Espacio The Jewel of Waikiki will open this summer after undergoing what some hotel industry experts have called the state’s most expensive per-unit remodel at nearly $5.6 million for each suite.
It’s apropos that Espacio, the new name for the former Aston Waikiki Beachside Hotel, is the Spanish word for space given that each of the property’s 2,250-square-foot suites takes up an entire floor. The hotel’s Japan-based owner, Kowa Waikiki LLC, purchased the 88-unit Waikiki Beachside for $25 million and is spending $50 million to convert it into just nine ultra-luxury suites.
To put that in perspective, Turtle Bay Resort’s current renovation is anticipated to cost a generous $70 million for 452 luxury guest rooms across 875 acres.
Joseph Toy, president and CEO of Hospitality Advisors LLC, said it’s a “safe bet” that Espacio is “the most expensive renovation per unit ever in our hotel market.”
It’s a huge investment even in Hawaii, where hotel owners usually spend $50,000 to $150,000 per unit on renovations, said Keith Vieira, principal of KV & Associates, Hospitality Consulting.
“Their renovation is an incredible number,” Vieira said.
However, Vieria said it might pencil out because Hawaii hotels don’t have enough suites to meet demand for the niche ultra-luxury market. Also, Espacio’s renovation costs, while steep, are probably lower than the cost of building a similar hotel from the ground up, he said.
Mark Bratton, senior vice president at Colliers International, the firm that handled the sale of the Aston Waikiki Beachside, said that’s why Kowa gravitated to the purchase.
“They came here looking to buy an oceanfront house. They looked for a few days and we sold them an oceanfront hotel,” Bratton said. “They made the decision to buy quickly, but it took a long time to do the acquisition. They formed an advisory team and were very thoughtful and smart. They already have a few hotels in Japan, but not ultra luxury. “
Bratton said investors are more bullish than ever on Waikiki, especially on the high-end side. The challenge is finding prime inventory, he said.
“Hoteliers typically don’t want to go into an older building to retrofit, but our zoning laws don’t allow for a lot of new construction,” he said. “That’s why we see a lot of renovation starting up again. ‘Alohilani Resort Waikiki Beach and the other Highgate properties are great examples of how owners are investing significantly in their plant to make big rate shifts.”
Deferred maintenance on the Waikiki Beachside and small rooms, some without windows, had made it an underutilized asset, Toy said. But its location across the street from world famous Kuhio Beach offers top-tier potential, he said.
Robert B. Chavez, president and CEO of Hermes USA, said there’s ample demand for Waikiki from luxury consumers, provided they can find accommodations to match their tastes.
“There still is room for at least a few more very high-end luxury hotels. If you were able to bring a few more of these hotels into the Honolulu market, you would draw more of these high-end travelers. Imagine the people who you are turning away because they want a luxury hotel experience,” Chavez said.
While brick-and-mortar retailers nationwide are struggling, Chavez said Hawaii’s two Hermes luxury-goods stores, one at the Royal Hawaiian Center and the other at Ala Moana Center, both posted strong double-digit increases last year and so far in 2019 are off to a great start.
Real estate analyst Stephany Sofos said Espacio is likely to be proof positive that “if you build it, they will come.”
Ed Skapinok, senior vice president of sales, marketing and revenue at Aqua-Aston Hospitality, said so far early bookings support that theory.
“The ownership group saw an opportunity to garner real interest from high-net-worth individuals looking for a really incredible experience,” Skapinok said. “We’ve already had a lot of interest from travelers from Japan and the U.S. West Coast. We even are starting to see some interest in people renting for a few weeks at a time. They would use it as a home base while they traveled to the neighbor islands.”
Skapinok said Espacio is expected to hold a soft opening in July with the grand opening planned for August. Rates at three-bedroom, three-and-a-half bath suites will run from $3,000 to $10,000 nightly depending on the season and the view, he said.
Each suite has ocean views and a private balcony with a whirlpool spa. There is a private rooftop pool and deck and a spa on property, too.
Suites are decorated with Italian marble and Moroccan artistic touches. Suite bathrooms come with Toto-brand washlets and each unit has a dry sauna.
Gourmet kitchens come with Sub-Zero and Wolf appliances. If visitors don’t want to cook or put private chefs to work in their kitchens, they can visit the property’s restaurant Mugen, which means boundless in Japanese. Jason Yamaguchi, nephew of celebrated Pacific Rim chef Roy Yamaguchi, will run the restaurant offering American fare with Japanese and French influences.
Airport shuttle service is complimentary as is day use of luxury cars. Guests will have access to butler service, and in-room iPads will allow them to to control everything from the temperature and lighting to ordering room service.
“Everything is very exclusive and very secure,” Skapinok said. “We don’t think there’s anything like this in the market.”
