The purchase of the King’s Village site in Waikiki by Hilton Grand Vacations is expected to reinvigorate plans for a new 32-story tower that have been in limbo since at least 2014.
Hilton announced Wednesday that it has purchased a 1.05 acre site in Waikiki, which includes King’sVillage, Hale Waikiki Hotel and Prince Edward Apartments, from BlackSand Capital Kings Village Shopping Center LLC for an undisclosed price. The move will allow Hilton to expand its timeshare presence in Hawaii to six properties and add hundreds of new units to Waikiki’s tight lodging market. It also resurrects redevelopment of a tired Waikiki corridor that had stalled several times under the previous ownership.
“Building on our local development history that started with the Lagoon Tower in 2000, our latest project in Waikiki will assure that HGV continues to offer lifetime vacation experiences to our next generation of owners,” said Mark Wang, Hilton Grand Vacations president and CEO, in a statement.
Hilton, whose most recent Hawaii timeshare offering was the Grand Islander by Hilton Grand Vacations Club in March 2017, said the King’s Village project would increase its total timeshare unit count to 1,429. Hilton Grand Vacations’ newest project is expected to include 191 units made up of studios and one-, two- and three-bedroom suites, a fitness center, pool, business center and owners’ lounge.
HGV has set an aggressive timetable for the project, which is expected to start construction in the second quarter of 2019. The project, which could start selling units next year, is targeted for completion in the first quarter of 2022.
The project can advance swiftly because the previous developer’s permitting and entitlements were transferable to HGV and HGV plans to keep the former owner’s exterior design, which was approved by the Honolulu City Council in 2016.
Bryan Li of BlackSand Capital Kings Village Shopping Center said in a statement his company was “glad to see the project moving forward under the current approvals, as we believe it will be good for the neighborhood, the Waikiki area and our local economy. Hilton Grand Vacations has a strong track record of operating exceptional properties in Hawaii, and we wish them continued success.”
BlackSand Capital Kings Village Shopping Center was supposed to have started construction of a 32-story condominium-hotel complex at 133 Kaiulani in 2016; however, the project hit a few snags. Developers — including the Kobayashi Group, the MacNaughton Group and BlackSand Capital — ran into community resistance when they presented plans in 2014 for a two-tower, 256-unit project. They postponed the project in 2017, citing high construction costs.
A suit filed September 2017 in 1st Circuit Court, which has been settled, brought further uncertainty when it pitted BlackSand Capital against Elda Investments, led by principal Marcus Fullard-Leo, a member of the family that previously owned the King’s Village site, which once belonged to Prince Jonah Kuhio Kalanianaole. Elda had accused Kobayashi and BlackSand, which paid Elda more than $40 million in 2012 for the King’s Village property, of conspiring to undermine Elda’s rights under the property’s lease.
Joseph Toy, president and CEO of Hospitality Advisors LLC, said he expects HGV’s new development to succeed.
“It’s a premium site and there’s less risk to timeshare development, which has faster cash flows than hotels or condominium hotels because of the amount of memberships that you can sell in a year,” Toy said. “The timeshare market is getting more competitive, but it’s still strong in Hawaii. People still seem to be drawn to the chance to own a part of the destination.”
Mark Bratton, senior vice president for Colliers International, said the previous owner made money on the deal because of the value of their permitting and entitlements. However, he called the deal a “win-win” because HGV gained another piece of Waikiki’s coveted tourism market. Bratton forecasts sales at HGV’s newest timeshare tower will be on par with the chain’s last tower, which sold ahead of schedule.
“They’ve got a great history and sales force here and their product is in demand. They are close to sold out in their other projects so this will give them several more years of inventory — that’s good for the destination,” Bratton said.
Waikiki Neighborhood Board Chairman Bob Finley said HGV has pledged to keep to the former developer’s scope and to its commitment to provide $1 million in community benefits.
“In my opinion this project is needed, but I was pleased to hear that they don’t plan to expand the project beyond what we’ve already supported,” Finley said. “We are short lodging in Waikiki and a new timeshare could ease some of the demand for illegal vacation rentals, which is always a complaint.”
On the flip side, Waikiki residents like Denise Boisvert-Jorgensen, who weren’t fans of the earlier project, are still concerned about the HGV project’s potential to take away views and add to congestion.
“It was bad enough that a gigantic condotel tower with only a small percentage of long-term residents was set to replace the low-rise King’s Village, but it will be sheer condo hell with a Hilton timeshares tower due to the extra congestion such a clientele will bring to the neighborhood’s sidewalks and roads,” she said.
