Hawaii hotels statewide have completed more than $2 billion in improvements since 2019, with at least another half-billion in renovations and from-the-ground-up new hotel builds in the pipeline.

Keith Vieira, principal of KV &Associates, Hospitality Consulting, said these estimated numbers represent significant reinvestment in Hawaii hotels. The repositioning and rebranding that followed have commanded higher hotel rates, employed more people and generated more taxes, Vieira said.

“At least half the hotels that I know that got rate increases now over 2019, it was because of a level of renovation, which statewide is over $2 billion,” he said. “At seven years hotels generally do a refresh, at 10 years a renovation. The difference with this was that hotels weren’t just looking at doing renovations; they were looking at repositioning to a higher level.”

Jerry Gibson, president of the Hawaii Hotel Alliance, said hoteliers are spending this cycle to ensure that Hawaii hotels keep their competitive edge.

“There are a lot of hotels trying to keep Hawaii as the best destination in the world, and to do that is a very, very expensive endeavor. Hotels are doing terrific work making sure that these hotels are in the right position for many years to come,” Gibson said.

Performance-based evidence shows that hotel investment and reinvestment are paying off. Hawaii hotels led U.S. markets with the nation’s highest average daily room rate of $380 and revenue per available room of $285 in the first six months of this year, according to the Hawaii Hotel Performance Report recently published by the Hawaii Tourism Authority.

Vieira said, “Renovation has increased construction spending and jobs. Rate growth has increased hotel and trickle-down jobs. It also has increased transient accommodations tax collections, which in the last decade have grown from $100 million to about $1 billion. Everyone is benefiting because these visitors spend across the board. They want an authentic experience, so they are interested in the $7 plate lunch, too.”

Some of the rate gains have pulled back in year-over-year comparisons, primarily on the neighbor islands. Still, Gibson said that there’s a strong belief that Hawaii’s rebound from COVID-19 is only going to get stronger when international and group visitors return in higher numbers.

Mark Bratton, senior vice president of Colliers International, said the return of international travelers, especially from Japan, is expected to drive rate growth on Oahu, and is drawing investors there.

“I would target 20% growth from when they start the renovation to when they finish,” Bratton said.

Bratton said he believes that while Oahu is never going to compare to Wailea and the Kohala Coast, there is room for more luxury five-star properties in Waikiki.

“Everybody comes into the market and wants to buy a fee-simple, oceanfront hotel,” Bratton said. “It doesn’t exist. Still, there are examples where building off the beach a short walk away has worked, like Trump International Hotel Waikiki and The Ritz-Carlton Residences, Waikiki Beach.”

B.J. Kobayashi, BlackSand Capital chairman and CEO and a founder and senior partner at the Kobayashi Group, like Bratton is especially bullish on Waikiki.

“Waikiki is very ripe for new development, and our group is very interested in being able to meet that demand. I’ve challenged the team to do two (five-star hotels) in the next five-plus years,” Koba­yashi said.

He said the group is currently vetting two sites in Waikiki and one just outside of Waikiki.

“I am 100% confident that not only would the visitors come and be interested in being a guest of a five-star in and around Waikiki that’s executed really well, but I think it would be over 90% occupied for years and years and years,” he said.

There have been huge investments and repositioning on the neighbor islands, such as the the Grand Wailea, a Waldorf Astoria Resort; the Ritz-Carlton Maui, Kapalua; the Courtyard by Marriott King Kamehameha’s Kona Beach Resort; Mauna Lani, Auberge Resorts Collection; and the Westin Maui Resort &Spa, Ka‘anapali.

The Kona Village Resort reopened in June after a major undisclosed renovation by Kennedy Wilson, which was so extensive it was almost like building an entirely new resort. Also, 1 Hotel Hanalei Bay opened in February on Kauai after a $300 million overhaul of the former St. Regis Princeville Resort.

A substantial $65 million renovation to the entire Outrigger Kona Resort &Spa is underway and is expected to be completed by year’s end.

However, Oahu is a hot hotel market, too. Turtle Bay reopened in July 2021 after a major renovation, and more hotels are pending renovations or new construction in West Oahu as well as downtown Honolulu and the Chinatown district.

Rick Egged, president of the Waikiki Improvement Association, said regular reinvestment in Waikiki is needed, and the “fact that the owners and operators of our properties continue to invest is a good sign for the future.”

Egged said the biggest renovation cycle that he can recall in Waikiki was from 2000 to 2010 when $5 billion worth of improvements were completed, including the Royal Hawaiian Center, the Waikiki Beach Walk and numerous hotels.

“This cycle in Waikiki is more of a refreshing of the properties to make sure that they stay current and attractive. We can continue to get visitors to Waikiki, and this is their dream vacation. It has to be something that matches up to those expectations,” he said.

In Waikiki, significant renovations have included the Halekulani, the Halepuna by Halekulani, the Waikiki Beach Marriott Resort &Spa and more.

Halepuna, formerly the Waikiki Parc, reopened Oct. 25, 2019, following a multimillion-dollar renovation. In April, chef Vikram Garg opened his first solo restaurant, Umi by Vikram Garg, in the former Nobu Waikiki space.

Halekulani, closed from April 2020 to Oct. 1, 2021, completed a wide-ranging restoration encompassing the hotel’s physical infrastructure and public spaces, guest rooms and suites. House Without a Key, a food and beverage venue that was featured in the first Charlie Chan novel in 1925, was modernized with the addition of a glass viewing kitchen. A new shaded outdoor bar called Earl’s, named in honor of the book’s author Earl Derr Biggers, also was added.

In July, chef and founder Peter Merriman opened Monkeypod Kitchen by Merriman at the Outrigger Reef Waikiki, which marked completion of the resort’s $85 million renovation. Outrigger also is moving forward with renovating the Ohana Waikiki East by Outrigger, which is likely to cost upward of $55 million.

Tom Calame, area general manager and managing director, Kyo-ya Resorts Hawaii, said Sheraton Waikiki recently completed a $200 million refurbishment bringing significant aesthetic and functional upgrades to each of its 1,636 guest rooms, hallways and the elevator landings on guest floors. The improvements including reconfiguring its ohana suites into two-bedroom spaces that can accommodate up to six guests.

Calame added, “Sheraton Princess Kaiulani is going to be refreshing 664 rooms in its Ainahau Tower rooms this winter, but a definitive timeline has not yet been set.”

Highgate, which has grown from one Hawaii hotel in 2012 to 16 across the islands, also is aggressively investing in its Hawaii hotels, many of which are in Waikiki.

Kelly Sanders, Highgate executive vice president for operations, said Hawaii’s aging hotel infrastructure has provided an opportunity to elevate the experience through infrastructure investments as well as immersive lifestyle programming.

“We are actually focused on elevating the customer profile,” Sanders said.

He said Highgate spent $150 million renovating the former Pacific Beach Hotel into the ‘Alohilani in 2018, and then added another $25 million in 2019 and 2020 to renovate the ballroom and add two club experiences.

Sanders said the former Ambassador hotel reopens Oct. 1 as the Romer Waikiki at the Ambassador after a $75 million renovation takes the property from a two-star to a four-star hotel. He said the renovation includes the creation of the Waikiki Swim and Social Club, which will also be open to locals, who can purchase passes as well as memberships.

“People can come and use the pool and the services and have charging abilities — similar to an Outrigger Canoe Club, but at a hotel,” he said. “One big focus area for us is making sure that every guest feels like a local and that every local feels like a guest.”

He said the 300-room Renaissance Honolulu Hotel and Spa, which will have an onsen-type Japanese spa, is slated to open Jan. 18 across from Ala Moana Center after a $300 million, from-the-ground-up investment.

Sanders said Highgate will manage the newly built AC Honolulu, a 112-room hotel slated to open Dec. 11 after a $22 million investment at 1111 Bishop St.

“It’s going to have meeting space and a speakeasy,” he said.

The company also completed a $19 million renovation in December of the old Aston Waikiki Beach Hotel into the 645-room Twin Fin Waikiki.

“We renovated the entire hotel and then repositioned and rebranded the property,” he said. “Our tagline is ‘Check in and paddle out.’”

Sanders said part of the hotel’s new branding references twin-fin surfboards. He said the hotel also has a partnership with Parley for the Oceans to eliminate single-use plastics out of the oceans, and with Surfline. It also has eight surf ambassadors.

He said design planning has started for an $18 million renovation at the Pagoda Hotel on Oahu. Sanders added that Highgate also will complete a $30 million renovation in December at the Royal Lahaina Resort.

After a $44 million gut and rebuild in April, he said, Highgate will open Waikiki House, the first adults-only resort on Oahu. The 179-room hotel, which was formerly the Pearl Waikiki, will feature a new Japanese izakaya bar and restaurant.