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Plan for Aloha Tower adds Business hotel

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Plan for Aloha Tower adds hotel

Source: Honolulu Advertiser

Dallas-based developer Ken Hughes yesterday added a business hotel to his redevelopment plan for state land at Honolulu Harbor as part of rebuilding the cruise terminal building at Piers 10 and 11.

Hughes introduced other new details to his ambitious master plan, including an "iconic" conceptual design of the cruise terminal building exhibiting a cruise ship shape from a side view.

The estimated $131 million building would rise four to eight stories, and would contain office space for the state Department of Transportation, some retail space, about 800 parking stalls to eliminate Aloha Tower Marketplace's parking shortage and the 250-room all-suite hotel.

Dallas-based firm Western International, which develops hotels primarily for Marriott, has committed to being the hotel developer and owner, Hughes said.

Hughes presented his refined concepts at a board meeting of the Aloha Tower Development Corp., the state agency that has been working with Hughes since early 2003 after issuing a request for proposals to redevelop Piers 5 and 6 in late 2002.

Hughes initially proposed a complex of residential units, offices, retail and a 250-room hotel on Piers 5/6. But he dramatically expanded his proposal to include replacing the Hawaiian Electric Co. power plant with a park, removing the parking from Irwin Park, building a downtown streetcar system and rebuilding the cruise terminal. A bypass tunnel under Nimitz Highway was another potential piece of the roughly $300 million master plan.

Early last year, Hughes dropped the hotel and offices from his plan for Piers 5/6, and increased the number of residential condos from 250 to 550.

At Piers 10/11, Hughes earlier proposed building residential condos atop a new cruise terminal building. Now he proposes replacing the Pier 10/11 condos with the business hotel because of improvement in O'ahu's visitor industry and support from cruise ship operator NCL.

"The market has changed," he said. "We think (a hotel) that is properly run is a successful proposition."

Joseph Toy, president of local visitor industry consulting firm Hospitality Advisors LLC, said the number of visitors coming to O'ahu for business other than to attend meetings and conventions rose 10.5 percent last year and is up 1 percent this year through August. Visitors coming on military and other government business are up 10.5 percent this year through August.

"I think there's a market there," Toy said, noting that Pier 5/6 was a more problematic site for a business hotel compared to the cruise terminal site, which is closer to restaurants and downtown businesses.

Hughes said high hotel occupancy in Waikiki has made it more difficult for business travelers to book rooms, and that cruise ship operator NCL America, which has two Hawai'i-ported ships running interisland cruises and next year will add a third, wants a hotel in the area for passengers.

"They're very fired up about a hotel in the zone," Hughes said. A NCL representative could not be reached for comment yesterday.

A business hotel has long been viewed as ideal for the area around Aloha Tower, and was part of at least two previous plans to improve the harborfront.

In the late 1980s, the state picked a developer to remake Piers 5 to 14 under a $700 million project that included a hotel, festival marketplace, condos, office building and ferry terminal.

But the project stalled in the early 1990s after completion of the $100 million retail marketplace that has struggled in part because planned phases with more parking and people were not built.

The state agency regained development rights for the land in 2000 and has been trying to find someone to finish redevelopment.

In early 2002, an unsolicited proposal that included a hotel and cruise terminal was considered, but rejected by the agency.

Hughes said he would finance his project with lenders and partners, but give the state the option to pay for and own the cruise terminal building if it chooses. Hughes estimated it would cost about $11 million to build the terminal.

Barry Fukunaga, an agency board member and deputy director of the Transportation Department Harbors Division, said he would welcome the terminal combined with a hotel. "It certainly makes a lot of sense," he said.

The Aloha Tower Development agency in its 2002 request for proposals asked developers to provide a ferry terminal, parking and 30,000 square feet of office space for the Transportation Department Harbors Division at Piers 5/6.

The agency yesterday formed a subcommittee of directors to consider the Piers 10/11 element of the Hughes plan. The subcommittee is made up of Fukunaga, produce industry businessman Neal Otani and Ted Liu, director of the state Department of Business, Economic Development and Tourism.

Hughes said that if he can reach agreement with the state on a lease and development terms, construction could begin in July 2006 and be completed by August 2008.

The developer's proposal to build and sell fee-simple condos at Piers 5/6 is pending. The agency, which cannot sell land, is seeking an attorney general opinion on whether condos can be auctioned through a Board of Land and Natural Resources process.


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