New Otani Kaimana Beach Hotel to close, reopen under new management

Original Article

Japan’s New Otani Co. Ltd. will close its only U.S. hotel in Hawaii at the end of November when the company’s lease expires with property owner BlackSand Capital, whose CEO said the boutique Kaimana Beach Hotel in Waikiki will reopen Dec. 1 under new management.

The New Otani Kaimana Beach Hotel, which has been closed temporarily because of the Covid-19 shutdowns, last week filed a WARN notice with the Hawaii Department of Labor and Industrial Relations saying 110 of the hotel’s 114 employees will be laid off Nov. 30 “due to sale of the hotel and property” — which actually took place nearly two years ago. In July, the hotel filed a WARN notice saying its Miyako restaurant would close Aug. 31.

A notice on the hotel’s website says that as of Dec. 1, “the New Otani Kaimana Beach Hotel will be known as Kaimana Beach Hotel.”

A subsidiary of the Tokyo-based New Otani Co. sold the then-leasehold 125-room hotel in December 2018 for $23.9 million to BlackSand Capital. The Hawaii private equity firm had paid $31.8 million in May 2016 to buy the land beneath the hotel on Sans Souci Beach from McInerny Foundation through its trustee, Bank of Hawaii.

BlackSand Capital CEO BJ Kobayashi told Pacific Business News that when the sale closed in December 2018, New Otani leased back the property for two years. That lease expires on Nov. 30, he said.

BlackSand is in negotiations with a new management company "that is locally owned" but which Kobayashi declined to identify.

“The intent all along was two years,” Kobayashi told PBN. “The deal that we crafted with Otani was we would do a two-year lease and then hire a manager to take over.”

The New Otani Co. owns 16 other hotels in Japan and one in China. The Waikiki hotel is its only U.S. property.