Grand Wailea's price tag could approach $500M
By Andrew Gomes
Advertiser Staff Writer
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| The Grand Wailea Resort & Spa is on a 40-acre shoreline parcel with 53 suites, a massive spa, elaborate water features and $30 million worth of artwork.
Advertiser library photo • Aug. 2, 2002 |
Local real estate experts estimated that major hotel companies' demand to have a luxury property in Hawai'i's strongest-performing resort market could easily drive the price of the Grand Wailea to more than $400 million and maybe close to $500 million.
California-based luxury hotel investment firm KSL Recreation Corp. over the past few months has been exploring a sale of the Grand Wailea and six other hotels, according to Mainland press reports citing a KSL spokesperson.
The Grand Wailea is the second hotel at the South Maui resort area recently put on the market. Last week, Honolulu-based Outrigger Hotels & Resorts said it intends to sell the Wailea Marriott, which it owns and manages under a franchise agreement with Marriott.
KSL officials could not be reached yesterday, but one person involved with the offering said prospective buyers for the critically acclaimed Grand Wailea have been touring the 781-room hotel in recent weeks and may have made offers.
Likely bidders for the Grand Wailea or Wailea Marriott are thought to include Marriott International, Host Marriott Corp., Hilton Hotels and CNL Hospitality.
KSL, a subsidiary of legendary buyout firm Kohlberg Kravis Roberts & Co., bought the hotel in 1998 for $373 million, the highest purchase price on record for a Hawai'i hotel, according to F. Kevin Aucello, director of CBRE Hotels, the hotel advisory group of CB Richard Ellis Hawaii Inc.
"That market is a strong market and a good one for hotel investors," he said, adding that it has been the most resistant to destabilizing forces such as the Sept. 11, 2001, terror attacks, SARS and the Iraq war.
Douglas Pothul, a former Colliers Monroe Friedlander executive who recently formed the local real estate investment firm ABK Capital, said offers will depend on hotel income and average daily room rates as well as competition between prospective buyers.
"Any of the top hotel owners and operators are going to be looking at that," he said. "With the amount of capital in the market, I would expect there will be a tremendous amount of players."
The Grand Wailea was developed for $600 million by Takeshi Sekiguchi's TSA International Ltd. It opened in 1991 as the Grand Hyatt Wailea Resort & Spa just as Hawai'i's tourism business began to slump.
Though it struggled financially for years, the hotel situated on a 40-acre shoreline parcel was an industry standard for luxury, with 53 suites, a massive spa, elaborate water features and $30 million worth of artwork. Room rates topped out at $7,000 a night in 1991, and today range from $465 to $10,800.
International Hotel Acquisitions LLC, an affiliate of real estate investment bank Secured Capital Corp., bought the hotel for $264 million in June 1998, and sold it six months later to KSL for $373 million.
KSL now is interested in selling the Grand Wailea and other assets to raise capital for reinvesting in undervalued resort properties, according to reports in the Arizona Republic and The Desert Sun of Palm Springs, Calif.
The company retained Goldman Sachs to solicit buyers for the Hawai'i hotel and The Arizona Biltmore Resort & Spa, Doral Golf Resort and Spa in Miami, Lake Lanier Islands Resort near Atlanta, and California properties La Quinta Resort & Club, PGA West and The Claremont Resort & Spa.
Two other KSL properties in California, La Costa Resort & Spa and the Hotel del Coronado, are not part of the sale offering.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
