Outrigger Looks West To Far East 

With firm lock on Hawaii, resort operator turns attention to Asia Pacific.

-- Hotels, 5/1/2008

HONOLULU—Outrigger Enterprises Group, basking in the glow of its Waikiki Beach Walk project that has completely rejuvenated the recently downtrodden area, is turning its sights toward Asia Pacific for its next round of growth.

Outrigger’s 8-acre (3-ha), US$535 million Beach Walk has been a hit since opening 18 months ago, turning the formerly dingy portion of the Honolulu neighborhood into a dining and shopping destination, raising occupancy and room rates throughout Outrigger’s home city. “Waikiki Beach has been a home run for us. We have changed the image of the center of Waikiki, and that is very satisfying,” says Outrigger President and CEO David Carey. “My competitors call us up and say, 'Thank you.’”

Outrigger currently has 47 properties under management or in various stages of development, totaling 12,000 guestrooms. About two-thirds of its inventory is in Hawaii, with the rest scattered about Asia Pacific. That should change in the next five years, however, as the group plans to add about 50 more Asia properties to its portfolio. Hawaii is built out for the most part, and Outrigger sees Asia as the key to the company’s future growth.

Two of Outrigger’s newest projects are condominium-hotel resorts in Bali—the 5-star Outrigger O-CE-N Bali is slated to open in June, while the 170-key Outrigger Panorama Bali recently broke ground for a 2010 debut. Thailand is likewise an attractive target for the group as Outrigger recently opened a regional office in Phuket, where it is developing The West Sands Outrigger Resort and is on the verge of announcing another management deal. The group also is searching for a site in Koh Samui.

“We’ve targeted a number of destinations there, and we are going through all of them right now,” says Mel Kaneshige, Outrigger’s executive vice president of real estate and development. An additional regional office is expected to open next year in Singapore. Other recently announced Outrigger projects include a 160-key condo-resort in Townsville, Australia, and a 160-key luxury resort on the island of Koror in Palau.

Outrigger’s Waikiki Beach Walk has been an early success.

China, of course, is prominent on Outrigger’s radar as an unannounced letter of intent has been signed for a project on Hainan Island, Kaneshige says. But beyond actual property developments, Outrigger is counting China’s enormous emerging outbound tourism market to be the economic driver of its Asia Pacific resorts. Wealthy Chinese have shown a taste for the Western resort experience, and as international travel becomes a realistic option for a greater portion of the population, Outrigger—an American brand with strong roots in Asia—seems well positioned to cater to the emerging travelers. In the near term, however, Outrigger is focused exclusively on the 5-star leisure market in Asia, Kaneshige says.

Between the growing Chinese outbound market and healthy intra-Asia travel from Singapore, Hong Kong and Japan, plus inbound tourism from the United States and Europe, Carey is confident in the region’s long-term viability for luxury resorts. “That particular region, supported by China, is continuing to experience strong economic growth,” he says.

Outrigger may place its upper-midscale family-friendly brand, Ohana Hotels & Resorts, into some Asia markets down the road—once they become firmly established tourist destinations, Carey says. “Some of the destinations are still developing their tourism infrastructure, so to make the mid-price brand work, you kind of have to establish the tourism market first,” he says.

The eight-property Ohana remains Outrigger’s secondary brand, though the company continues to gradually move Ohana upmarket. With the overall Hawaiian tourism landscape increasingly upscale, Outrigger has been repositioning Ohana accordingly. “One of the things we have learned about being in Hawaii and the Pacific is that when people travel a long way, they want a much higher quality of experience,” Carey says. “You almost wouldn’t recognize our Ohana properties from 10 or 15 years ago.”

A pair of Ohana hotels—Ohana Waikiki West and Ohana Honolulu Airport—are among six Hawaii Outrigger properties that in February became affiliates of Choice Hotels International’s Clarion Collection. The Clarion affiliation, which comprises more than 3,000 guestrooms, also includes Ala Moana Hotel, Outrigger Luana Waikiki, The Wyland Waikiki and Keauhou Beach Resort. Choice will market and provide distribution for the properties, which also participate in the Choice Privileges loyalty program.

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