Posted on: Saturday, February 12, 2005

Ala Moana Hotel is next 'condotel'

By Andrew Gomes
Advertiser Staff Writer

The new owner of the mid-price Ala Moana Hotel plans to renovate and convert the 1,150-room property into a luxury condominium-hotel to be sold room by room to investors.

Crescent Heights — the Miami-based luxury condo developer that in October paid Japanese firm Azabu USA $85 million for the underperforming hotel next to Ala Moana Center — said it expects to start selling rooms in the next several weeks for prices starting in the mid-$100,000 range.

The transformation would be the single-largest conversion of a Hawai'i hotel into a so-called "condotel." Buyers purchase condotel units which can serve as a residence but typically are rented out through an on-site hotel management company.

The renamed Ala Moana Hotel Condominium joins several smaller hotels that have been fixed up and sold by the room over the past few years, primarily in Waikiki. With the Ala Moana property, close to 3,500 rooms in Hawai'i will have undergone conversion to condotel use since 2001.

Crescent Heights has already started renovation work, and plans to spend an unspecified "multimillion-dollar" sum to upgrade the hotel, which will continue operations during construction.

Room sale prices are expected to start somewhere between $100,000 and $200,000 for studios depending on location, and run higher for 67 or so one- and two-bedroom suites.

Crescent Heights plans to install kitchens in some rooms, but said it isn't sure how many it will be able to install.

Upgrades include stone countertops, slate and stone flooring, contemporary urban furniture and other additions to guest rooms. The company also plans to add a fitness center and a meditation area on the pool level that also is to be renovated.

Typically the price of a condotel unit does not include use of a parking space, but owners can pay extra for parking when available.

Because roughly 90 percent of condotel unit buyers retain their rooms for visitor rentals, industry experts don't expect the Ala Moana Hotel Condominium to hurt O'ahu's visitor industry.

Jason Ward, spokesman for the Hotel Employees & Restaurant Employees Union Local 5 representing about 455 employees at the Ala Moana Hotel, said he didn't anticipate any significant staffing changes because of the conversion.

Joseph Toy, president of local tourism industry consulting firm Hospitality Advisors LLC, said upgraded rooms and amenities at the hotel should help improve the overall image of O'ahu visitor accommodations and the hotel's business with the nearby Convention Center.

"I would think it would still be attractive to the convention market," he said. "It's a very good hotel, and it has a lot of potential."

Crescent Heights indicated it would maintain the hotel's dining and entertainment options that include Aaron's Atop the Ala Moana, Rumours nightclub, South Seas Village Theater Restaurant at the Hawaiian Hut, Royal Garden Chinese restaurant, Japanese restaurant Tsukasa, Mahina Lounge and Plantation Café.

Crescent Heights has yet to select a company to manage hotel rooms for buyers who opt into an on-site management program. Believed to be on a short list are local firm Outrigger Hotels & Resorts, and Dallas-based Wyndham International, which owns the Park Shore Waikiki hotel but does not manage it under the Wyndham name.

Industry observers have said that the Ala Moana Hotel, which was the tallest building in Hono-

lulu when it was built in 1970, has lagged the market in performance in recent years in part because it lacks a name-brand operator and is located on the outer edge of Waikiki.

"We are taking this renowned hotel to the next level by creating a luxury, first-class destination," said Kathryn Acorda-Strona, regional marketing director for Crescent Heights.

Crescent Heights is primarily a residential condo developer but has been involved with a couple of hotel condos in Miami Beach. The company is developing the Ko'olani luxury residential high-rise in Kaka'ako, and expects to follow that with a second residential tower next to Ko'olani.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.