Hawaii Hotel Ownership Staying Local
It’s a rarity for Hawaii hotels to be sold from one local group to another. After a long string of sales to mainland or institutional investors, the trend has finally turned.
First off, BlackSand Capital, a Honolulu-based commercial real estate private equity group, purchased the Royal Lahaina Resort from Pleasant Travel Services in Dec ‘21. Pleasant is owned by long-term Hawaii hospitality family, the Hogans. With the transaction involving a private equity firm focused on value-creation, there’s high likelihood the Maui property won’t stay in Hawaii hands forever, but does give another chapter of local stewardship to an investment firm very knowledgeable with fixing up dated Hawaii hotels. Past and current Hawaii hotel investments by BlackSand Capital include Maile Skycourt, Hilton Garden Waikiki Beach and Kaimana Beach Hotel.
The second transaction came just one month later in Jan ‘22 with the sale of Pagoda Hotel from local developer Peter Savio to Rycroft Holdings LLC, an investment firm run by dynamic Honolulu businessman Robert Kurisu. The Pagoda is no such iconic resort along the lines of BlackSand’s recent investment on Maui. However, what the property lacks in aesthetic appeal, it makes up in core location, blocks from Ala Moana Center and adjacent to the booming developments of Kaka’ako. A revamped Pagoda could continue the trend of quality in-fill select service hotels starting to pop up around Oahu. West Oahu saw the first with the Embassy Suites in 2015 with a Residence Inn and Hampton Inn & Suites quickly following. Downtown Honolulu, Chinatown and UH-Manoa have all also been rumored future locations of off-beach select-service hotels. For Oahu visitors, all these options finally give local travelers and thrifty tourists the options to stay somewhere other than near Honolulu airport, where dated finishes and a lack of amenities leave travelers high-and-dry and desperate for a flight out, or Waikiki Beach, which every local knows can be all-consuming mayhem in it’s full tourist-infested glory.
The common thread between both sales is the onboarding of hotel management company Highgate, to run both properties. While not a local firm themselves, the NY-based company has quickly become one of the largest hotel operators in the state. Pagoda will be the company’s ninth Hawaii property in its rapidly-expanding portfolio. Royal Lahaina is the company’s first assignment on Maui, and likely the start of more to come for the powerhouse company. Highgate’s sophisticated management approach, keen eye for adding value and best-in-class team will hopefully produce the kind of results needed to keep these properties in local hands for many more years to come.