The Bratton Team

Oahu’s construction pipeline for hotel properties extends beyond Waikiki

By Allison Schaefers
November 6, 2022

Hawaii’s largest hotel market is about to get even bigger.

There’s a wave of new hotel development on Oahu, where more than a dozen properties are in the planning or the construction pipeline with delivery goals between 2023 and 2027, according to data from Powell &Aucello, Hawaii Hotel Real Estate Advisors, founded in 2020 by former hotel executives Tim Powell and Kevin Aucello.

Over the past two dec­ades, Oahu lost more than 13% of its hotel inventory, but the island now is making up for lost ground. Powell and Aucello said the hotel construction pipeline is the largest on Oahu that they can recall since land-use policies tightened the barriers for hoteliers, especially in Waikiki, where the majority of the island’s hotels are located.


“It hasn’t been this way since the late ’70s,” Aucello said.

Mark Bratton, Colliers International senior vice president, agrees with that assessment, as does Emmy Hise, senior director for hospitality market analytics at CoStar Group, and Keith Vieira, principal of KV &Associates, Hospitality Consulting.

Some of the new hotel development is going into traditional markets like Waikiki, where at least two large hotel projects are planned, including the 36-story, 515-room AMB Tower at the Hilton Hawaiian Village, which is not likely to open until at least 2026 or 2027.

There’s also a Residence Inn, a 162-room extended-­stay hotel planned for the old Pacific Business News Building near the Hawai‘i Convention Center. Powell said the project is expected to start construction in the first quarter of 2024 and could open in 2025.

Waikiki Bazaar has proposed the Hale Lauula project, a six-story, 16-unit boutique hotel, at 2154 Lauula St. Bratton said there’s also the possibility of a fourth Waikiki hotel, a completely new building, which is unusual for the district, where land is tight and government regulations protect Diamond Head views.

But Oahu’s hotel market is so hot that new hotel development is spreading out to Downtown Honolulu, Chinatown, near the Daniel K. Inouye International Airport and West Oahu.

“If somebody is going to put a hotel downtown, you know we are in quite an aggressive growth stage,” Powell said.

The first of the new hotels expected to open is a 112-room AC Marriott under construction at 1111 Bishop St. in the old Remington College office building, which has five stories and a basement. Patricia Chang Moad, vice president of operations for Continental Assets Management, a private real estate investment company founded by her father, Andy Chang, said they are targeting a January 2024 opening.

Moad said the select-­service hotel will have a metro vibe and will attract mostly short-stay business travelers. She said the footprint of the five-story property won’t change; however, it will be reconfigured to offer food and beverage options, including a 50- to 60-seat restaurant and a 1,000-square-­foot lounge. The hotel also will have two 1,000-square-foot meeting spaces.

“There’s demand in the market; there’s nothing in between Waikiki and the airport,” Moad said. “I believe in this project and in downtown. We are so excited about activating downtown.”

IN CHINATOWN, a restoration of the landmark Wo Fat Building is underway at 115 Hotel St. Donald Kenney, a partner in the Mighty Union, a hotel development and marketing company, said former University of Hawaii football coach June Jones, Dickie Chang and John Davenport also are involved in the project, which would put 23 luxury hotel rooms on the second and third floors of what was once Hawaii’s oldest chop suey house.

The hotel, which is targeted to open in the third quarter of next year, would top a 100-seat restaurant featuring a large serpentine bar, as well as first-floor retail space, a hotel lobby and coffee shop.

Powell said Chris Flaherty, managing partner for ‘Ikenakea Development, is planning a 240-room, full-­service hotel in Chinatown on Nimitz Highway and Maunakea Street. Powell said the planned high-rise would put a brand-new building on what is currently a vacant lot.

Mana‘olana Partners, an affiliate of Los Angeles-­based Salem Partners, is the developer of the Mandarin Oriental Hotel and Residences tower located Ewa of the Hawai‘i Convention Center just beyond Waikiki. The 37-story project is designed with 125 hotel rooms above roughly 99 residences that already have been released for presales.

The Renaissance hotel is currently under construction at 1390 Kapiolani Blvd. by Sky Kapiolani Hotel LLC, a subsidiary of JL Ala Moana LLC, which does business as JL Capital. The 380-foot, 39-story, full-­service hotel is anticipated to open in the fourth quarter of 2023.

The Luke family and Seattle-based Hadley Properties are planning a roughly 240-room extended-stay property, the Homewood Suites by Hilton, at the site of a five-story logistics building by the intersection of Paiea and Aolele streets. The project, which is still waiting on the city Department of Planning and Permitting to pull permits, could be under construction as early as next summer, with a delivery date of about two years after that.

THIS CYCLE of hotel development also could bring Ewa Beach its first hotel. Eagle Point Hotel Partners and Alakai Development are planning a dual-branded Hyatt Place and extended-stay Hyatt House for the Hoopili master-planned community. Construction could start next year.

Western States Lodging and Garn Development, through Kapolei Hotel Partners III LLC, are developing a 204-room Element by Westin, a youthful extended-­stay, limited-service brand on the Leihano block of Kapolei. The hotel’s location is near the Utah-based development group’s other Kapolei hotels, the Embassy Suites, which opened in 2017, and the Marriott Residence Inn, which opened in 2019.

Powell said the Castle &Cooke Hawaii Koa Ridge community in Central Oahu also has plans to develop a dual-branded hotel concept.

HISE SAID one reason interest in building Oahu hotels is rising is that the market has been historically strong, and it’s coming back from the COVID-19 pandemic.

In September, Oahu hotels realized the strongest demand increase of the major islands. A nearly 49% rise in hotel demand through September also contributed to higher occupancy on Oahu, giving hoteliers amazing pricing power.

“Hawaii is a high-barrier-­to-entry market. But on top of that it has the highest top-line performing metrics in the nation,” she said, adding Oahu was among the top five markets in the nation for revenue per available room (RevPAR) on a trailing 12-month basis.

RevPAR is considered by many in the hotel industry as the key performance measure, as it is the rate that a room rents for regardless of occupancy status.

Another reason for the proposed growth of Oahu hotels is that business development, especially on the west side, has increased the need to serve more business travelers.

“There are few options for growth in Waikiki, and the Kapiolani area is seeing an amazing gentrification, so it makes sense to add a beautiful hotel to this area and be a part of the beautification of this area of Honolulu,” said Tim Lee, CEO of JL Capital.

The emergence of remote work and hybrid work during the pandemic also has become a lasting trend, which is prompting conversions of office space. Moad said such conversions are not common on Oahu as not all properties are suitable. However, the success of the Hyatt Centric, an office-­to-hotel conversion in Waikiki, bodes well for the burgeoning trend.

“They were the first on Oahu, we’re the second,” she said.

Hise said limited-service hotels, including extended stay, have been the primary development category for U.S. hotels over the past few years.

‘The upscale and upper mid-scale, which are generally limited service or select service, for the past four years have been dominating the construction pipeline, representing more than half of the rooms under construction,” she said.

Hise said extended-stay hotels took hold in the mid-2010s in the U.S., with 20,000-plus rooms in that category added each year from 2015 to 2021.

“Some investors are more comfortable with that steady, constant demand with a low operating cost,” she said.

VIEIRA SAID hotel worker unions are a reason that until now Oahu has been significantly behind the limited-service hotel development trend. In the past, there was heavy pushback from the unions concerned that fewer guest services and amenities meant fewer jobs.

“The properties that are being proposed now are small. It’s not Hilton building a 3,000-room hotel. It’s not worth fighting for one restaurant,” he said.

Even if all the hotels in Oahu’s development pipeline get built, which is unlikely given the current economy and high interest rate environment, Vieira said they won’t come close to replacing the illegal vacation rental market, which Honolulu Mayor Rick Blangiardi has estimated could be as high as 14,000 units.

Crackdowns on illegal short-term rentals, which continued last month with the implementation of Ordinance 22-7, Bill 41, could boost Oahu hotel performance by decreasing the number of places to stay for those attending sporting or other events or whose friends and family don’t have rooms to spare. They could even increase demand for limited-service and extended-stay properties, which until recently were never really part of Oahu’s hotel market.

“Talking about Bill 41, I never talked to anybody that said (years ago), ‘Supply is going down and I’m going to build now — the market is good,’” Bratton said.

He said some developers and owners are now looking back and saying, ‘Hey this is really going to help and it’s going to hold rates up for these legal nightly rentals.’”

Supporters of the proposed hotel growth on Oahu say it is expected to generate additional taxes and jobs while enhancing the community. They expect the ancillary ones to help manage tourism by keeping business travelers and sports travelers closer to where they need to be, thereby reducing traffic.

But not everyone is convinced that Oahu needs additional hotels, or that they will be good for the island.

K.C. Connors, a moderator for the Facebook site Enough Tourists Already, said replacing vacation rental units with hotel rooms was not what she had in mind when she supported city Ordinance 22-7, Bill 41, which the Hawai‘i Tourism Authority touted as a way to reduce Oahu visitor arrivals.

“I’m very concerned with over-tourism. There needs to be a carrying-capacity study,” Connors said. “We shouldn’t be building new hotels until we know what we can handle.”