Outrigger Hospitality Group is finalizing a deal to purchase the 509-room oceanfront Sheraton Kona Resort & Spa at Keauhou Bay, which is on land leased from Kamehameha Schools.
The acquisition is the second one in Hawaii for the company since Denver-based KSL Capital Partners LLC’s 2016 purchase of Outrigger Hotels and Resorts, which had been owned and operated by the Kelley family for 69 years. At the time, it was anticipated that KSL’s capital would allow Outrigger to make more acquisitions and greater reinvestment into existing properties.
Last year, the company acquired an on-site luxury resort rental program at Honua Kai Resort & Spa on Maui for an undisclosed price. It also completed a $35 million renovation of the Outrigger Waikiki Beachcomber, a property near the International Market Place in Waikiki.
Up next, it’s expected to close April 15 on the Keauhou property, which will be renamed Outrigger Kona Resort and Spa. The property, which is located at 78-128 Ehukai Street, also will be managed under the Outrigger brand, said Jeff Wagoner, president and CEO of Outrigger Hospitality Group.
“The majority of our Outrigger hotels here are all on Oahu and so to be able to expand our Outrigger brand on the Big Island and quite frankly on the other islands is very important to us,” Wagoner said. “Clearly Hawaii is where this company was founded, we have an incredible history here so any growth that we can have in Hawaii will be very strategic and important to us.”
Wagoner said the company would not disclose financial details of the acquisition, which was announced to employees this morning. Wagoner said the company intends to make employment offers to all 270 or so of the property’s current employees and to honor their ILWU union contract.
The property, which sits on 22 acres just south of Kailua-Kona, is best known for its historic location at Keauhou Bay, the birthplace of Kamehameha III, and its waters, which draw people come from all over the world who want to swim with manta rays. But it also includes meeting space, a wedding chapel, a fitness center and spa, an oceanfront pool and waterslide, a traditional Hawaiian cultural center and two restaurants. Its 10,000-square-foot convention center — the largest meeting space in the Outrigger chain and on the Kona Coast — will allow the company to make further advances into the lucrative meetings, events and incentive group market.
“We are uniquely positioned to steward this property with our seven decades in Hawaii,” Wagoner said. “This is a really exciting time for the company and the brand.To me, this property fits so nicely into what we are trying to do.”
Once the sale is finalized, Wagoner said Outrigger will begin drafting a modernization master plan to improve the upper, upscale property. Wagoner said significant investment is planned, but declined to provide a number. The property is expected to stay open throughout renovations, which could begin within the next 12 month, he said.
Outrigger currently operates 37 properties and more than 7,000 rooms in Hawaii, the Asia Pacific and the U.S. mainland.