GUAM HILTON RESORT SOLD

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By Gene Park

HAGATNA, Guam (Pacific Daily News, Nov. 17) - The Hilton Guam Resort & Spa, a longtime institution of Guam's tourism industry, has been sold and was under new ownership as of yesterday.

Although London-based Hilton International is no longer the owner of the famed local hotel, residents can expect no changes in the hotel's operations, services and the hotel's name, assured Hilton Guam General Manager Manfred Pieper.

Contracts with suppliers, stores, wholesalers and restaurants also remain intact, meaning establishments including Roy's Restaurant and the Tree Bar will stay. The sale will not only retain all current management and employees, but also may mean new employees, with a multimillion-dollar renovation planned in the near future for the hotel.

Pieper yesterday announced that the hotel was sold on Nov. 16 at a private signing in New York, but did not name the buyer, describing it as a "U.S.-Japan-backed investment firm" based in California.

Department of Revenue and Taxation records show that ownership of the Hilton Guam's property and hotel were turned over to DaVinci-RP Hotel Investors LLC, which would lease out the property to DaVinci-RP Operating Lessee Inc.

Department of Land Management records show the buyer paid a cash down payment of about $4.25 million, plus $25 million in debt financed by Aozora Bank Ltd., indicating a purchase price of slightly less than $30 million.

Aozora Bank Ltd. is a Tokyo-based bank with total capital stock of about $3.9 billion, according to the bank's Web site, ww.aozorabank.co.jp.

The hotel opened in 1972 and was developed by local investors including Ken Jones, Alfred Ysrael and the Calvo family. Ysrael has said he was the only remaining original investor who still retained his shares of stock in the hotel.

The hotel was put on the market during the summer of 2003. The hotel will be managed by Hilton International, but no longer owned by the hotel chain. Out of about 80 Hilton hotels in the Asia-Pacific region, only Guam and a Sydney location were owned by Hilton International.

Pieper said the new owner fits the standards and services that Hilton International expects to be met, and hotel services will remain consistent.

"If we were to have an owner who has a different philosophy in providing services or standards, it would be very difficult," Pieper said. "We needed a company that was compatible, and one investment group crystallized."

All 455 employees of the hotel will retain their jobs. All day yesterday, the hotel management met with workers on different shifts to privately discuss the sale.

One change expected from the sale is the revival of the Genji Restaurant and the 100-room Magahaga Spa wing, both of which were closed because of damage from Supertyphoon Pongsona in 2002.

The renovations may see employment of about 50 additional staff, Pieper said, but added that new hires are dependent on room occupancy, not room availability.

In addition, the current 587 rooms will undergo a soft renovation along with the Magahaga rooms, including new bedding and covers.

"All of these can be carried out without a major nuisance to our guests," Pieper said. He estimated that renovations may cost around $10 million, and could begin in the first quarter next year and be completed by early to mid-2006.

Pieper, who also was a proponent of the recently failed casino gambling initiative, said Hilton International's decision to divest the property was not related "in any way, shape or form" to Guam's economic outlook, and with the failure of Proposal A.

"Obviously, you don't have a major multimillion-dollar transaction completed between Nov. 3 and Nov. 16," Pieper said. "As much as (the new owners) were somewhat disappointed that the gaming initiative did not carry, in no way did it influence the final agreement."

Pieper said the new owner's plan to spend millions of dollars is a good indicator of its confidence and positive outlook in Guam's tourism industry, which is aiming for 1.3 million visitors for fiscal 2005.

Hilton's sale apparently isn't the only large deal on the real estate landscape, hinted Nick Captain, president of real estate consulting firm The Captain Company, and who did appraisal work for the Hilton buyer and lender.

Although he wouldn't specify which properties, Captain said there are a number of hotel properties that are either under contract of sale or being aggressively marketed for a sale.

"The hotel sector of the real estate market is extremely hot right now," Captain said.

"There's lots of action; potential foreign investment activity is extremely high. Property owners are experiencing increasing pressure from their lenders and adjusting their expectations in line with the realities of the market."

Captain said he expects a number of additional hotels might be sold in the next 12 to 18 months.

"It's a strong signal of optimism for the future of the tourism business in Guam," Captain said. "It's a strong sign that better times lie ahead. Investors don't buy into downward-moving markets, they buy into upward-moving markets."

November 18, 2004

Pacific Daily News: www.guampdn.com

 

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