Xenia Hotels & Resorts sells Hawaii hotel for $200m

Xenia Hotels & Resorts has sold the 693-room Aston Waikiki Beach Hotel in Oahu, Hawaii, for a sale price of $200 million, or approximately $310,000 per key.

The new owners are Highgate Holdings and Rockpoint Group.

“Although Oahu is a market with limited supply growth, this Two Diamond hotel became less of a fit for our company as we have upgraded our portfolio and further refined our strategic focus,” said Marcel Verbaas, Xenia’s chairman and CEO. “The hotel’s competitive position has weakened as the competition has significantly improved its product over the past two years. With less than 40 years remaining on the ground lease and considerable capital required to position the hotel more competitively in the market, the opportunity to take advantage of significant investment interest in Hawaii was too compelling to pass up.”

“Xenia Hotels has been pleased with the evolution of our portfolio since our listing in early 2015,” Verbaas continued. “After this transaction, nearly 95 percent of our portfolio is in the luxury or upper upscale chain scale, and we have created significant balance sheet flexibility to take advantage of opportunities as they arise. Xenia Hotels has executed more than $1.8 billion of transactions, according to Verbaas.

Statewide performance ended 2017 on a high note with a 5.4 percent revenue per available room (RevPAR) gain, exceeding the 4.8 percent gain achieved in 2016, according to CBRE.

Oahu results declined in occupancy and lackluster ADR growth, concluded CBRE. Oahu’s slip in performance has been attributed to several factors: loss of wholesale business, slower than expected ramp-up for the newly renovated hotels along the “KuhioRiviera”, an evolving traveler who is now exploring the neighbor island experience (and whose travels are facilitated by enhanced direct flights to the neighbor islands from Mainland gateways).

Oahu, however, averaged modest growth in RevPAR to $194 (+1.7 percent), which was driven by higher ADR to $233 (+2.5 percent), as occupancy of 83.3 percent (–0.7 percentage points) declined slightly in 2017 versus 2016, according to the Hawai Hotel Performance Report by the Hawaii Tourism Authority

However, statewide tourism kicked off the New Year with solid gains in visitor arrivals and spending, which rose to the highest statewide total for visitor spending ever recorded for a single month in Hawaii’s history, according to Hawaii Tourism Authority.

Visitors to the Hawaiian Islands spent a total of $1.69 billion in January 2018, an increase of 4.9 percent compared to January 2017.

Total arrivals to Hawaii grew 5.4 percent to 796,483 visitors in January, with total visitor days also increasing (+4.1 percent) versus a year ago. But in January arrivals rose on Oahu, spending fell (–1.9 percent to $662.0 million) compared with last year.

Transaction activity in 2017 is poised to exceed $1.5 billion, according to CBRE.

Recent high-priced hotel transactions include Blackstone Group’s purchase of the 450-room Turtle Bay Resort on Oahu for approximately $330 million. And the firm recently purchased the Waldorf Astoria-branded hotel Grand Wailea resort on Maui.