Hyatt hotel to invest $100M in renovations

Blackstone Group LP will spend more than $100 million to renovate the Hyatt Regency Waikiki Beach Resort and Spa after buying the leasehold on the property for $450 million.

David Nadelman, the new Hyatt area vice president and general manager, revealed the coming investment during an exclusive interview with the Honolulu Star-Advertiser to discuss his first 90 days on the job and what’s in store for the luxury Waikiki property.

"It will be a very thoughtful renovation that brings Hawaii into the building and gets Hyatt out into the community. The people of Honolulu deserve this because this property is iconic and it’s wonderful that Blackstone wants to put that level of investment into it," said Nadelman, who came to Waikiki after more than six years as general manager at the Grand Hyatt San Francisco.

Blackstone and key Hyatt decision-makers, including Nadelman, have been working on plans to transform the nearly 40-year-old property for some months. When theHyattRegencyWaikikiwas built in 1976 for $100 million by celebrated developer Christopher Hemmeter, it launched the concept of the opulent mega-resort in Hawaii.

"We’ve had lots of very lively, thoughtful, and respectful dialogue about where we want to be. We are truly building a product for all of our stakeholders," Nadelman said. "We want input from all of them."

Nadelman already has made good on his word. For example, he held a Hawaiian-naming ceremony in his on-property penthouse with the hotel’s cultural experts Aka and Aunty April before putting the Hawaiian equivalent of his name on his Hyatt badge. He’s probably the only top executive at Hyatt sporting a name tag that says "Kawika from Queens, N.Y."

"I recognize that this is not my hotel and not my land. I enter into other people’s hotels and lands so it’s important to learn all that I can about the culture of this place," he said.

To that end, Nadelman also agreed to serve on the Waikiki Improvement Association’s board of directors, a role that piggybacks his service to the Bay Area hospitality scene. Before moving to Hawaii, Nadelman served as president of the San Francisco Union Square Business Improvement District and held executive board positions on several prominent nonprofit groups, including San Francisco Travel.

Nadelman also is proving sensitive to how the coming renovations will be perceived by the hotel’s owners, managers, associates and the broad range of guests, who come mostly from the Asia Pacific. Just 11 days after the closing, Blackstone and Hyatt already had opened three demonstration rooms. Now, they are gathering feedback from guests who are lucky enough to test them as well as associates and representatives from Unite Here Local 5, which ratified a new union contract with the hotel in August, ending a three-year labor dispute.

"Basically, there are three constituencies that I have to worry about: the owner, the guests and our associates," Nadelman said. "I had the union rep and five associates go through the room and give me their opinion. Why wouldn’t I want to include the person who has to clean that room?"

While many details about the coming room renovations are undecided, Nadelman said all of them will include Hyatt’s celebrated Grand Bed, a pillow-top Sealy Posturepedic that retails for more than $1,500, and Washlets, the bidet-style toilets made by Japan-based Toto Ltd. that typically offer everything from seat-warming and cleansing jet streams to deodorization and even air-drying.

"Philosophically, if the decision affects guests, owners, or associates in a negative way , it’s probably a bad decision. If it’s good for one and neutral for the other two groups, it’s probably a good decision," Nadelman said. "But, you know, everyone loves the Washlets."

The hotel also is considering new shower heads, televisions and state-of-the-art in-room technology such as radio frequency identification keys, which contain computer chips that can be remotely programed. While decisions are still being made about the renovations, they are slated to begin in the middle of 2014 with an 18-month transformation of the hotel’s 1,230 guest rooms. Eventually, the overhaul will reach the hotel’s public and retail spaces, too.

"We are very aware that there will already be more than 1,500 hotel rooms out of inventory in Waikiki so we are only going to take 54 rooms out of our inventory at a time. The renovations will be very self-contained," said Nadelman, who has built his 33-year career within Hyatt Corp. helping renovate and reposition other properties in Las Vegas, Boston, Dallas and Atlanta.

The planned Waikiki renovations come on the heels of a 2009 suite renovation, a $13 million third-floor renovation in 2011, which included three restaurants, the Jacuzzi, regency club and lounge areas and the just-completed $2.5 million renovation of the Koa Ballroom.

The newest investment is noteworthy because it represents the property’s largest renovation in decades, said Joe Toy, president and CEO of hotel consultancy Hospitality Advisors LLC.

"Typically, when you see those types of numbers, you would expect to see a dramatic shift in positioning," Toy said. "This is a huge vote of confidence in Waikiki and in this property."