Aggressive investment in Hawaii hotels should pay off for Starwood Hotels & Resorts Worldwide Inc. in the coming years as visitors return to the islands in larger numbers, according to Frits Van Paasschen, the company’s president and chief executive officer.
"We are beginning to see pent-up demand play out, and while we are seeing the Hawaii market come back, Starwood has invested more than $1 billion in renovations in Hawaii," said Van Paasschen, who was visiting the newly renovated Sheraton Waikiki this week.
"If 2009 was the year of the staycation, the next few years will be an exercise in pent-up demand," Van Paasschen said, adding, "Hawaii is delivering newly renovated properties at just the right time."
Starwood manages or owns 11 properties in Hawaii. Recent and future investments include the completed $187 million renovation of the Sheraton Waikiki, the planned $700 million redevelopment of the Sheraton Princess Kaiulani and Moana Surfrider’s Diamond Head Tower in 2012 by Kyo-ya Hotels & Resorts, and the planned $500 million renovation and redevelopment of the Sheraton Maui Resort & Spa in 2012.
Starwood’s overall occupancy in Hawaii averaged 71.7 percent year to date, and revenue per available room or RevPAR, considered by many to be the best measure of hotel performance, rose to $186.59.
At some properties, such as the Sheraton Waikiki, occupancies have climbed to 89 percent, said Keith Vieira, senior vice president and director of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia.
The improvement signals a positive trend for the remainder of the year, Vieira said. Leisure travel, a key driver of recovery, is up 40 percent, and group room nights are up 201 percent with 48,083 more room nights on the books this year than last year. Incentive business travel is also up 540 percent from 2009, and many companies that canceled this year and last year are rebooking through 2013.
Hawaii will continue to be a key focus for Starwood across all brands, including the Luxury Collection, St. Regis, Sheraton and Westin. The company recently finalized a contract extension with Kyo-ya Hotels & Resorts – owners of the Sheraton Waikiki, Royal Hawaiian, Moana Surfrider, Sheraton Princess Kaiulani and Sheraton Maui Resort & Spa – that will take the relationship to 2021. Sheraton has been managing Kyo-ya properties since the 1960s.
"This 60-year agreement signifies the longest-running hotel management contract in the islands," Van Paasschen said.
The Westin Maui, the Westin Kaanapali, the Sheraton Kauai and the Westin Princeville could see renovation and redevelopment, Vieira said. The company might bring another W to Waikiki Beach, and its Four Points brand to secondary markets like Lihue and Kahului, he said. Starwood also has discussed introducing the Aloft brand hotel to the islands, Van Paasschen said.
In addition to growing and refining its local brands, the chain is eyeing the Asian Pacific, with an emphasis on China, as a key to Hawaii growth. Starwood plans to double its China presence to 100 hotels by 2012, "meaning Starwood will influence the hotel purchasing decisions of even more outbound Chinese travelers, many of them making trips to Hawaii," Van Paasschen said. Chinese travel to Hawaii could benefit as the Chinese become more familiar with the Sheraton brand and hooked on its loyalty program.
Van Paasschen was at the Sheraton Waikiki for an event with 150 of Starwood’s top customers and travel agents from North America and Asia.
"Hosting this important relationship-building meeting in Hawaii underscores the importance of this region to Starwood overall and is a great opportunity to reintroduce Hawaii as a primary destination for leisure and business travel," Van Paasschen said.