2025 Hawaii Hotel investment Transactions Review

Hawaii’s 2025 hotel investment was all about the dirt. We brokers don't need to sell hotels if people are going to spend so much for terra firma. You might think there’s gold in that land because investors paid over $1.3 billion this year. Fortunately, we were involved in some of those deals.

Ko Olina Resort Hotel Development Site Acquisition

Powell & Aucello represented NewAge Ko Olina, an affiliate of Kam Sang Company, Inc., in the acquisition of two prime oceanfront lots at Ko Olina Resort on Oʻahu. The properties are entitled for the development of a combined 2,200 hotel rooms and residences. The purchase includes a 26.3-acre property located between Aulani, a Disney Resort & Spa, and the Beach Villas at Ko Olina and a 17.3-acre property located between the Beach Villas at Ko Olina and Marriott’s Ko Olina Beach Club.

Hyatt Regency Waikiki Leased Fee Sale

The Steiner family’s $215 million sale of its 87,000-square-foot property beneath the 1230-room Hyatt Regency Waikiki translates to $2,471 per square foot—one of the highest per square foot figures on record for Hawaii hotel land. Purchased by Montgomery Street Partners’ Ground Lease REIT, the investment offers a yield of approximately 4% from lease income, a structure mirrored in prior transactions involving the Alohilani Resort and the Courtyard by Marriott Waikiki. Institutional investors deem long-term ground leases a stable investment, often accepting yields in the 4% to 5% range.

Four Seasons Hualalai Leased Fee Sale

The $400 million sale of the land under the Four Seasons Hualalai to entities affiliated with leasehold owner Michael Dell was initially a startling event given Kamehameha Schools' past reluctance to sell some of their trophy land holdings. It is our view that it was a good deal for both parties. This was a good deal for KS as they will most certainly get a better yield on the $400 millioni than the 2.5% they were earning. For the lessee it was also a good deal for a couple of reasons. First, fee simple hotels command capitalization rates 100 to 150 basis points lower than leasehold deals. Second, fee simple ownership enhances cash flow by eliminating ground rent obligations. Our calculations show that when applying the lower cap rate to projected income (less the rent payment), the differential in value of the property justifies the purchase price for the leased fee.

Royal Hawaiian Leased Fee Sale

Kamehameha Schools sold the land under the iconic 528-room Royal Hawaiian for $510 million to Japan-based Daisho Co. in November. The hotel, built in 1927, is owned by Kyo-ya via a ground lease that expires in 2076. The site is 10.3 acres putting the price per square foot at $1,133. Interestingly, on a per square foot basis, this is about 1/2 of the price of the Hyatt Regency Waikiki leased fee interest. It is our view that the PSF price differential is due to the much higher density of the Hyatt site relative to the Royal Hawaiian site.

Kailua-Kona Hotel Development Site

Powell & Aucello represented the seller of a premier 1.8-acre hotel development site along Ali‘i Drive in Kailua-Kona, Hawai‘i Island. The fee-simple parcel, formerly owned by DPM Acquisition LLC, has been acquired by Baywood Hotels, marking a significant investment in one of Hawai‘i’s most vibrant hospitality markets. Baywood Hotels plans to develop a Residence Inn by Marriott on the site. The buyer holds all entitlements and anticipates commencing construction in 2027.

Here’s a link to our in depth commentary on the economics behind some of these deals:

https://myemail.constantcontact.com/Behind-the-Surge--Why-Investors-Are-Paying-Top-Dollar-for-Hawaii-Hotel-Land.html?soid=1134492189974&aid=vSuk8e8FE4s

Meet with Us at the ALIS Conference

We will be in Los Angeles for the ALIS Conference from January 26^th to 28^th. We will be discussing our recent listings, other Hawaii hotel opportunities and the outlook for the Hawaii hotel industry.

1189 Waimanu Street, Suite 3302

Honolulu, HI 96814

(808) 466-3401

www.PowellAucello.com