Turtle Bay Resort with 450 rooms in Hawaii sold for $680 million

  • Image credit Turtle Bay Resort

Host Hotels & Resorts plans to brand the hotel with The Ritz-Carlton upon closing

Host Hotels & Resorts, Inc. (NASDAQ: HST) today announced that it has entered into an agreement to acquire the simple interest in the 450-room Turtle Bay Resort on the North Shore of Oahu, Hawaii, including a 49-acre right-of-development parcel, for approximately $680 million , after deduction of key money. The purchase price allocation is expected to be $630 million for the resort and $50 million for the parcel, subject to final review. The acquisition price represents an EBITDA multiple of 16.3x, or a maximum percentage of approximately 5.3% on the resort’s estimated 2024 results.1. The purchase is subject to customary closing conditions and the transaction is expected to close by the end of July 2024.

The resort recently benefited from a transformative renovation and was closed from March 2020 to June 2021. The renovation included the rooms and bungalows, lobby, pools, restaurants, shops, meeting space, spa, a new club lounge, building systems, as well as an updated exterior and arrival experience. It will be acquired completely free of brand and management, and upon closing, Host plans to transfer management to Marriott and brand the hotel with The Ritz-Carlton brand. In connection with the rebranding, Marriott provided key funds and favorable modifications to several existing management agreements. Before taking into account the significant upside expected from The Ritz-Carlton brand, the resort is expected to be one of Host’s top assets based on estimated full year 2024 results with an expected RevPAR of $570 , a total RevPAR of $980 and an EBITDA per key. of $86,0002. Following the recent renovation and rebranding, the company expects the resort to stabilize between approximately 10-12x EBITDA3 in the period 2027-2029.

James F. Risoleo, President and Chief Executive Officer, said, “We are pleased to enter into an agreement to acquire Turtle Bay Resort, which will further expand and diversify our already strong presence in Hawaii. Oahu is a high-demand vacation destination, with consistently high occupancy rates, an internationally diversified demand base and high barriers to entry, resulting in historically slightly negative supply growth and essentially no expected supply in the near term. Additionally, due to the recent transformative renovation of the resort, we do not expect significant capital expenditure in the near term. We look forward to working with employees and local partners to build on the resort’s preeminent position on Oahu’s North Shore. With the planned rebranding of Ritz-Carlton, we believe the resort will generate outsized growth as it stabilizes, further increasing the EBITDA growth profile of our portfolio.”

The resort is uniquely located on 1,180 acres on Oahu’s north shore with five miles of beach and coastline views. It features 450 rooms, all with ocean views, including 42 bungalows with direct access to the beach, a separate check-in and a private pool. Other amenities include 18,000 square feet of indoor meeting space, a club lounge, six food and beverage outlets, seven retail spaces, a spa, a fitness center, two golf courses, seven beaches, four resort pools, tennis and pickle ball courts, an equestrian center, a working farm and access to 12 miles of oceanfront trails. The 49-acre oceanfront land parcel is entitled to development, and similar to the company’s strategy for other properties, Host plans to increase its value over the long term.

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