"Amazing," said Philadelphia resident Maryann Strunk. "This is the Hawai'i you just don't see in brochures."

With its narrow sidewalks, jumble of storefronts and lack of landscaping, Kuhio Avenue is a street in need of a makeover. Honolulu Mayor Jeremy Harris proposed last week to spend $19 million to widen its sidewalks, cut down on crime and bring Kuhio Avenue a little closer in line with its beachfront neighbor, Kalakaua Avenue.

Harris' plan is one step in an effort to rejuvenate the area. State and tourism officials hope to eventually convince hoteliers to upgrade their Kuhio Avenue properties and keep them as hotels instead of converting their buildings to condominiums or apartments.

At stake for Waikiki and the state is a potential drop in tourists staying in hotels, with the accompanying loss of visitor spending, jobs and tax revenue. When condos take over, a tourist area can fill up with residents who tend to spend less there.

"The state runs a risk of losing a significant revenue stream if it doesn't address that," said David Carey, chief executive of Outrigger Enterprises Inc. "If it goes from hotel to apartment, for example, one, it doesn't pay any (hotel room tax) and two, the revenue is paid by residents and not visitors."

Updating Waikiki's aging tourism plant — the network of hotels, stores and attractions — has been on Hawai'i's to-do list for years.

Kalakaua has undergone a rejuvenation over the past five years with a sidewalk widening project that has made walking along the beachfront more pleasurable, and several Kalakaua hotel renovations have been completed or are in the pipeline.

But a block mauka is the aging stretch of Kuhio Avenue, one of the Waikiki areas still in sore need of revival.

"There's not the sense of ambience that you get on Kalakaua," Outrigger Enterprises' Carey said. "It's not a great place. Kuhio Avenue is going to have to go through its own renaissance in order to be competitive. The way it's going now, it's going to go residential."

Tourism officials hope that the city's investment in Kuhio Avenue will improve the area, not only for residents but for tourists.

Jennifer Nolde, a visitor from Milwaukee who was waiting at a bus stop on Kuhio, agreed the street needs a makeover. "It looks like it's been a while," Nolde said.

Kuhio Avenue businesses said they hope the improvements will help them as well.

"A lot of people, I think, stay off this street," said Rodney Young, manager at the Food Pantry grocery store at the corner of Kuhio Avenue and Walina Street. "After they get it improved, I think we'll get a lot more traffic in this area."

The city has spent about $50 million since 1997 improving Kalakaua Avenue, a project that helped spur hotel renovations along the main Waikiki thoroughfare. City and tourism officials envision that happening to Kuhio Avenue.

Kuhio revival sought

The quality of many Kuhio Avenue hotels tends to be lower than properties on Kalakaua and the aging of the buildings has recently led to a string of conversions from hotels to condominiums, a trend that hoteliers and tourism officials want to stop.

Some are pushing for legislation to extend and raise state hotel construction and renovation tax credits. A 10 percent tax credit approved after Sept. 11 expired last year and a smaller credit will remain in effect only until 2005.

"What you're really looking for is a credit or positive steps that are going to stimulate additional investments or additional improvements," said Murray Towill, president of the Hawai'i Hotel & Lodging Association.

"There are some areas where you're having a difficult time getting that type of reinvestment to occur," Towill said, including areas like Kuhio Avenue that are off the beachfront.

Carey said it will probably take a combination of factors to discourage the conversions and maintain hotels on Kuhio Avenue.

"The challenge for off-beach hotels is there's going to have to be substantial support — government support — to transition that inventory," Carey said. "The alternative is to say the destination is going to change, it's going to have less hotel rooms," he said. Fewer rooms can have a ripple effect, diminishing traffic for retailers and attractions throughout O'ahu.

With competition from other tourist destinations like Las Vegas' ever-changing Strip, many worry Waikiki is lagging. There is a deepening feeling among some in the industry that the resort's worn-down image is contributing to O'ahu's loss of business to Maui.

Renovation under way

"We're seeing momentum return to Waikiki," said Joseph Toy, president of hotel consultancy Hospitality Advisors LLC. "There is more to be completed, but it's well on its way."

The renovation is badly needed after some Japanese owners neglected their properties following purchases during the foreign investment heyday of the 1980s.

"Essentially we missed a renovation cycle in Waikiki," Toy said. "The Japanese bubble burst and so these guys just didn't have the money to do it."

U.S. owners began buying properties in the 1990s and have been investing in improvements.

"We still need to see this renovation," Toy said. "Most of the reinvestment money was going to the Neighbor Islands. It really wasn't until the late 1990s that we saw money coming back into Waikiki."

Waikiki Improvement Association President Rick Egged said property owners have spent about $500 million in Waikiki over the past five years. Another $600 million in projects is projected in the next five years.

Hotel officials say the upgrades have helped attract higher-spending visitors who expect snazzier hotels and better services, just the kind of tourists needed to revive the state's most popular resort.

"We're beginning to see the face of the market changing ... which certainly is welcome, particularly in Waikiki," said Kelvin Bloom, president of Aston Hotels & Resorts.