When an affiliate of Cerberus acquired a group of primarily Hawaii-based luxury hotels and resorts, the properties were suffering from declining profitability, excessive leverage and increasing pressure from creditors.
Cerberus’s investment in these properties is an example of the Firm’s ability to enhance value through its financial acumen and flexibility, significant operational expertise and long-term commitments to investments.
Following the acquisition, Cerberus moved quickly to improve the hotels by:
- Assisting management in securing a $1.9 billion loan to refinance the properties’ debt and provide them with much-needed funds to renovate and rebrand
- Improving guest satisfaction levels with upgraded facilities and services
- Divesting non-essential assets including the successful sale of a Florida luxury hotel and a stake in Tokyo’s Imperial Hotel
- Negotiating with the hotels’ unions to improve work rules and drive efficiencies
- Enhancing the value of the properties by purchasing entitlements to additional land such as private beaches in Waikiki
Strengthened by Cerberus’s actions, occupancy rates grew to exceed industry averages through the 2008-2009 recession and a challenging global tourism market. The properties have maintained their high levels of occupancy rates and guest satisfaction – even after the decline in Japanese bookings following the 2011 earthquake and tsunami – and today are well-positioned in their markets.