Hilton Grand Vacations Company broke ground yesterday on a 38-story time-share tower at the Hilton Hawaiian Village Beach Resort and Spa.

The Grand Waikikian, which will be built on the site of the former Waikikian Hotel and Tahitian Lanai restaurant, is expected to be completed in late 2008. The tower will be Hilton's seventh at its Hawaiian Village property.

Gary Seibert, area vice president and managing director of Hilton Hawaii, called the Grand Waikikian a "new economic engine" and said the project would add jobs and pump more visitor spending into the local economy.

In addition to hundreds of construction jobs for the next two years, the development will create more than 150 permanent, resort operations positions, said officials with Hilton Grand Vacations Company, the time-share division of Hilton Hotels Corp.

"While this project is going to benefit Hilton Grand Vacations Company, we also believe ... it's going to benefit the community and the tourism industry," said Mark Wang, Hilton Grand Vacations Company senior vice president for Hawai'i and Asia.

The Grand Waikikian tower will include at least 331 one-, two- and three-bedroom time-share suites and four floors of retail, office and guest amenity space. The top five floors will be designated penthouse levels with access to added amenities such as a private check area, concierge and lounge.

The project will include a retail shopping arcade, beachside restaurant and pool with three slides and a "lazy river" feature.

Hilton officials declined to disclose the cost of the project, but its 2001 draft environmental impact statement projected construction costs at $80 million. Hilton Hotels Corp. is also making other improvements, including a $13.5 million restoration of the nearby Duke Kahanamoku Lagoon.

The Grand Waikikian will be Hilton Grand Vacations Company's fourth time-share development in Hawai'i. It operates the 236-unit Lagoon Tower and 72 units in the Kalia Tower at the Hilton Hawaiian Village, as well as the recently opened 120-unit Hilton Grand Vacations Club at the Waikoloa Beach Resort.

The development of the Grand Waikikian will continue to strengthen Hilton's position in Waikiki and help reposition the Ala Moana Boulevard corridor, said Joseph Toy, president of hotel consultancy Hospitality Advisors LLC.

"If you look at what was there before — the Tahitian Lanai and the Waikikian — this really rejuvenates the area and then adds to the continued repositioning of Waikiki that began in 1998," he said. "So this is the continuation of the elevation of Waikiki as a visitor destination."

Toy also said research shows the time-share market is more resilient to downturns than hotels because of the prepaid aspect of time-shares.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.