|By Allison Schaefers, The Honolulu
Star-AdvertiserMcClatchy-Tribune Regional News
Feb. 14, 2012--The sale of the Seaside Hotel, a circa-1970 Waikiki lodging owned by United Airlines, to an undisclosed buyer is pending.
United Airlines put the property at 342 Seaside Ave. on the market some time ago, said Michael Trevino, a spokesman for United Airlines.
"I believe that there is an agreement, but we haven't closed on the deal," Trevino said.
The transaction is drawing attention from the commercial real estate market because it is one of the few hotels in Waikiki on fee-simple land, and when it closes will become the first non-distressed sale in Waikiki since the hotel market began improving, said Joseph Toy, president and CEO of hotel consultancy Hospitality Advisors LLC.
"Most of the transactions that we've seen have involved distressed properties or properties that were under financial pressure," Toy said. "It's been more of a restructuring game, but as the market improves, I think that we'll see an increase in (non-distressed) transaction activity this year and next."
While the hotel's small size and inland location could pose some challenges for the new owner, interest in the fee-simple property was robust, said Mike Bratton, vice president of the investment properties division for Colliers International.
"There are a lot of people that want to buy a fee-simple hotel in Waikiki, and there is much more demand than there is supply of those kinds of properties," Bratton said.
The 14-story, 125-unit Seaside was assessed at $9.4 million in 2011, according to property tax records. Built in 1970, the building sits on about a quarter-acre. It has a ground-floor restaurant, Cha Cha Cha 2, and a roof deck with ocean views.
The new owners likely will upgrade soft features like linens and carpets and will probably position the hotel as a trendy boutique, Bratton said. Given the property's inland location, the new owners probably will forgo major structural changes, Bratton said.
Reinvestment could take the property's average daily rate from about $79 a night to over $100, he said.
The pending sale has sparked protest from United Airline workers and retirees who have been staying at the hotel for decades.
More than 400 members belong to the newly formed Facebook page Save the Seaside Hotel, and about 148 people have signed a petition asking United not to go through with the sale.
Protestors say they view United's decision to sell the hotel as another perk that has been lost since the carrier's merger with Continental. They also expressed concern about how the decision will affect the hotel workers who have taken care of them for years.
Workers were notified of the pending sale in a termination letter. Their last day of work will be Feb. 29; however, some of them may have an opportunity to work for the new managers.
Peggy Daughtry, a retired flight attendant for United, sent an email expressing her anguish about the hotel closure and pending layoffs to Jeff Smisek, United's president and CEO.
"Your decision to let these people go out into a flailing economy is cruel and heartless. I couldn't be more appalled," Daughtry said in the email.
Smisek defended the carrier's position in his email to Daughtry.
"We are not in the hotel business, we are in the airline business, which is why we have sold this unrelated piece of real estate," Smisek wrote. "We will be accommodating our flight attendants at other hotels. I do know that our flight attendants liked the staff at the Seaside Hotel, but I'm confident that the new hotels we use will provide good service."
However, Daughtry and other supporters of the hotel say another property and staff would not suffice.
"It was my home away from home when I used to fly Honolulu trips," said Karen Kino, who was a United flight attendant for 33 years. "I'm very sad that it's closing. The workers are like family. I won't forget their faces."
Daughtry said she has booked a trip to Waikiki for Feb. 27 and 28.
"I wanted to stay there one more time," she said.
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