CNL and company acquired the property from Marriott International in 2001 for $130 million and then completed a $65-million renovation. The sale price represents $213,000 per key and a 3.9% capitalization rate based on 2004 net operating income. CNL's estimated net gain on the transaction is $48 million.
CNL says the sale will enable it to capitalize on favorable lodging market fundamentals and recycle capital into new investments. CNL owns 94 hotels and resorts across North America. It continues to have a presence in Hawaii with its 780-room Grand Wailea Hotel Resort & Spa in Maui.
Thanks to strong demand from vacation travelers and a decreasing supply of hotel rooms, Hawaii was the best performing hotel market in the US through the first half of the year, according to a recent report from the Hospitality Services Group of Ernst & Young LLP.
Hotel occupancy in the four major Hawaiian hotel markets of Oahu, the Big Island, Maui and Kauai increased 4.5% in the first six months of 2005 compared the first six months of 2004. Over the same period, average daily room rates (ADR) increased 6.8%, according to data supplied by Smith Travel Research. Nationally, occupancy increased 2.8% and ADR rose 4.8%.
In addition to increased travel to the islands, one of the major factors affecting Hawaii hotel performance is the surging residential market, which has spurred strong residential construction as well as the conversion of a significant number of hotel rooms to for-sale condominiums or timeshares.
"This trend is particularly significant on Oahu, where, this year to date, more than 1,500 rooms are planned for conversion to residential, resulting in a probable net loss of supply in 2006," states the report.
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