By Andrew Gomes
Advertiser Staff Writer
Fairmont Hotels & Resorts, a Canadian owner and operator of luxury hotels, has acquired a majority interest in the partnership that owns the Kea Lani Hotel at the Wailea Resort on Maui.
The company, a wholly owned subsidiary of publicly traded Canadian Pacific Ltd., yesterday purchased a "substantial majority" stake in the $250 million, 450-suite hotel from Kea Lani LP for an undisclosed amount.
|The 22-acre Kea Lani property was developed in 1991.
Kea Lani Hotel photo
Kea Lani LP is headed by Charles Sweeney, who developed the 22-acre ocean-front property in 1991 then bought it back from Japanese lenders in 1998 with partners Jon Miho and George Ruff of Honolulu-based Trinity Investment Trust LLC, Goldman Sachs and the Apollo Group.
The partnership bought $175 million of mortgages at a steep discount some experts believe was as little as $30 million. Fairmont bought out Goldman Sachs and Apollo, but the company would not say for how much.
The independently managed hotel will become known as the Fairmont Kea Lani Maui. Fairmont will keep all of the hotels roughly 600 employees, the company said.
The purchase is part of a recent wave of investors in high-end Hawaii hotels, especially on Maui, and is part of a broad expansion by Fairmont.
Last month, New York investment firm Blackstone Group reached a deal to buy the Hyatt Regency Maui Resort for an estimated $200 million. Also sold in the last few years: the Maui Marriott Resort for $152.5 million; the Westin Maui for $132 million; and the Grand Wailea for $263.5 million.
"Everythings at the top of the market right now," said Gary Kenar, manager of Commercial Properties of Maui, a real estate firm that has represented at least one interested buyer in the Kea Lani. "Its just a prime hotel, and everyones been looking at it. Mauis really doing well."
Fairmont has been looking for a luxury hotel in Hawaii for at least six months. The company has its roots in a San Francisco-based chain of seven hotels that was acquired in 1998 by Canadian Pacific Hotels, a subsidiary of Toronto-based transportation, energy and hotel conglomerate Canadian Pacific Ltd.
In the last 18 months, Fairmont has steadily increased its portfolio to 38 hotels owned and/or operated in the United States, Canada, Caribbean, Mexico, Bermuda and Barbados. It manages another 30-plus hotels in Canada under the Delta brand.
The Kea Lani acquisition was a strategic fit, according to William Fatt, Fairmont chairman and chief executive.
"It represents a key resort destination for us. Fairmonts entry into the Hawaiian Islands represents a significant step in growing our resort portfolio and diversifying the areas in which we operate," he said.
Fatt said the hotel is one of the bigger investments for the company, which would like to expand to Florida and would consider buying additional Hawaii upscale property.
Saudi Arabias billionaire Prince Alwaleed Bin Talal owns 16 percent of Fairmonts management company and large stakes in some of the worlds finest hotels, but he is not an investor in the Kea Lani, according to Fairmont spokeswoman Ann Layton.
Fairmont, Layton said, is a long-term owner and will invest over the long term to maintain quality of the Kea Lani, which recently added a spa and last year received $5 million in improvements.
Fairmont has no short-term renovations planned. It will replace general manager Sean Sweeney, son of Charles Sweeney, with Chris Luedi, formerly of the Fairmont Scottsdale Princess in Arizona. Otherwise, no major changes are planned, Layton said.
One advantage Fairmont will bring to the Kea Lani, one of few independently managed luxury hotels in the Islands, is an international sales and marketing resource.
Layton said 50 percent of Kea Lani customers are from West Coast states. Another 22 percent come from the Midwest, and 8 percent from Asia. Fairmont has a primarily U.S. and Canadian customer base. It also is strong in Europe.
Fatt said that international sales and marketing force "can really add value to a property and help add to its performance."
Glynis Esmail, corporate marketing vice president for Landmark Hotels, which has managed the Kea Lani since it opened, said performance has been good but somewhat limited.
"This hotel has been successful," she said. Occupancy has been above 80 percent, and suites are listed at $305 to $615 a night. Still, the partnership recognized the lack of an extensive sales and marketing network restricted its potential. "There was a feeling that a brand could take it further now," Esmail said.
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