Outrigger Enterprises will delay and likely scale back an ambitious
$300 million Waikiki redevelopment project after Gov. Linda Lingle
refused to extend a significant tax credit for hotel construction
The project would be one of the biggest in recent years for
Waikiki and has been considered to be a key to revitalizing Oahu’s
Hawaii-based Outrigger had counted on a three-year, 8 percent
tax credit on hotel construction to help attract financing for its
Lewers Street corridor renovations, said Eric Masutomi, Outrigger
vice president for planning.
The Beach Walk project, which was expected to break ground in
April 2004, would create a public plaza, major new retail space, a
new 890-room hotel, a showroom, meeting and banquet facilities, and
Masutomi said Outrigger now expects to trim those plans,
eliminating such elements as a ballroom and meeting center, which
don’t add revenue but would have attracted high-end business and
“We’re looking at a minimum six-month delay,” he said.
“And in addition to that we’re looking at the need to scale the
project back.” Masutomi said the company might replace some hotel
construction with condominiums, which would bring immediate
Hawaii is facing a $152 million budget shortfall over the next
two years, according to the governor’s office, and Lingle said she
vetoed the hotel credit, as well as other measures, because the
state cannot afford them.
Critics of the veto complained that the credit would have helped
Waikiki, which the governor has made a priority for her new
cabinet-level tourism czar, Marsha Wienert.
But Lingle said a new marketing strategy and planned sand
replenishment could also aid the ailing resort.
Hotel businesses have not been left empty-handed. A 4 percent
tax credit is currently in place through 2005.
The vetoed House Bill 1400 would have lowered a previously
existing 10 percent credit to 8 percent, and extended it through
House tourism committee chairman Rep. Jerry Chang said he plans
to introduce the larger hotel tax credit again next session.
Masutomi said Outrigger executives meanwhile will revise their
plans based on the 4 percent credit and hope to revisit the issue