Alfred Harding

The backlash from companies holding expensive junkets and conventions while receiving federal bail out money is taking it's toll on hotel revenue as groups cancel their conventions in droves.

Wall Street Journal Article

The interesting point made here is that "Hotels are Businesses Too". All of these cancellations are going to take their toll on the employees who will be laid off as hoteliers try to decrease their overhead as their revenue numbers decline.

The silver lining for us homeowners at the Beach Villas at Ko Olina (who rent out our villas) is that we were never setup for conventions and groups so we don't have this business to loose. To attract group bookings we need the food & beverage component along with conference rooms.

The bulk of our business comes from individual families or small groups of families traveling together who are looking for luxurious accommodations at a "value" price. By value I mean we have $400.00 - $800.00 rates instead of $1,500.00 - $2,500.00 per night rates. Not $200.00 per night rates for a two or three bedroom suite.

So we have a couple of challenges:

While hotels in Hawaii are crying because their 98% occupancy levels have fallen into the 70%'s, I don't know if we we'll every be able to achieve 75% to 95% occupancy on a consistant basis since hotels use group bookings and conventions to smooth out occupancy during slower times of the year.

With lower purchase prices being touted for the June sales event, with all things being equal, you won't have to rent out as many nights as before.

The other challenge for us is in our ability to cut expenses which is limited by the sales agreements we signed with the developer when we purchased our villas. Some of the language may preclude us from being able to do any meaningful cost cutting which could then be reflected in lower Home Owners Association (HOA) fees.

Again, with the lower purchase prices for the June sales event, the savings in mortgage payments will offset the HOA dues. Not so lucky for us current homeowners.

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Please allow me to represent you as your buyers agent on selection day. There is no cost to you and your purchase price is exactly the same. What you select and how much you pay will make a big difference in your profitability; both from an appreciation standpoint and if renting, covering expenses. Afterwards, we can also work together to "get heads in beds".

(All of the thoughts expressed in this blog are my own personal opinion, they are no guarantee that you will achieve similar results, it's just me sharing my own experiences and what has happened in my own situation. I cannot know what will happen in the future.)

With my very informal analysis (feel free to correct me if you know the actual #) I believe that there are around 40 villas for rent out of the 125 or so that have already been purchased. Talking with homeowners, I think this number is going to increase as people who previously would not have worried about their monthly expenses are now considering rentals to offset their expenses. Think people in the financial sector for example.

(Of course the down side to renting out your place is that you are going to have wear and tear. We repaint and patch up the place once a month along with touching up the furniture periodically to keep the place in tip top shape.)

So if more people need to rent out to help with expenses, let's say the number will rise to 50% or 60 villas or so.

The unknown in all of this is what will happen when the next 125 villas are sold.

My two schools of thought:

1 - If the prices get low enough, people may decide that they don't want to hassle with rentals. This would be really good.

2 - New buyers with less income may become the new buyers at the property and for them, they will still need rental income to offset expenses.

So depending on which type of buyer is attracted to this sale, bargain hunters, people with less income, investors, etc. will determine what happens. Centex is in the best position to know the type of buyers it has received deposits from thus far.

I am hoping that it will be the high quality buyer based on the thought that these buyers have come from the existing Centex database and that these potential purchasers had considered purchasing at the higher price. It's the new buyers I don't know about.

Total # of rental units:

So I believe that we will have up to 50% of our units as rental units eventually or around 125 or so. We are not running full occupancy with the current rental units so it's not going to be pretty.

The good news is that our inquiries are up around 600% over the same time last year and we are getting many more reservation requests than we can accept for Easter, Spring Break, Thanksgiving, Christmas & New Years of 2009.

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Please allow me to represent you as your buyers agent on selection day. There is no cost to you and your purchase price is exactly the same. What you select and how much you pay will make a big difference in your profitability; both from an appreciation standpoint and if renting, covering expenses. Afterwards, we can also work together to "get heads in beds".

(All of the thoughts expressed in this blog are my own personal opinion, they are no guarantee that you will achieve similar results, it's just me sharing my own experiences and what has happened in my own situation. I cannot know what will happen in the future.)

Target Kapolei Telephone #: (808) 457-3679

The new Target at the Kapolei Commons Shopping Center has opened. They started hiring employees about a month ago. They plan on hiring up to 1,200 people for this location and the Salt Lake location. People camped out overnight to be in line for the jobs.

The new Target is located one exit down from the Ko Olina exit where the Ko Olina Beach Resort is located. About a five minute drive. It is going to be so convenient, great for all of the new Beach Villas Resort home purchasers if they are lucky enough to get their hands on a new Beach Villa at the June 6th & 7th Sales Event. I wish Target had been open when we purchased our Villa's last year.

Now, you'll be able to get your dishes, silverware, toaster, vaccum cleaner, towels, shower curtains, knick knacks, etc. for your new place so easily!

Entrance to the new Kapolei Target.

Heavy Equipment in the new Target Shopping Center.

Costco Kapolei Telephone #: (808) 674-3900

The Costco in Kapolei has opened! It is built on 17.75 acres and the warehouse is 159,019 sf. A gas station is also here. At full build out they will employ 200 - 300 associates. 50 employees have transfered over from the Waipio location to get things going.

The great thing is that the new Costco is only one exit down from Ko Olina. About a five minute drive, it is right across the street from The Home Depot.

If you don't have a Costco Warehouse membership, it is worth the money. I think I only pay around $50.00 - $75.00 per year. You'll save that on one trip. According to Costco, one out of every two people in Hawaii have a Costco membership.

This location sells USDA Prime steaks, we BBQ'ed a couple of Rib Eyes and they came out outstanding. They also have a small selection of Ahi Tuna, Salmon and a couple of other fish, not as good as Sam's Club, but not bad. We have Wolf B-B-Q gas grills around the pool areas at the Ko Olina Beach Villas Resort so come out and B-B-Q and watch the sun go down.

Milk was only $3.85 this past week. 03/14/09.

Thursday, February 12th, 2009

What you can do:

You can live here full time or use your place as a second home and leave it empty when you are not here. If you wish to rent out your place, you have the option of renting the place out yourself, hiring a management company (as approved by the board) or hiring the on-site management company to manage the place for you. I can talk with you individually about your options and the pros and cons of each choice.

What you can't do:

Resort Management has the exclusive right to provide "First Class" services at the property. Bell Services, Concierge, Housekeeping, the Beach Bar, etc. (Resort Management is owned by Jeff Stone, the owner of the entire Ko Olina Resort.) We pay fees to them twice. The first as part of our first class services included in our HOA dues and then additionally for second tier services such as housekeeping, changing the air filters, starting your car, etc.

This is good and bad. The good is that you don't want a million different companies wandering around our property all falling over each other trying to provide guest services. It would be messy. On the other hand, this gives the Management Company, Resort Management the perfect situation in which to operate a monopoly where pricing for services are not competitive.

With that said, I believe that Resort Management over time will fine tune their pricing to try and capture as much revenue as possible. To find that right price which will capture the most business at the best price. So this will be of positive benefit to all and would keep Resort Management, the homeowners (investors) and guests happy. Kind of like congress, as long as the masses are happy, there will be no uprising.

I have never been able to get a clear answer regarding the "grey" area's, but my general feeling is that if you rent out your place, you are supposed to use resort managements services. If you live here, you can hire your own housekeeper or clean the place yourself just like you do at home.

The Big Picture:

Every relationship, restriction, provision, etc. in our purchase agreement is in the document for a very specific purpose. It is my opinion that the "players" have specific goals in mind for this project, unfortunately, they have not shared those goals with me. I think we shall see the next "big" thing after all of the units are sold and Centex becomes less of a player. (A positive item is that Centex will still maintain some control to balance other interests for the near term, we also have very wealth homeowners, a judge, lawyers, etc. living or owning at the property.) I believe these factors will help mitigate some of the negative possible outcomes. (I like to calculate worst case senarios.)

All the goals were worked out long before the first spade of dirt was turned in the ground. We are the smaller fish. With this in mind, I decided that the rewards still outweighed the risks. We'll see how this play's out long term.

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Please allow me to represent you as your buyers agent on selection day. There is no cost to you and your purchase price is exactly the same. What you select and how much you pay will make a big difference in your profitability; both from an appreciation standpoint and if renting, covering expenses. Afterwards, we can also work together to "get heads in beds".

(All of the thoughts expressed in this blog are my own personal opinion, they are no guarantee that you will achieve similar results, it's just me sharing my own experiences and what has happened in my own situation. I cannot know what will happen in the future.)