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The Honolulu Advertiser
Posted on: Thursday, September 15, 2005

Ala Moana Hotel signs Outrigger

By Andrew Gomes
Advertiser Staff Writer

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Outrigger Hotels & Resorts, Hawai'i's largest locally owned hotel owner and operator, has signed a letter of intent to take over on-site management of the Ala Moana Hotel for a developer that recently bought the 1,150-room property and is selling rooms to individual investors.

Miami-based condominium development firm Crescent Heights announced that Outrigger will begin helping with management, marketing and operations of the hotel in an advisory capacity.

The arrangement could later lead to Outrigger assuming Ala Moana Hotel management for Crescent Heights and room buyers who want their units managed by a firm staffing the hotel's front desk, though such a long-term management role would be subject to subsequent agreement.

Perry Sorenson, Outrigger chief operating officer, said no timetable is projected for when Outrigger might become the hotel's on-site manager, though Outrigger views such an arrangement as a big opportunity.

"The Ala Moana Hotel has been one of Honolulu's largest, best known, and best located hotels for many years," he said.

Kathryn Acorda-Strona, Crescent Heights regional marketing director, said Outrigger's help will assist Crescent Heights to reposition the hotel which is next to Ala Moana Center but has not performed well in recent years as a successful, contemporary urban hotel serving O'ahu visitors and the nearby Hawai'i Convention Center.

"This hotel has been a landmark for years and will continue to operate as a full-service hotel," she said.

In most cases, almost all condotel unit purchasers rent out their rooms as vacation units either through off-site or on-site management companies that typically charge as much as 50 percent of room revenue for their services.

If Outrigger assumed management of the large majority of Ala Moana Hotel units, the hotel could become the company's largest property after the 883-room oceanfront Outrigger Reef on Kalia Road.

The Ala Moana also would become the third so-called condotel owned by individual room owners that Outrigger manages in Waikiki.

Outrigger is the on-site management firm for the Outrigger Luana Waikiki, formerly known as the Waikiki Terrace Hotel, and an off-site manager for units in the Waikiki Shores next to the Outrigger Reef.

Outrigger entered the condotel management business in 1994, and manages roughly 1,300 units for individual room owners mostly at Neighbor Island properties.

Sorenson said it is a "monstrous task" to renovate, sell and manage 1,150 rooms at the Ala Moana. "It's a new adventure for all of us," he said. "Crescent Heights is one of the nation's leading developers, and we're very pleased they have selected Outrigger to advise them."

Crescent Heights bought the Ala Moana Hotel about a year ago from Japanese firm Azabu USA for $85 million, and is renovating the property and reselling it by the room.

About 200 rooms to date have been renovated, and it is expected to take until summer 2006 to complete the renovation.

The developer in July began signing purchase agreements with buyers, and the first 75 sales of 620 signed contracts closed earlier this week, Crescent Heights said.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.