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Hospitality Lawyer — Trump’s luxury residential mixed-use project in Hawaii sells out in 8 hours. New sales record claimed.

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12 November 2006

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Hotel Lawyer on How to have a blow out of hotel-enhanced residential mixed-use. Donald Trump seems to find himself surrounded by controversy — whether it involves his giant kiosk in Chicago, his huge American Flag at his Mar-a-Lago Club in Palm Beach or his big “hole” in Manhattan’s Soho. But whatever you think of the man, you have to be impressed by the latest demonstration of his brand power at the Trump International Hotel & Tower in Waikiki. According to the story by Allison Schaefers in Saturday’s Honolulu Star Bulletin, Trump and his Los Angeles-based partner, Irongate, set a new world record for residential development sales — selling more than $700 million of luxury units in just 8 hours, and selling out all 464 hotel suites and residences in the first day of what had been planned as a two-day sales event.

The Trump-Irongate sell out surpassed what is claimed to be the prior record established by Intrawest last December when it sold $425 million, comprising 318 units, of the first phase of hits Maui resort development. What does this mean?

The Project

The Trump International Hotel & Tower in Waikiki will be a 38-story, 464-room hotel-condominium complex on the corner of Kalia and Saratoga roads across from Fort DeRussy Park. It is Oahu’s first five-star hotel to be developed since the 1980s. When completed in 2009, it is expected to become the cornerstone of Outrigger Enterprises’ massive Waikiki Beach Walk redevelopment.

The latest sell out of the Trump International Hotel & Tower in Waikiki was done with a sales effort focused simultaneously in Japan and Hawaii. In fact, “About 40 percent of the buyers were from Hawaii and Asia, and the remainder came from all over the world,” Ivanka Trump said. Many buyers came from a database of investors who have bought into other Trump developments, she said.

Buyers paid an average price of $1.5 million. Units were priced from the mid-$400,000s for studios to more than $9 million for a three-bedroom penthouse.

Despite the relative newness of hotel-condominium properties in Japan, the Japanese were the largest single group of buyers, according to Sid Lanolt, co-founder (with Peter Dupois ) of Vancouver, Canada-based S&P, the marketing firm for the project.

The focus on the Asian market and the overwhelming response are particularly noteworthy. “We’ve just seen the Japanese real estate market improve over the last two years in Japan, and with local improvement there’s been a heightened movement to buy more real estate in Hawaii,” according to Lanoldt. “Trump Tower is the first large indication of renewed interest from Japan in Hawaii real estate.”

By the time the sales started, more than 1,000 prospective buyers had paid $20,000 to reserve space in the project according to Dupois, chief executive officer of S&P.

What is interesting about this?

  • A number of things are interesting about this remarkable feat — this 8 hour sell out of $700 million of residential units.
  • Condo hotels are not dead! Well-conceived projects in good locations continue to work as part of hotel mixed-use developments. And the brand can be very important!
  • In case you have not noticed, Donald Trump is more than “just” a very successful developer. He had developed a powerful BRAND with legs.
  • If you blinked, you may have missed the fact that Trump now has 33 developments in the works worldwide, according to the Honolulu Star Bulletin.
  • Trump is not the main developer in many of these projects, but has arranged deals that are more like those of a typical “brand” with a license-type of arrangement for the use of his name, and a profit sharing arrangement.
  • The latest sell out of the Trump International Hotel & Tower in Waikiki was done with a sales effort focused simultaneously in Japan and Hawaii. The Asian focus of marketing efforts and Asian buyer interest is significant.
  • Look for more Trump projects — with some significant ones IN ASIA.

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