Blackstone Group to buy Grand Wailea for $1.1 billion

The pending sale of Grand Wailea resort on Maui for $1.1 billion will be the highest price paid for a Hawaii hotel and the second highest paid for a hotel in the United States.

New York-based Blackstone Group LP, a private equity firm, plans to purchase the Grand Wailea, according to a source familiar with the deal.

The sale of the 776-room Grand Wailea for the equivalent of $1.4 million per room bodes well for the continued strength of the Hawaii hospitality investment market.

It’s “far and away the most expensive” single-hotel transaction ever in Hawaii, said Joseph Toy, president and CEO of Hospitality Advisors LLC.

“It’s a big number for a very good hotel that’s front-loaded, so it has large, ocean-view rooms,” added Keith Vieira, principal of KV and Associates, Hospitality Consulting LLC.

Hawaii is attracting very “sophisticated and savvy” buyers, Toy said.

“This purchase by Blackstone shows the confidence that these investors have in Hawaii. It’s great news for Hawaii. Not only are they spending top dollars to acquire the asset, but they’ll put money back into it to help increase the valuation for investment returns,” Toy said.

Vieira said he expects Blackstone will renovate the Grand Wailea to attract even higher-spending visitors.

“They have the money to invest in creating a higher level of service or product,” he said.

Blackstone acquired Turtle Bay Resort in October for roughly $330 million. In the past, the company has owned other Hawaii properties, including the Hyatt Regency Waikiki Beach Resort and Spa, Marriott Wailea Beach Resort Maui, Hilton Hawaiian Village Waikiki Beach Resort and Hyatt Regency Maui Resort and Spa.

The $1.1 billion price tag would make the Grand Wailea sale second only to the sale of Manhattan’s Waldorf Astoria for $1.95 billion almost three years ago. China’s Anbang Insurance Group Co. bought the Waldorf Astoria from Hilton Worldwide Holdings Inc.

Blackstone will be buying the Grand Wailea from GIC Pte, Singapore’s sovereign wealth fund.

Toy said development constraints combined with a diversified tourist market and some of the nation’s best occupancy rate and highest room rates continue to draw top-notch investors to Hawaii’s hospitality industry.

The supply of hotel rooms in Hawaii is expected to grow by only 0.2 percent this year compared to 2.2 percent for the rest of the U.S., according to STR Inc.’s forecast released at the Global Tourism Summit, hosted by the Hawaii Tourism Authority in September.

STR forecast that Hawaii would realize 4.5 percent hikes in average daily rate, the average price paid for a hotel room and in revenue per available room, or RevPar. Many in the hospitality industry identify RevPAR as the key performance measure for hotels since it’s the average price that a hotel realizes for each room in a property whether or not it’s occupied.

In comparison, STR forecast that the U.S. ADR would grow 2.7 percent and U.S. RevPar would grow 2.5 percent.

And within Hawaii, Maui hotels are doing especially well.

HTA’s November hotel report, the most recent available, showed that Maui leads the islands in RevPAR. Maui’s RevPAR increased 6.5 percent year-over-year to $236.

In the luxury tourist district of Wailea, hotel occupancy increased 4.2 percentage points to 83.2 percent in November. Wailea led the state in RevPAR, which rose more than 13 percent to $409, and in the average daily rate, which climbed nearly 7.5 percent to $489.

Blackstone is one of the nation’s largest hospitality investors with 211,000 hotel rooms globally, according to its website.

The deal to purchase Grand Wailea was first reported by the newsletter Real Estate Alert.

Bloomberg News contributed to this report.