A recent article in the Garden Island newspaper highlighted three Kauai hotels at risk of foreclosure;
- Kauai Beach Resort (recently known as the Hilton, also formerly the Radisson)
- Aloha Beach Resort, and
- 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.
Other related articles:
- For tourism, signs of hope; Honolulu Advertiser, Jan 7,2010; increase in occupancy in Waikiki, but down in outer islands
- Isle Hotel Rates Fall; Star Bulletin, Jan, 7, 2010
- Hawaii is far from an economic paradise; Los Angeles Times, January 2, 2010