3 Kauai hotels face foreclosure

A recent article in the Garden Island newspaper highlighted three Kauai hotels at risk of foreclosure;

  1. Kauai Beach Resort (recently known as the Hilton, also formerly the Radisson)
  2. Aloha Beach Resort, and
  3. ResortQuest Kaua‘i Beach at Maka‘iwa (now called Aston Kaua‘i Beach at Maka‘iwa)

The article, Occupancy Slide Drives Hotels to Foreclosure, sites last year’s drop in visitor occupancy to 50 percent as the driving force behind the current financial risk for these hotels, as well as the island’s economic struggles. 

If Kauai hotels follow the path of Oahu’s Turtle Bay Resort, they are likely to continue operations even if the lender takes over operations. Pacific Business News reported last month;

The Turtle Bay Resort on Oahu’s North Shore is officially under new ownership.

A consortium of international investment management firms took back the property from Oaktree Capital Management in a deed in lieu of foreclosure transaction that closed on Tuesday.

How do hotel foreclosures relate to Kauai real estate?

The Kauai Beach Resort converted to individually owned condo/tel units in 2005, prior to taking on the Hilton brand name.  The developer went bankrupt last year, and 140+ of his units went to foreclosure.  With the inability to get a loan on a “lodging unit”, sellers have been facing foreclosure or doing short sales with some selling as low as $49K.  The lender who bought the developers foreclosed units has been holding onto the inventory, and indicated they felt it will rise in value. 

How would a resort foreclosure affect individual condo owners?  I’m not sure.  But this is a question to look into if considering buying a foreclosed condo/tel offering.

I also get questions from buyers about how the change from Hilton management has affected the resort.  It’s now managed by Aqua Hotels and Resorts.

Well, it so happens I attended a CRS Short Sale and Foreclosure training class there today and stopped by to “talk story” with some of the staff.  With big smiles and lots of aloha, I learned the same staff is working there and the resort looks great.  More local music events and some great specials for kama’aina guests were some of the positive changes mentioned.

Buyers face a tough decision to determine if the short sale and REO condo/tel units at the Kauai Beach Resort present a true value at this time, based on the uncertainty of hotel operations in this market and the possibly impact on individual owners.  Contact me for a complete market report on Kauai Beach Resort listings and recent sales.

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About Susanna "Susie" Kunkel, RA

With a belief that life is too short to not follow your dreams, Susie and her daughter became new Kauai residents in less than 4 months after visiting for the first time in 2000. She brings a wealth of information from her background in administrative, contract and paralegal work in a variety of industries including technology, investment banking, biotech and estate planning. As a Realtor, Susies's tenacious and technical approach have earned her a large group of extremely loyal clients. Susanna is a steadfast believer in "The Golden Rule", and applies it to her approach as a Realtor. "Each client and each property are unique, so it's important to me to listen intently to what my clients' goals are, and to make sure I go above and beyond to help meet them."
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2 Responses to 3 Kauai hotels face foreclosure

  1. Thanks Kevin – very true. The hotels’ future is uncertain here, but the “coconut wireless” indicates an improvement in visitor arrivals for the summer. Let’s hope that will help Kauai hotels and our economy move forward.

  2. Kevin says:

    One big difference between the Turtle Bay property and the Kauai resorts you write about is that occupancy rate at Turtle Bay has been very high (I want to say high 70’s if not more) and the local community supports the resort. What will kill the golden goose on Oahu’s N Shore would be the construction of 1000’s of more hotel units by the new owners. See http://www.defendoahucoalition.com for mort info.

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