Phase Two involves redevelopment of the block bordered by Saratoga Road, Beach Walk, and Kalia Road. It includes replacing the OHANA Reef Lanai, the OHANA Royal Islander, and the Malihini Hotel with a new 890-room hotel. Pedestrian bridges will connect the new hotel to the Phase One entertainment, retail and meeting center. Phase Two work is projected to begin in 2006, at a cost of $170 million.

"In our designs, we worked hard to emphasize the street level experience," said Mel Kaneshige, senior vice president of Outrigger Enterprises. "It was actually a place-making exercise. We wanted to transform Lewers Street into a destination instead of just a road that gets you somewhere. Working with our architect, Group 70, we think we've achieved that. Through creative site planning, we've also managed to disperse a significant amount of vehicular traffic from Lewers. We wanted to transform the existing congested mixture of storefronts and hotel lobbies into a more human-scale shopping and hotel district that lets all Waikiki guests know that they are indeed in Hawaii. Everything you see, smell, taste, touch and hear will let you know that you are in Hawaii."

No loss of jobs is expected at the affected hotels. Employees will be transferred in advance to other Outrigger and OHANA Waikiki hotels as positions open, and any reductions in staffing will be handled through normal job attrition. Vendors and retailers in the area have been on month-to-month notices in anticipation of the redevelopment.

The redevelopment project brings Outrigger full-circle in its recent expansion. The 184-room Edgewater Hotel, which opened in 1951 and is at the heart of the redevelopment area, was the second hotel built by company founders Roy and Estelle Kelley, and for years was the only major building in that area of Waikiki. (The Kelleys' first hotel, the Islander, was built in 1947 and has long since been demolished.) The Edgewater Hotel was the first hotel in Waikiki to have an automatic elevator and a swimming pool, and it set the standard for Outrigger's growth in Waikiki in the succeeding decades, meeting the needs of generations of travelers seeking moderately priced rooms in Waikiki. 

Outrigger Hotels & Resorts is a division of Hawaii-based Outrigger Enterprises, Inc., the largest lodging company in Hawaii and one of the fastest growing lodging companies in the Pacific. Under its Outrigger Hotels & Resorts and OHANA Hotels of Hawaii brands, the company currently operates or has under development 41 hotels and resort condominiums throughout the Pacific region, representing nearly 12,000 hotel rooms and condominium units in Hawaii, Micronesia, Australia and the South Pacific.

In tandem with its successful Pacific expansion, Outrigger expanded statewide, acquiring the Outrigger Waikoloa Beach Resort on the Big Island of Hawaii and the Outrigger Wailea Resort on Maui. Outrigger spent an additional $25 million on each Neighbor Island property for renovations and upgrades. Outrigger's affiliate, Outrigger Lodging Services, manages nearly two-dozen hotels and resorts throughout the U.S. mainland.