Conditions of the waves are good for Hawaii – Jeff Wagoner, president and CEO of Outrigger Hospitality Group, shares about how 2024 will be a stronger year and the group is ready to ride them
What’s your sense of how the market is doing?
My opinion is that we haven’t gotten into a stabilised environment yet across the globe – and a lot of that is the residual of Covid-19 (travel patterns).
Japan is a great example. The market has opened for quite some time, but for Hawaii it is back at only 40 per cent of 2019 level. It is growing, so we are encouraged, but it shows that just because a market opens, it does not mean you are back 100 per cent with it. It takes time. On top of that you’ve got issues such as currency considerations.
I think we (the global travel market) will start to see full stability in 2024 or 2025. Now, that doesn’t mean that every destination is struggling; there are plenty of leisure destinations that are strong. We’ve seen leisure travel come back significantly faster than business travel and group travel, and historically that’s been the case if you look at travel post the global financial crisis, 9-11, etc.
So, for a resort player such as Outrigger, that’s great, but how do you make up for Japan when it’s only 40 per cent back?
Coming out of the pandemic, the volume coming from the mainland US completely replaced the travel that was missing from Japan, so we were at or above pandemic level in occupancy and ADR.
This was due to pent-up demand and air capacity boost. We had about 135 per cent of airline seats coming into Hawaii on the backside of the pandemic, versus what we had going into it.
Southwest Airlines had just come into the market at the beginning of the pandemic from new destinations in the mainland US. United Airlines and Hawaiian Airlines added flights, such as the three direct flights from Austin, Texas. We had a lot of new destinations coming into the islands from the US mainland.
That’s why my thesis is we’re going to see strong recovery from 2H2024. Forward bookings are looking strong in summer in Hawaii, and we have some additional base business that will be in the market. On top of that, we’ve got this increased US mainland demand – and my assumption is that Japan will be significantly back or close to 2019 level during the summer of 2024. Summer will really start to catapult some significant growth in the Hawaiian islands.
That’s good news for your recent hotel acquisitions in Maui and Kauai isn’t it? Why are those acquisitions are important?
On July 26, we completed the purchase of the Kaanapali Beach Hotel (now rebranded as Outrigger Kaanapali Beach Resort) on Maui. The hotel has 432 rooms and the Kaanapali Beach is traditionally rated one of the top three beaches in the US, in fact it’s now ranked the Number One Beach in the US and Number 10 Beach in the World by TripAdvisor.
We bought the hotel, and The Plantation (an 18-room inn that was part of the purchase), two weeks before the wildfire on Maui. We lost The Plantation in the fire. It was a devastating time for that island. We were incredibly thankful that all of our employees were safe, but around 100 people on the island lost their lives and it was a difficult period.
On August 22, we purchased what is now the Outrigger Kauai Beach Resort & Spa (formerly Kauai Beach Resort & Spa), a beachfront property with 350 rooms.
It’s important for us to be on all of the major Hawaiian Islands with scale in full service properties. So, being able to buy a property on Maui and Kauai helped us fulfil that mission.
Are there still gaps that you need to plug in Hawaii?
We will always continue to look at properties in Hawaii for our brand. We are a Hawaii-centric company, but we also have grown quite a bit internationally and have a significant focus now on growth internationally in some of the well-known resort destinations across the globe.
Which destinations are priority?
We have properties in Mauritius, Fiji, Thailand and the Maldives and there are plenty of other resort destinations for us to pursue. When I first got into this role, I started to think about where we should go in Asia-Pacific. I went to Google Maps on my computer and zoomed in on the islands in the Pacific. You start to really understand the amount of opportunities that truly exist.
That being said, our priorities would be Australia, Bali, Vietnam and Ishigaki (in Okinawa), as well as additional properties in Thailand – we have a corporate office in Thailand and the infrastructure for us to take on additional properties there.
We are constantly looking for assets that fit the Outrigger strategy, such as on the beach or in beach communities.
Could we go back to the early August wildfires that were predominantly on Maui island – how did you handle that?
We quickly made available our property on Maui for any of our employees that needed housing. We had 105 employees who lost their homes and we put them up immediately and created meals for them and their families. We were able to bring a 40-foot container filled with food and supplies from Oahu into Maui for our employees. We worked with Blue Hawaiian Helicopters to fly materials in.
The wildfires burned down 3,000 homes in Lahaina (in north-west coast of Maui island; it comprises the Lahaina town and the Kaanapali and Kapalua beach resorts). Together with the greater hotel community, we also worked with the governor and the state to pull together hotel rooms that could house these displaced residents.
How is the situation now?
There’s little new housing in the Maui market. We still have over 2,000 rooms occupied across the hotels within the Kaanapala area, and we continue to work with the state to find housing solutions for our employees and the other displaced residents.
It’s a situation where you’ve got housing issues in the market prior to the fire, and now you’ve got 3,000 homes that are gone. So it’s going to take time, effort and creativity to rebuild that particular area, or to find alternative housing for all of these displaced residents.
