Outrigger bet could pay off for Waikiki
By Andrew Gomes
Advertiser Staff Writer
In the high-stakes game of Hawai'i tourism, Outrigger Hotels & Resorts not only is anteing up with a massive, long-term redevelopment project, but is placing a $300 million bet that could pay off big for the state's most important visitor destination.
Hawai'i's largest local hotel chain plans to raze a half-dozen buildings in the middle of Waikiki and replace them with an entertainment showplace, pedestrian promenade, retail shops and a high rise. The project, Waikiki Beach Walk, is expected to attract more tourists and locals, create more jobs and pressure other retailers and hoteliers to upgrade.
Outrigger's decision to move forward now coincides with revitalization projects recently begun or completed in the area, including Kuhio Beach, Kalia Tower, DFS Galleria, Kapi'olani Park's bandstand and several major hotel renovations.
The renewal is coming at a critical time for Waikiki, an aging urban resort that has started to lose ground — and visitors — to other destinations.
"It's hard to underestimate what this project means to Waikiki," said Rick Egged, president of the Waikiki Improvement Association. "It's probably the most important project to date. It's going to restore the romance and create a pedestrian-friendly place."
Sam Bren, chairman of the Waikiki Neighborhood Board, said the Waikiki Beach Walk will help thin the "concrete jungle" that has grown up behind the beach.
"It is a beautiful, beautiful concept all the way down the line," he said.
Bren wishes the project could begin sooner, but Outrigger's initial retail/entertainment phase won't come on line for three or four years, followed by the new hotel tower around 2009.
Still, tour operators and travel agents say the initiative will help them generate excitement among travelers thinking about visiting Waikiki.
Ryokichi Tamaki, vice president of marketing and contracts for Japan Airlines' tour operator JALPAK International Hawai'i, said the planned redevelopment will help JALPAK, which expects to bring 400,000 Japanese visitors to Hawai'i this year.
"This project really suits future Waikiki marketing," he said. "Waikiki has to be more fun. This is fabulous. We need something new here."
Waikiki Beach Walk won't be without its downsides. The project will produce years of inconvenience from construction, displace roughly 40 tenant businesses, and possibly restrict vehicle access to Lewers Street.
Fred Livingston, who owns two restaurants in Outrigger hotels scheduled to be part of the first phase of redevelopment, said he's concerned for his combined staff of about 75.
Livingston has operated the Trattoria Restaurant at the Ohana Edgewater for 20 years, and acquired Davey Jones Ribs at the Ohana Coral Seas more recently.
"It's emotional for me and my staff," he said. "You don't like to build up a business and then lose it. But that's progress.
"I think that it's wonderful for Waikiki. Opening up the landscape can't hurt in the eyes of the visitor."
Outrigger officials expect that when the project is complete, new retailers, restaurants, bars and entertainment operators will employ more people than the current tenants do.
Other complications could arise from a desire to restrict vehicles on Lewers between Don Ho Lane and Helumoa Road, which Outrigger would like to make part of its pedestrian promenade.
Curt Yokoo, assistant manager of Mad Hatter, a hat store across from the redevelopment area, noted that construction activity probably will affect business, but the end result will be a more friendly environment.
For other retailers such as the neighboring Royal Hawaiian Shopping Center, Waikiki Shopping Plaza and International Marketplace, Outrigger's project presents a competitive challenge.
"It's a shot in the arm we all need," said Sharon Weiner, group vice president for DFS Hawai'i, which opened a $65 million expansion of its retail Galleria earlier this year. "We need something new for people to come back and see and do."
Hotel operators believe that any competition for accommodations will be outweighed by a greater benefit to the industry.
Keith Vieira, Hawai'i operations director for Starwood Hotels and Resorts Worldwide and its Sheraton properties, said anything that improves the image of Waikiki is good for all businesses in the area.
"More money (invested) in Waikiki spurs others to improve their product; the overall product improves; we all benefit," he said.
For hotels that directly compete with Outrigger, any loss in occupancy from Outrigger's new tower should be offset by higher rates, which Outrigger is helping raise by upgrading lower-tier rooms.
Lynn Craig, a California travel agency owner who is critical of Outrigger for softening the market with older and cheaper products, was pleased to hear about the company's planned investment.
"Waikiki needs upgrading badly," Craig said. "I think (Outrigger's project) would help."
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
