Monthly Archives: October 2010

Fee Simple vs Leasehold

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Hawaii Property Ownership Explained:

Fee Simple vs Leasehold

Most people only know of one type of real estate ownership; fee simple, also known as freehold. Hawaii and a few other states have another form of ownership known as leasehold. The difference in these two types of land tenure is very different and affects the value of the real estate. It is important to know the difference, especially if you’re buying real estate in a leasehold state.

FEE SIMPLE: Fee simple ownership is probably the most familiar form of ownership to buyers of residential real estate. A fee simple buyer is given title to the property, which includes the land and any improvements to the land in perpetuity. In the case of a condominium the purchaser would own a pro-rata share of the land. Aside from a few exceptions, no one can legally take that real estate from an owner with fee simple title. The fee simple owner has the right to possess, use the land and dispose of the land as he wishes–sell it, give it away, trade it for other things, lease it to others, or pass it to others upon death.

LEASEHOLD: A leasehold interest is created when a fee simple land-owner (Lessor) enters into an agreement or contract called a ground lease with a person or entity (Lessee). A Lessee rents the land from the Lessor for the rights of use and enjoyment of the land much as one buys fee simple rights; however, the leasehold interest differs from the fee simple interest in several important respects. First, the buyer of leasehold real estate does not own the land; they only have a right to use the land for a pre-determined amount of time. Second, if leasehold real estate is transferred to a new owner, use of the land is limited to the remaining years covered by the original lease. At the end of the pre-determined period, the land may legally revert back to the Lessor, and is called reversion. At the end of the lease term many lessors and lessees have agreed on either a new lease or the Lessor may agree to sell the land to the Lessee. In the case of a condominium depending on the provisions of any surrender clause in the lease, the buildings and other improvements on the land may also revert to the lessor. Finally, the use, maintenance, and alteration of the leased premises are subject to any restrictions contained in the lease.

If you have additional questions or would like to speak to one of our Ohana please call us at (808)879-3667 or 1-(800)291-5535. 

Worldwide Survey Ranks Maui High in Hotel Stays & Prices

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Maui ranks high in hotel stays, prices

Worldwide survey examines rates, revenues of island destinations

October 28, 2010 – By HARRY EAGAR, Staff Writer – Maui News
A survey of world island tourist destinations puts Hawaii, and particularly Maui, at or near the top in hotel occupancy, prices and revenue per available room.

The study, released today by Hospitality Advisors, found the Maldives are easily the most expensive of the top island destinations, but through the first nine months of this year, Oahu had the highest occupancy, 78.3 percent.

Maui, which was included in Hawaii but also reported separately, was fourth in average daily rate, despite considerable discounting over the past year and a half. The average Maui room was priced at $225 a night, down 6.3 percent from a year before.

That sandwiched Maui between the Bahamas ($273) and Aruba ($204).

But because Maui enjoyed better occupancy rates than either, hoteliers here realized more money, a revenue per available room amount of $155, up 7.7 percent.

Aruba was eighth in occupancy, 62.3 percent, and the Bahamas wasn’t in the top 10. Thus, when it came to revenue, the Bahamas was fourth with $152, and Aruba was fifth with $127.

The Maldives is somewhere off in a class by itself, a low-lying, remote collection of dry sandbanks with only a few, but very expensive, resorts. Joseph Toy, president of Hospitality Advisors, noted that it is a prime destination for Asian tourists.

It is also the only place that occasionally knocks Maui out of the top spot in polls of English-language travel magazine readers. (These polls are self-reported, not scientifically sampled, but Maui’s firm hold at the top shows that travelers’ enthusiasm for the Valley Isle is firm.)

A room in the Maldives averages $539 a night, around $100 more than a room at Wailea, which is far and away the most expensive destination in Hawaii. Maldives occupancy was 62.6 percent, and its daily revenue for rooms was more than double Maui’s at $331, although down by 16.9 percent.

After Oahu in occupancy were Guam (76.6 percent); Bali (74.9); Puerto Rico (70); Maui (68.9); Jamaica (66.3); Maldives (62.6); Aruba (62.3); Phuket (61.7); and Kauai (61).

Most of those destinations had higher rack rates than Oahu, which averaged $147. In some cases, like Maldives and French Polynesia ($292), much higher.

However, because of its overall better occupancy rates, Hawaii counties were all in the top 10 in revenue per available room.

Oahu was seventh ($115); Kauai eighth ($112); and the Big Island, despite making a poor showing in occupancy compared with the rest of Hawaii, was still 10th ($102).

The survey, conducted by Smith Travel Research for Hospitality Advisors, also ranked islands vs. comparable international destinations.

Here Singapore swept the board, first in occupancy (82.5 percent); average daily rate ($192); and room revenue ($159), barely higher than Maui taken separately.

Hawaii was fourth in occupancy after South Korea and Australia, followed by New Zealand, the Caribbean, China, Mexico and Thailand. All of the top 10 international destinations gained in occupancy rates this year. Singapore gained the most, 11.9 percent. Hawaii was up 6 percent.

Hawaii, second in rack rate at $173 was one of four top 10 destinations where rates fell, here by 3 percent. The other cost cutters were Mexico, Thailand and New Zealand. Singapore raised rates by 10.9 percent, which did not hurt its allure. The same was true of China, which raised rates by 10.8 percent to $112 but gained 9.4 percent in occupancy to 60.3 percent.

It is a sign of the overall weakness of world tourism that two top 10 countries by occupancy, Mexico and Thailand, had rates of 55.2 percent and 52.7 percent, which would be poor even compared with the Big Island.

Singapore rocketed ahead in revenue per available room, up 29.6 percent. Hawaii was second in that category with $123, a gain of 6 percent.

China had the biggest percentage gain in revenue, up 31.1 percent, but from a low starting point. Its room revenue was only $67, which was still a bit higher than New Zealand.

“Despite the unprecedented market decline that Hawaii endured over the past two years, Hawaii has been able to maintain its strong positioning when compared to other island and sun destinations,” Toy said.

He noted that surveys show that Maui has a separate brand identity from Hawaii.

The survey covered 38,000 properties with nearly 5 million rooms. Hawaii accounted for only 0.015 percent of rooms surveyed. The state had under 75,000 rooms in 2008, according to the state Department of Business, Economic Development & Tourism, and even fewer now.

* Harry Eagar can be reached at heagar@mauinews.com.

Average gas price falls in Honolulu

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A new report says the average retail gasoline price in Honolulu has fallen 4 cents per gallon in the past week.

According to gasoline price website HonoluluGasPrices. com, Sunday’s average was $3.37. That was 23.6 cents per gallon higher than the same day one year ago and 9 cents per gallon higher than a month ago.

Nationally, the average fell 1.4 cents per gallon in the last week to $2.81 per gallon.

The price represents an increase of 10.1 cents per gallon during the last month. It’s also 13.8 cents per gallon higher than the same day a year ago.

Maui News

County Council approves Kula Ridge project

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County Council approves Kula Ridge project

October 20, 2010

Maui County Council members voted 6-2 late Tuesday to approve the Kula Ridge project that promises to bring 59 affordable housing units for senior citizens and single families.

The action came following a 14-hour day filled with back-and-forth exchanges on the proposed affordable housing project and the conditions with which it would be approved.

Council Members Wayne Nishiki and Sol Kaho’ohalahala cast the two dissenting votes, while Council Members Danny Mateo, Mike Molina, Gladys Baisa, Jo Anne Johnson, Bill Medeiros and Joe Pontanilla voted in favor of the fast-track housing application. Council Member Mike Victorino was excused from deliberations, which started around 1:45 p.m. and ended with the vote at 11:07 p.m. Tuesday.

In the morning, about a dozen people testified for and against the project. Proponents praised the proposal for bringing affordable housing and jobs to the island, and opponents criticized Kula Ridge for being too dense and out of character for Upcountry while also questioning its water source and archaeological surveys.

The Kula Ridge project sits on 48 acres located above Holy Ghost Church and the Kula Community Center. The application calls for building a 116-lot development featuring 59 affordable senior duplexes and single-family homes.

In the last hour leading up to approval, Kula Ridge officials agreed to take out 11 affordable housing units it planned to build in the Kula Ridge subdivision and use for as a work-force housing requirement credit for the adjacent Kula Ridge Mauka development.

The fast-track state housing law allows a developer to bypass most state and county land-use requirements by promising to build affordable homes. The application came with a 45-day window for council members to take action. Maui News