'Mess' expected with Waikiki face-lift
By Lynda Arakawa
Advertiser Staff Writer
The core of Waikiki will soon become a major construction site when Outrigger Enterprises Inc., the Royal Hawaiian Shopping Center and the International Market Place begin redevelopment projects to revitalize the character of Hawai'i's No. 1 destination.
Deborah Booker • The Honolulu Advertiser
Outrigger breaks ground tomorrow on its $460 million Waikiki Beach Walk project. The Royal Hawaiian Shopping Center is scheduled to begin an $84 million renovation in late summer, and the International Market Place is expected to undergo redevelopment in early fall that would cost up to $150 million.
This area of Kalia Road at Beach Walk will face demolition in the redevelopment project. The Ohana Edgewater Waikiki hotel to the right will be demolished in the first phase.
People in Waikiki can expect partial road closures — particularly surrounding the Beach Walk project — daytime construction noise and boarded-up areas during at least the next couple of years. City officials and those involved in the projects say they are working to minimize inconveniences, but there's a limit to what they can do.
"It's going to be a mess," Waikiki Neighborhood Board chairman Robert Finley said of the Beach Walk project. "But hopefully when it's finished it should be very beautiful. ... It's just a project whose time has come."
The costly changes are designed to turn Waikiki into a more attractive and higher-end resort destination.
"I think now for the first time Waikiki will have the kind of product that's been attracting (upscale travelers) to Maui," said David Carey, president and CEO of Outrigger Enterprises. "Maui has done very, very well with that class of customer that said, 'Waikiki is not quite good enough.' Well, now Waikiki will be good enough."
Waikiki improvements in the past five years total about $600 million from the private sector and about $70 million in public money, according to Rick Egged, president of the Waikiki Improvement Association. Another $900 million in improvements is projected during the next four years, he said.
The most ambitious by far is Outrigger's Waikiki Beach Walk project, which will redevelop 7.9 acres of land along Lewers Street, Beach Walk, Kalia Road and Saratoga Road in two phases.
The first phase of the project, expected to be completed late next year, includes tearing down three hotels, building a low-rise 90,000 square-foot retail entertainment complex, and renovating three Outrigger properties.
The second phase includes renovating two more hotels by the end of 2007 and demolishing three buildings for possibly a high-rise residential or resort condominium.
Several neighbors said they view the added traffic, noise and other inconveniences as a temporary and inevitable byproduct of a much-needed project.
The project has raised "the normal operational concerns (but) we're looking more to the project being completed and the boon that that will be for this end of Waikiki," said Gerald Glennon, executive assistant manager of the nearby Halekulani hotel.
For Web cameras, daily traffic reports and weekly updates on construction progress, visit www.waikiki beachwalk.com.
"It's going to be a wonderful improvement to Lewers Street today, which is not the most attractive area. I think Outrigger has really done a great job in involving the neighbors and trying to address our concerns for access and egress. At times we're going to have some chaos to deal with, but we just have to look toward the next 24 months and what a big improvement it's going to be ultimately and manage through it in the process."
Monitoring traffic
Portions of the one-way Kalia Road and Lewers Street makai of Kalakaua Avenue will accommodate two-way traffic during certain construction periods. Drivers can expect at least partial closures of Lewers Street, Beach Walk and Helumoa Road. Kalia will also be partially closed during major sewer relocation work.
"You're looking at, I would say, a good 14 months of constant partial closures of one street or another," said Eric Masutomi, Outrigger's vice president of planning. During that period there will be heavy construction on both sides of Lewers Street.
The first six to eight months will be the most intense, with demolition activities and concrete slab work on Lewers and Beach Walk, Masutomi said.
Deborah Booker • The Honolulu Advertiser
He said much of the regular Lewers Street traffic will be eliminated during construction because Outrigger properties in the area will be shut down. About 80 percent of the traffic on the street is for Outrigger hotels and tenants, he said.
The Ohana Waikiki Tower, at Kalia Road and Lewers Street, will reopen after renovations under the Embassy Suites brand. Parts of Kalia Road will handle two-way traffic during some construction periods.
The concrete from torn-down buildings will also be crushed on site and used as fill for basement parking lots, reducing the number of trucks in and out of Waikiki, Masutomi said.
While construction activity may be a nuisance to some in the area, Outrigger employees are more directly affected by the new project.
Outrigger CEO Carey said most employees at affected hotels will be transferred to other Outrigger properties or take early retirement.
Those employees will help as Outrigger's other Waikiki hotels become busier when the Ohana Waikiki Village and the Ohana Waikiki Tower hotels close tomorrow, Carey said.
"We're not anticipating any permanent layoffs," Carey said. "There may be some vacation time, but for now I think we've got jobs for everybody in the system that doesn't take a retirement option."
Ohana Waikiki Village employee Bert Nawatani will soon put aside his daily general building maintenance duties and will be involved in the renovations. Ohana Waikiki Tower housekeeper Florencia Silapan is transferring to the Ohana Waikiki Malia hotel.
Employees, who have waited years for the project to finally begin, have been counting down the days to the groundbreaking, they said.
"When it's done the hotels are going to be fabulous," Nawatani said.
Ohana Waikiki Village and the Ohana Waikiki Tower hotels will reopen after renovation under the Embassy Suites brand.
The Beach Walk project had already been half a decade in the making when Outrigger unveiled the plans in July 2001. It was scheduled to begin in 2003, but the Sept. 11 attacks halted the project's momentum.
Since then, Outrigger has made changes to the plan, ultimately reducing the number of hotel rooms in the area, in some cases converting two rooms into one suite. A planned high-rise hotel will likely become a residential or resort condominium building, or a combination of all three.
But the net loss of rooms should not have a major impact on the inventory in Waikiki, said Daisy Aio, senior director of hotel consultancy PKF Hawaii.
"I don't think it's going to have such a dramatic effect that we won't be able to accommodate the visitors that want to come to Waikiki," she said.
Overall, the Beach Walk project plans are well-received, particularly by tourism officials who are hoping to reposition Waikiki as an attractive destination for upscale travelers.
Outrigger Enterprises Inc. rendering
"I think that most people would say Waikiki is certainly a better destination today than it was five or 10 years ago," said Murray Towill, president of the Hawai'i Hotel & Lodging Association. "And I think these improvements will only continue that trend and make Waikiki a more exciting and desirable place to visit."
An artist's rendering of the corner of Kalia Road and Lewers Street after renovations. Roy's restaurant will be part of the low-rise retail entertainment complex planned for the area.
The finished area will serve as a strong anchor to the Waikiki core area and will help to return it to one where visitors and residents mingle, said Joseph Toy, president of hotel consultancy Hospitality Advisors.
"In the last five years, we're beginning to see the local community back in Waikiki," he said. "The intent of redevelopments like the Outrigger's is a further attempt to bring locals back in. ... People come here not just for the beaches, but they want to understand the people and the culture, and this is an opportunity to recapture that as well."
Outrigger's room rates, which have typically appealed to more budget-conscious travelers, will reflect the project upgrades. A stay for a family of four at the Ohana Waikiki Village costs $79 to $169 a night, according to the hotel Web site. An Outrigger spokeswoman said rack rates have not yet been set for the new Embassy Suites property that replaces the Waikiki Village and the Ohana Waikiki Tower, but that rates will be in the $250-plus range.
Carey said he's looking forward to attracting high-spending visitors. "When you're successful at the top, the profit margin's better," he said.
Industry experts say the market has been changing to one that is accepting higher prices. Upgraded hotels and high occupancy have driven up demand, allowing hoteliers to command higher room rates. Hawai'i hotel revenues hit a record $2.73 billion last year, topping the 2000 high-water mark despite selling fewer rooms. Both the statewide average daily rate and revenue per available room set records.
"There's a lot of closer, cheaper places where people could go, in the U.S. and Asia," Carey said. "So I think Hawai'i should hold its place as a high-quality destination."
The retail entertainment center, however, will not just be for tourists with deep pockets, according to Barbara Campbell, Outrigger's vice president of retail development and leasing. A Roy's restaurant planned for the center will probably be the most upscale restaurant, and there will be no luxury boutiques.
Carey said the retail center is intended to attract both residents and visitors.
"We want the locals to come to this place as much as the tourists," he said. "There's not that many places that have that nice mix for both."
During construction, finding hotel rooms in the peak travel seasons will be a challenge, said Duke Ah Moo, staff vice president of Hawai'i operations at Pleasant Holidays, the largest U.S. tour operator to Hawai'i. The company will likely try to accommodate some visitors on the Neighbor Islands and other resorts outside of Waikiki, he said.
"I think it's going to be challenging as far as the customer experience goes while the construction is going on," Ah Moo said. "However, I think the end product will be beautiful and will enhance the visitor experience tremendously."
Reach Lynda Arakawa at larakawa@honoluluadvertiser.com or 535-2470.
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Waikiki Beach Walk Project Cost: $460 million First phase breaks ground tomorrow and is to be completed late next year. First phase includes: • Tearing down the Ohana Coral Seas and the Edgewater Lanais hotels — both of which have been closed — the Ohana Waikiki Village parking lot, and the Lewers Street Loft building to make way for a two-story, 90,000 square-foot retail entertainment complex. The complex, envisioned as a gathering place for both tourists and residents, will include 40 retail shops, four major restaurants, three or four smaller food and beverage establishments and an open pedestrian plaza. • Shutting down the Ohana Waikiki Village and Ohana Waikiki Tower hotels, which have a total of 881 rooms, and redeveloping them into the 421-suite Embassy Suites-Waikiki Beach Walk. The two hotels will be joined by a central lobby, porte cochere and parking structure, with a pool deck and pavilion on top. The lobby will be on the site of the already-closed Ohana Edgewater Waikiki hotel, which will be torn down. • Closing the 480-room Ohana Reef Towers Hotel and redeveloping it into a 193 timeshare-unit Fairfield Hawaii at Waikiki Beach Walk. What to expect during construction: Partial closures of Lewers Street, Beach Walk, Helumoa Road and Kalia Road during various periods of the project. Portions of Kalia Road and Lewers Street makai of Kalakaua Avenue will be open for two-way traffic during certain times. The second phase includes: • Renovating the Outrigger Reef on the Beach (may begin by the end of the year) and the Ohana Islander Waikiki (to begin in spring 2006). Outrigger plans to keep both hotels open during renovation, which is expected to be completed at the end of 2007. • Tearing down the Ohana Royal Islander and Ohana Reef Lanai hotels, as well as the Hale Pua Nui apartments to build a high-rise resort condominium or residential condominium building. Outrigger has yet to select development and joint venture partners for that project. Royal Hawaiian Shopping Center Cost: $84 million Renovation expected to begin in late summer and be completed in late 2006. Project includes: • Applying new exterior finishes similar to the kapa patterns outside the Cheesecake Factory and reducing three thick concrete bridges connecting mall wings to a single, less-dense bridge that opens a view to the Royal Hawaiian hotel. • Changing the mall's central performance area into a 30,000 square foot landscaped gathering area. • Adding more windows, lanai, roof elements and a nine-restaurant food court to the second floor. What to expect during construction: The center will remain open, but certain areas will be barricaded during renovations. Most construction stages will be conducted on site but at least one lane on Kalakaua Avenue may be partially blocked for short periods of time, landowner Kamehameha Schools officials said. International Market Place Cost: $140 million to $150 million Expected to begin in the early fall and reopen in early 2008. Project includes: • Demolishing the 48-year-old marketplace and adjacent Waikiki Town Center on 4.5 acres between Kuhio and Kalakaua avenues. • Rebuilding a 230,000 square-foot complex of three-story retail buildings, kiosks, an amphitheater and food hall set amid meandering paths, a boardwalk, hula mound and artificial stream replicating one cut off by the Ala Wai Canal. What to expect during construction: Site will be fenced off. No road closures anticipated other than a possible lane closure for equipment and supply delivery trucks if they can't get on the site, said a spokesman for landowner Queen Emma Foundation.
Changes are on the way
