by cash-strapped Japanese companies, fell. The result: a growing division of products.

“What we’re seeing is a repositioning of the whole Waikiki product,” Toy says. In the next several years, Outrigger’s redevelopment of its properties will increase activity on the Ewa end of Kalakaua. I think it will provide incentive for the Royal Hawaiian Shopping Center to invest, and possibly, the Queen Emma Foundation will follow with a redevelopment of the International Marketplace. It will take time, but we’ll see a much better Waikiki.”

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David K. Choo