Hilton Hawaiian Village is providing some ammunition for anyone trying to convince an owner to renovate. Following the $83 million renovation of the Rainbow Tower, Q2 RevPAR jumped 12%, revenue increased 15% to $116 million, and the resort generated $41 million in EBITDA, the highest in Park Hotels & Resorts’ portfolio. Next up is a roughly $100 million renovation of the Aliʻi Tower.
And just down the road, Ka Laʻi Waikīkī Beach, Hilton’s first LXR property in Hawaiʻi (formerly Trump Waikiki, who thought that was a good idea?), just completed its own $100 million renovation. That one is particularly interesting because Ka Laʻi is a condotel, where pulling off a property-wide renovation across individually owned units adds a whole other layer of fun.
I recently had an interesting conversation with a hotelier about the challenge of selling renovations to ownership. The pitch sounds easy: renovate, raise rates, make more money. Except sometimes you’re spending millions just to bring the product back up to the level of its comp set. If you’re already achieving comparable ADR with a tired product, explaining that a renovation may protect your rate rather than dramatically increase it can be a tough sell.
HHV’s early numbers certainly help the ROI argument. But the bigger question for owners may be: Are you renovating to create a premium, or spending the money necessary to keep the premium you already have?
