RHR was hired as asset manager of the Honolulu Prince Hotel in the local Hawaiian market in February 2008, then renovated and rebranded the hotel as the Waikiki Pearl in June 2009.
The property, which was in extremely poor condition with mostly vacant retail spaces, was purchased for $7.5 million from a foreign investor and owner, who had mismanaged the asset.
The hotel was encumbered by 10 residential leases, which RHR terminated amicably during the property’s renovation.
The extensive renovation, lasting 13 months, presented guests with a modern and consistent guest experience by upgrading the building’s exterior, retail spaces, guestrooms, bathrooms, kitchens, HVAC systems, elevators, and lobby. It was also necessary to remediate the spray-on ACM in the guestrooms.
As 25% of the original room inventory featured 1 & 2 bedroom suites with kitchens, a rarity in the Waikiki market, RHR obtained premium pricing for these units upon renovation completion.
RHR created additional value and rental flexibility by creating lockout rooms attached to the 2-bedroom units, creating 3-bedroom options, which did not previously exist.
RHR expertly controlled the renovation process and contained expenses to ensure that the project achieved a maximum ROI for investors.
During RHR’s asset management, the property achieved RevPAR improvement of 84.1% to $124 and NOI grew from $300,000 to $2.8 million.
The Waikiki Pearl was sold for $18.0 million ($136,400 per key) in July 2013.
Over a five-year hold period, the overall IRR to investors was greater than 25%.
Revenue Growth
RHR increased revenue through the following initiatives:
Overhauled revenue management practices.
Developed a dedicated hotel website targeted at increasing profitable direct bookings.
Shifted business from low-end wholesalers to higher-rated direct channels and FIT business, increasing rate after occupancy levels were achieved.
Deployed new sales and marketing strategies focused on growing direct reservation channels and e-marketing.
Renovated and released retail spaces and significantly increased parking revenue.
Results
ADR increased by 83.8% to $131.
Revenue grew 160.7% to $6.4MM.
Expense Savings
RHR reduced operating expenses through the following initiatives:
Implemented a payroll management system to reduce labor expenses and right-sized the management team through complexing.
Replaced HVAC systems, installed reflective roof and window topcoat, and modernized elevators to decrease energy usage.
Instituted a preventative maintenance program to perform deep cleanings and minor repairs.
Aligned management interests with ownership through incentive compensation tied to profits.
Waikiki Beach, HI
Waikiki Pearl
Project Summary
Asset Management Assignment of a 132-Room Hotel
Revenue Growth
RHR increased revenue through the following initiatives:- Overhauled revenue management practices.
- Developed a dedicated hotel website targeted at increasing profitable direct bookings.
- Shifted business from low-end wholesalers to higher-rated direct channels and FIT business, increasing rate after occupancy levels were achieved.
- Deployed new sales and marketing strategies focused on growing direct reservation channels and e-marketing.
- Renovated and released retail spaces and significantly increased parking revenue.
ResultsExpense Savings
RHR reduced operating expenses through the following initiatives:- Implemented a payroll management system to reduce labor expenses and right-sized the management team through complexing.
- Replaced HVAC systems, installed reflective roof and window topcoat, and modernized elevators to decrease energy usage.
- Instituted a preventative maintenance program to perform deep cleanings and minor repairs.
- Aligned management interests with ownership through incentive compensation tied to profits.
Results