The Days Inn-branded Maui Oceanfront Inn, home of Sarento’s on the Beach, could be the latest Hawaii hotel to hit the auction block as part of a bankruptcy reorganization.
Court documents show that San Diego-based Western Apartments Supply & Maintenance Co., which owes $12.2 million to mortgager OneWest Bank, filed Chapter 11 bankruptcy in April. More than 50 creditors are named in the petition filed by Carroll Davis, president of Western Apartments Supply & Maintenance Co.
The 88-unit hotel, which has another 22 years on its state land lease, is just the latest in a series of Hawaii hotels to face resale, said Bankruptcy Trustee Joseph Toy, president and chief executive officer of hotel consultancy Hospitality Advisors LLC.
During the last several years, Hawaii’s hotel industry has seen a fair amount of sales, management changes and debt restructuring as owners sought to come out of a period where revenue declines where much steeper and faster than anticipated, Toy said. Hawaii’s hotel industry lost 30 percent of its revenue per available room and 15 to 20 percent of its occupancy and average daily rates from 2006 to the 2009, he said.
The Ritz-Carlton Kapalua Bay, the Four Seasons Hualalai, Maui Prince Resort, Fairmont Orchid Hawaii, Ilikai Hotel and Turtle Bay Resort & Spa are some other local hotels that grappled with steep debt loads.
"A lot of major properties are still restructuring," Toy said, "but we still see pressure on smaller to midsize properties where the terms of the loan are too overwhelming."
Hotel properties, in those cases, are often sold and repositioned, he said.
"I was appointed bankruptcy trustee late last month to administer the bankruptcy on behalf of the court and look at options, which could include the bankruptcy sale of the Maui Oceanfront Inn," Toy said.
If the hotel goes to auction, Toy said its location on the crescent of Keawakapu Beach at the gateway to Wailea and its flagship restaurant are likely to help generate investor interest.
"The beach location is extremely desirable," Toy said, "and Sarento’s is a very attractive amenity."
