Sheraton Keauhou Bay up for sale
Jan 22, 2009, 11:25 am
#1
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Sheraton Keauhou Bay up for sale
http://www.starbulletin.com/business...auhou_Bay.html
HONOLULU STAR-BULLETIN
Foreclosure a possibility for Sheraton Keauhou BayThe Big Island resort has been plagued by plunging occupancy
By Kristen Consillio
POSTED: 01:30 a.m. HST, Jan 22, 2009
Lenders of the Sheraton Keauhou Bay Resort & Spa are considering foreclosing on the 521-room luxury property on the Big Island's Kona Coast.
Troubled Lehman Brothers Holdings Inc., which filed for bankruptcy last year, is the main lender on the property, owned by New York private-equity firm Brickman, whose local entity is Koa Hotel LLC.
The 22-acre resort south of Kailua-Kona has seen occupancy plummet along with the rest of the island's hotel industry. The Big Island's occupancy rate has hovered around 50 percent since September, according to Hospitality Advisors LLC.
"It's all about occupancy at the hotel; it's dramatically off from where it was last year ... and Lehman going out hasn't helped," said Roderick O'Connor, a principal of Brickman. "Obviously Hawaii has been going through some terrible economic times. The downturn in tourism is pretty remarkable and obviously our asset is caught in between."
The real estate firm has been in conversations with lenders and is "trying to work things out between us as best as we can under the circumstances," he said.
The resort has between 250 and 300 employees, O'Connor said.
"It concerns me a great deal; we worked hard to get those jobs back in the Keauhou area," he said. "It's very painful for us as well."
Lehman Brothers vice president Kimberly Macleod declined comment.
Brickman acquired in June 2001 the property, which includes 65,000 square feet of meeting space, a 14,000-square-foot pool, 12,800 square feet of retail, a wedding chapel, fitness center and spa.
Despite being a leasehold property with an 18-year term from Kamehameha Schools at the time, the hotel was in "an irreplaceable location and Brickman believed that Hawaii was poised for an upswing in tourism," according to its Web site.
The hotel was closed and in "severe disrepair" when Brickman scooped up the asset by acquiring the debt of a financial institution that was unwinding its equity real estate business. After negotiating a consensual foreclosure with the resort's Japanese owner, the firm worked out a ground-lease extension as well as 10 years of free rent, Brickman's Web site said.
Starwood Hotels & Resorts Worldwide Inc. opened the Big Island resort in 2005 following an extensive two-year renovation totaling $70 million.
The total value of the resort is $43.8 million, according to county tax records.
Keith Vieira, Starwood's senior vice president and director of operations for Hawaii and French Polynesia, said the lenders were still discussing a potential foreclosure and didn't know when it would be filed.
HONOLULU STAR-BULLETIN
Foreclosure a possibility for Sheraton Keauhou BayThe Big Island resort has been plagued by plunging occupancy
By Kristen Consillio
POSTED: 01:30 a.m. HST, Jan 22, 2009
Lenders of the Sheraton Keauhou Bay Resort & Spa are considering foreclosing on the 521-room luxury property on the Big Island's Kona Coast.
Troubled Lehman Brothers Holdings Inc., which filed for bankruptcy last year, is the main lender on the property, owned by New York private-equity firm Brickman, whose local entity is Koa Hotel LLC.
The 22-acre resort south of Kailua-Kona has seen occupancy plummet along with the rest of the island's hotel industry. The Big Island's occupancy rate has hovered around 50 percent since September, according to Hospitality Advisors LLC.
"It's all about occupancy at the hotel; it's dramatically off from where it was last year ... and Lehman going out hasn't helped," said Roderick O'Connor, a principal of Brickman. "Obviously Hawaii has been going through some terrible economic times. The downturn in tourism is pretty remarkable and obviously our asset is caught in between."
The real estate firm has been in conversations with lenders and is "trying to work things out between us as best as we can under the circumstances," he said.
The resort has between 250 and 300 employees, O'Connor said.
"It concerns me a great deal; we worked hard to get those jobs back in the Keauhou area," he said. "It's very painful for us as well."
Lehman Brothers vice president Kimberly Macleod declined comment.
Brickman acquired in June 2001 the property, which includes 65,000 square feet of meeting space, a 14,000-square-foot pool, 12,800 square feet of retail, a wedding chapel, fitness center and spa.
Despite being a leasehold property with an 18-year term from Kamehameha Schools at the time, the hotel was in "an irreplaceable location and Brickman believed that Hawaii was poised for an upswing in tourism," according to its Web site.
The hotel was closed and in "severe disrepair" when Brickman scooped up the asset by acquiring the debt of a financial institution that was unwinding its equity real estate business. After negotiating a consensual foreclosure with the resort's Japanese owner, the firm worked out a ground-lease extension as well as 10 years of free rent, Brickman's Web site said.
Starwood Hotels & Resorts Worldwide Inc. opened the Big Island resort in 2005 following an extensive two-year renovation totaling $70 million.
The total value of the resort is $43.8 million, according to county tax records.
Keith Vieira, Starwood's senior vice president and director of operations for Hawaii and French Polynesia, said the lenders were still discussing a potential foreclosure and didn't know when it would be filed.
Jan 22, 2009, 12:50 pm
#2
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Wow. I was just about to book for Dec. 2009. Keep us updated please.
Jan 22, 2009, 2:49 pm
#3
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Until foreclosure comes to mean (in a clear majority of cases) property closure, I don't think every hiccup in property ownership need be noted on FlyerTalk. There will be many, many properties for sale, or in foreclosure, where guests see no effect.
It's FlyerTalk, not Hotel News Resource.
It's FlyerTalk, not Hotel News Resource.
Jan 22, 2009, 2:53 pm
#4
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I was there a couple of months ago. The resort was a ghost town. Well, the resort is in need of a serious renovation. I was upgraded to one of the top level gigantic suite (1000 sq ft) and it was not even that nice. Don't get me wrong, they treated me very well. But, I can see why the occupancy rate is so low.
Jan 22, 2009, 4:39 pm
#5
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I was there a couple of months ago. The resort was a ghost town. Well, the resort is in need of a serious renovation. I was upgraded to one of the top level gigantic suite (1000 sq ft) and it was not even that nice. Don't get me wrong, they treated me very well. But, I can see why the occupancy rate is so low.
Jan 22, 2009, 5:33 pm
#6
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The place was always a bit spartan and plain even after the renovation (which you will learn if you stay there and/or read any of the threads on this property).
Rooms are spacious, but let's just say -- NOT over-decorated! (At least not when I was there a few years back.)
Rooms are spacious, but let's just say -- NOT over-decorated! (At least not when I was there a few years back.)
Jan 22, 2009, 5:45 pm
#7
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We stayed there a year ago and I fell the only benefit for being Platinum was the 500 pt. amenity.
So I preferred the HIlton--Hawaii's too far for a mattress run.
So I preferred the HIlton--Hawaii's too far for a mattress run.
Jan 22, 2009, 6:49 pm
#8
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I want to know where they spent 70 million dollars on the renovation!?!?!
Jan 23, 2009, 3:42 am
#9
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Jan 23, 2009, 8:36 am
#10
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It's closer to the dive spots than the other chains.
Jan 23, 2009, 8:45 am
#11
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It can be pretty darn good for a mileage run, though! 
I agree that this foreclosure notice is not catastrophic.
I also agree that this property leaves some things to be desired. It doesn't have its own beach, isn't really close to downtown Kona, and is a rather strange building design which has some ups and downs.
But it's not an awful place and the prices are much more favorable than all of the other Starwood properties in HI. (I'm purposefully excluding the Sheraton PK since the hotel itself gets such unfavorable reviews.) AAA rates of $150 right now at the Sheraton Keauhou. It's still a Cat4 for awards, and it doesn't look as if that's likely to change.
I haven't been to the Hilton Waikoloa Village, but I think of the Hilton as being an all-encompasing resort and a much higher price. You'd stay there to mostly remain on the resort property. I think of this Sheraton as little more than a hotel -- not so much a "resort" itself.
I'm glad that Starwood has a property on the Big Island, and I'd be willing to stay there again if we ever return. (Night diving with the mantas was one of the most amazing dives we've ever done, and I'd love to do that again!)
What reasonable changes should this hotel do to become more favorable to FTers and others? Is their marketing all wrong? Do they just need to bring in an interior designer? (Corporate, local, or both?) Are there noise issues which need to be addressed? Staff training problems? Room assignment problems? Problems with dining services?
I agree that this foreclosure notice is not catastrophic.
I also agree that this property leaves some things to be desired. It doesn't have its own beach, isn't really close to downtown Kona, and is a rather strange building design which has some ups and downs.
But it's not an awful place and the prices are much more favorable than all of the other Starwood properties in HI. (I'm purposefully excluding the Sheraton PK since the hotel itself gets such unfavorable reviews.) AAA rates of $150 right now at the Sheraton Keauhou. It's still a Cat4 for awards, and it doesn't look as if that's likely to change.
I haven't been to the Hilton Waikoloa Village, but I think of the Hilton as being an all-encompasing resort and a much higher price. You'd stay there to mostly remain on the resort property. I think of this Sheraton as little more than a hotel -- not so much a "resort" itself.
I'm glad that Starwood has a property on the Big Island, and I'd be willing to stay there again if we ever return. (Night diving with the mantas was one of the most amazing dives we've ever done, and I'd love to do that again!)
What reasonable changes should this hotel do to become more favorable to FTers and others? Is their marketing all wrong? Do they just need to bring in an interior designer? (Corporate, local, or both?) Are there noise issues which need to be addressed? Staff training problems? Room assignment problems? Problems with dining services?
Jan 23, 2009, 11:58 pm
#12
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Until foreclosure comes to mean (in a clear majority of cases) property closure, I don't think every hiccup in property ownership need be noted on FlyerTalk. There will be many, many properties for sale, or in foreclosure, where guests see no effect.
It's FlyerTalk, not Hotel News Resource.
It's FlyerTalk, not Hotel News Resource.
Jan 31, 2009, 5:37 pm
#13
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I was there 2 weeks ago. As a platinum member, I was upgraded to one of the corner suites (balcony see ocean and ocean). I stayed there for a week; was able to get 5th night free, $100 food coupon and 500 pts for arrival, 500 pts for each night and 500 pts for filling out exiting survey. Overall an excellent deal. The pools are nice and there is a nice slide too. Everything else is just okay. I used the hotel primarily to sleep at night and was gone from early morning till late at night. Staff is very nice. I was thinking about going to their luau (Firensea), but glad I didn't. I saw the end of the show from the balcony and it wasn't that great. The suite was average, not great. Decorated sparsely and the bath/shower was average.
Feb 1, 2009, 2:52 am
#14
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My apologies if you found this annoying, but I thought this instance is significant as it's likely no new owner will be found anytime soon. One needs to remember what this facility was before it was a Sheraton, and that's more than likely what it will become again if the property is foreclosed on as the Big Island is seeing occupancy rates at around only 50%.
Feb 2, 2009, 9:14 am
#15
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Yes Kathy, you are correct
I worked at the Sheraton Moana Surfrider twenty years ago. (It's of course now a Westin.)
The Japanese owners, bless their hearts, spent fifty million U.S. dollars making the original 1901 Moana beautiful again.
It was an amazing transformation ... the former dump became a complete shell, looking like something out of Beirut during their civil war, the Banyan courtyard out back looking worst of all, the ground around that lovely tree all 'blown up' ... the whole property a 'war zone' ... and then : Cinderella!
I'll never forget how even the day before the grand re-opening in March of '89 the 'openers' were still working on things like the carpeting. Never thought they would finish in time.
Virginia Murison, the lead architect, was a magician!
In the end, it was all worth it - the First Lady of Waikiki was truly brought back to life and we thankfully can today still enjoy her romantic charms.
The Japanese owners, bless their hearts, spent fifty million U.S. dollars making the original 1901 Moana beautiful again.
It was an amazing transformation ... the former dump became a complete shell, looking like something out of Beirut during their civil war, the Banyan courtyard out back looking worst of all, the ground around that lovely tree all 'blown up' ... the whole property a 'war zone' ... and then : Cinderella!
I'll never forget how even the day before the grand re-opening in March of '89 the 'openers' were still working on things like the carpeting. Never thought they would finish in time.
Virginia Murison, the lead architect, was a magician!
In the end, it was all worth it - the First Lady of Waikiki was truly brought back to life and we thankfully can today still enjoy her romantic charms.