Curated News
By: NewsRamp Editorial Staff
August 24, 2026
Hawaii Hotel Deals Slow as Pricing Gap Widens
TLDR
- Buyers can secure Hawaii hotels at a five percent return, below market's seven percent, by structuring deals with future repositioning plans.
- Hawaii hotel deals require 30-50% equity, with positive leverage at 7% return versus 6.5% debt cost, and often use leasehold-to-fee structures.
- Flexible leasehold structures let buyers improve properties before purchase, benefiting communities through enhanced hotels and preserved family ownership.
- PACIFIC 19 Kona was bought via a leasehold with option to buy, closing at $23M after a six-year process and $10M in upgrades.
Impact - Why it Matters
For investors and stakeholders in Hawaii's hospitality sector, this news highlights a critical juncture: the current pricing gap between buyers and sellers is stalling transactions, but it also presents opportunities for those who can structure creative deals or wait for debt costs to shift. Understanding the dynamics—such as the importance of positive leverage, the thinning middle market, and the prevalence of leasehold structures—is essential for anyone looking to buy or sell hotels in Hawaii. The market's resilience, characterized by conservative debt levels, suggests that those with patience and capital can find value, but they must be prepared for a longer timeline and unique challenges like labor unions and limited fee simple oceanfront properties.
Summary
Hawaii's hotel market is experiencing a slowdown in transactions, not due to distress, but because of a pricing gap between buyers and sellers. While a few hotels in Waikiki are available for a first-year return of around five percent, most buyers are underwriting closer to seven percent, creating a two-point spread that is stalling deals. This gap is largely driven by the cost of debt, with positive leverage being a key threshold. As Mark D. Bratton of The Bratton Team at Colliers International Hawaii notes, buyers are not holding out for better prices but are declining to buy into negative leverage.
The buyer pool has thinned in the middle, with publicly traded REITs stepping back, while independent investors, family offices, and some institutional capital remain active. Recent transactions like PACIFIC 19 Kona, acquired by Nine Brains, and Turtle Bay Resort, acquired by Host Hotels, illustrate the range of activity. Deals are increasingly structured to give buyers control before title, such as leasehold positions with the right to acquire the fee, as seen in the PACIFIC 19 Kona deal, which closed at $23 million after a six-year process. Hawaii's market is quiet but not stressed, with conservative debt levels and a spread that could close if debt costs move, making it a market waiting for a catalyst rather than a correction.
Source Statement
This curated news summary relied on content distributed by Keycrew.co. Read the original source here, Hawaii Hotel Deals Slow as Pricing Gap Widens
