Waikiki gets $1 billion update as "urban resort"

WAIKIKI, Hawaii — This once-run-down visitor destination is in the midst of a $1 billion makeover, and even the tourists are starting to look different.

Gone are the days when busloads of sunburned, budget-conscious Japanese tourists toting ABC store shopping bags dominated the street scene in the Honolulu beach area. In their place are more well-heeled visitors, increasingly from the U.S. coasts.

New retail complexes, upscale restaurants, nightclubs and thousands of recently renovated hotel rooms and condominiums have sprouted. There's even new sand on part of Waikiki's famed beach. Along with it is a new price tag, too: At an average of $148 a night, Waikiki's hotel-room rates are now the second-highest in the nation, behind only New York City.

"We've repositioned Waikiki as an urban resort," says David Carey, of Outrigger Enterprises, the hotel chain. Its new $310 million Embassy Suites-Waikiki Beach Walk, a hotel and retail complex, opens this month, with upscale accommodations and shops. For visitors, the changes mean more things to see and do, especially eating and shopping, without having to leave the 450-acre Waikiki enclave that is home to 90 percent of Oahu's hotel rooms. The new choices are evident by walking down Kalakaua Avenue, the major Waikiki boulevard: Restaurants such as Cheesecake Factory, P.F. Chang's, Nobu's, Seņor Frog's and Planet Hollywood have opened or are being planned.

The retail mix, once characterized by overpriced boutiques and low-end kiosks, now includes more mainstream stores such as Foot Locker, Niketown and Banana Republic. The landmark, blocks-long Royal Hawaiian Shopping Center, built in the 1970s, is undergoing an $84 million renovation that will be a 293,000-square-foot open-air mall with about 110 stores, restaurants and attractions on four floors.

Fashionable nightclubs, which had all but disappeared in the past decade, have reappeared. "When I first moved here in the 1980s, Waikiki was still a fun place to visit. But over the years locals began to avoid it," says Joseph Toy of Hospitality Advisors, a hotel consulting firm. "Now it's becoming a place where you can go out to a nightclub again, see some Hawaiian music and meet the people who live here." Waikiki is home to 93,000 people daily, 70 percent of them visitors.

The changes have been a mixed blessing, says Marjorie Jacobsen, who along with her husband, Everett, has traveled to Waikiki from their home in Dillon, Mont., every winter the past 11 years.

"It's really been cleaned up," she says. "But it's also gone very upscale, and they may be cutting the average family out."

Nearly everyone involved points to a decision by then-Honolulu mayor Jeremy Harris to spend millions of dollars in the mid-1990s to improve sidewalks, landscaping, walkways, lighting and other public facilities. "There's a new pedestrian experience that makes it feel more like being in a park," says Rick Egged, of the Waikiki Improvement Association.

Waikiki merchants then started using a new tax surcharge to maintain facilities and offer safety patrols, hospitality services and daily torch lighting and hula shows near the beach, he says. "There's a lot more activity on the street now."

Officials also began a beach replenishment program. Workers are using high-pressure pumps to suck sand off the ocean floor and stream it onto the beach, where it will be dried and spread to patchy areas, says Peter Young, chairman of the state Department of Land and Natural Resources.

Once the public improvements were in place, investors with more traditional hospitality companies started snapping up some of the older hotels at bargain prices, saving more money for renovations, Carey says.

"Upgrading was crucial. It was the only way to bring in the higher-paying customers," Carey says. Although statewide visitor counts are down slightly this year, room revenue is 13 percent ahead of Waikiki's record pace for last year, Toy says.

Still, budget travelers haven't been left entirely out of the mix, Toy says. "There's still a lot of room inventory available in the $65- and $75-a-night range, and there are youth hostels and condo rentals," he says. "That's always going to be a part of the Waikiki market."