NEW YORK — Outrigger Hospitality Group has been on an acquisition streak this year.
In May, the Honolulu-based resort owner/operator purchased the Kaanapali Beach Hotel and Lahaina’s Plantation Inn bed-and-breakfast on Maui, and in mid-June Outrigger announced it will acquire the Kauai Beach Resort & Spa on the island of Kauai in Hawaii.
These latest deals cap off a two-year period in which Outrigger acquired several beach resorts, including two in Thailand, bringing its total portfolio to 17 resorts in Hawaii, Thailand, Fiji, Maldives and Mauritius.
Outrigger Hospitality Group President and CEO Jeff Wagoner said the company has been in acquisition mode, and that persistence is key when it comes to pursuing deals such as these in beach destinations.
In a podcast interview with Hotel News Now during the 2023 NYU International Hospitality Industry Investment Conference, Wagoner and Monica Salter — Outrigger’s vice president of global communications and social responsibility — shared inside information about the Kaanapali Beach Hotel deal and hinted at the Kauai deal, though it wasn’t officially announced until after recording.
Outrigger had bid on the Kaanapali resort several years ago, Wagoner said, and the other party prevailed. But the pandemic proved too much of an obstacle and that party dropped out of the deal.
“The owners called us back, we got back into the deal right away and were able to get this completed,” he said. The deal will close on July 26.
Outrigger will make an additional investment of about $60 million in renovations, on top of an $80 million renovation the previous owners completed during the pandemic.
He called it “a fabulous representation of Outrigger as we continue to move forward.”
Capitalizing on Guest Demand
Salter said the company considers this period of high leisure demand — especially for beach destinations — as an opportunity to continue to reinforce to its guests what Outrigger stands for and what people can expect at its locations.
That helps the company differentiate in highly competitive markets, both executives said.
“You want to be comfortable when you go on vacation,” Wagoner said. “I still want the finer things, I want to go into a nice bar or restaurant and have fun, and I want the service levels to be right, but … I want to be able to walk in off the beach and not feel like I need to get in the elevator very quickly and get to my room because, you know, everybody else is dressed to a T.”
Salter said the company works hard to convey to guests what they can expect from the idea of “barefoot luxury.”
“We show that vibe on our Instagram feeds as well, which is harder to do on a website,” she said. “On a website, you see the room category, you see the restaurant, but what’s the vibe of the property? How are you going to feel when you’re there and what do you want? So we use social media and influencers to market that vibe and that barefoot luxury feel because they can show what meals they’re eating, what outfits they’re wearing.”
Shifting Feeder Markets
Resort markets can be bellwethers of travel demand, as hoteliers notice shifts in inbound feeder markets, particularly when those feeder markets are international.
Japanese travelers have long flocked to nearby Hawaii, but a combination of longstanding pandemic restrictions and efforts to subsidize domestic travel within Japan, means those travelers are just now returning to Hawaii, Wagoner said.
And now, similar thoughts around the resurgence of outbound travel from China has hoteliers excited, but Wagoner cautions them to take a deep breath.
“There was an euphoria of ‘China’s coming back; this is going to be awesome,’ and I personally said we all need to take a deep breath because my gut is it’s going to be like what happened in Japan. You had a lot of local travel going on in China. It was not necessarily subsidized the same way, but it was a push to be able to create local travel and support the local destinations … and so it’s going to be some time before that comes back.”
He also cited the fact that Chinese and Russian travelers were Thailand’s biggest feeder markets pre-pandemic, and COVID restrictions plus the war in Ukraine meant neither group was traveling. But recently, Russian inbound travel has started to return to Thailand.
“These dynamics will all continue to change,” he said.
For more from Wagoner and Salter on the pace of mainland U.S. travelers visiting Hawaii, Outrigger’s ESG efforts and their thoughts on leisure travel trends in the future, listen to the audio podcast linked above.