Please read the below case and perform an analysis with 100-200 words and be precise. thank you! will give thumbs up the best response.

Outrigger History 1 On Black Friday, September 13, 1929, Roy C. Kelley arrived in Hawaii with his wife, Estelle. An architect by training, Mr. Kelley joined the firm of C. W. Dickey and was responsible for designing many of Honolulus landmark buildings, including the main building of the old Halekulani Hotel and the Waikiki Theater on Kalakaua Avenue. Nine years later Kelley set out on his own and opened his architecture firm, building numerous homes, apartment buildings, and hotels on the island of Oahu. In 1963, Kelley took over the land occupied by the old Outrigger Canoe Club, and Outrigger Hotels became a reality with the mission of bringing the dream of a vacation in paradise within the reach of the middle class traveler. Included in the agreement were leases on three Waikiki lots that later became the Outrigger East, Outrigger West, and Coral Reef hotels. The Outrigger Waikiki Hotel was built on the site of the old canoe club, arguably the prime spot on Waikiki beach, in 1967. Throughout the next two decades, Outrigger Hotels Hawaii, as the company was named, continued its expansion in Waikiki. When in the seventies the zoning authority put a cap on new construction in Waikiki, Outrigger began to expand through acquisition rather than construction, ultimately becoming the largest chain in the State of Hawaii with over 7,000 rooms and a total of 15 properties concentrated in Waikiki (see Exhibit 6.1). Thanks to its clustered configuration, Outrigger Hotels Hawaii was able to maintain a centralized management structure fitting Mr. Kelleys management by walking around style. In 1989, Outrigger Hotels Hawaii, now under the leadership of Roy Kelleys son, Dr. Richard Kelley, took over management of The Royal Waikoloan Hotel on the Big Island of Hawaii. When Hurricane Iniki, heading for Waikiki in 1992, barely missed Honolulu and ravaged the island of Kauai, it provided further impetus for Outriggers geographical diversification strategy to and beyond neighboring islands. The firm, now expanding into management agreements with third-party owners, added properties on Maui and Kauai and ultimately grew to a total of 26 locations in the Hawaiian Islands.

In 1996 the firm made its first international foray, opening the Outrigger Marshall Island Resort on Majuro Atoll in the Republic of the Marshall Islands. Through partnerships, joint ventures, acquisitions, and new developments, the firm continued to grow internationally, adding properties in Guam, Fiji, Tahiti, Australia, and New Zealand (see Exhibit 6.3). While growing geographically, Outrigger Hotels Hawaii also began to diversify its product portfolio with the addition of condominium resorts beginning in 1990. Because of its geographical and product diversification, in 1995 Outrigger Hotels Hawaii changed its name to Outrigger Hotels and Resorts, and in 1999 it re-branded fifteen of its hotels in Waikiki to launch a new hotel brand called OHANA Hotels of Hawaii. Reflecting on the decision, President and CEO David Carey commented:

We had an identity crisis because the market moved up, we upgraded the on-beach properties where we had higher demand and bought some nice properties in neighboring islands. But we had huge variation in the portfolioif you stayed at a budget property vs. a beach front property, youd be very confused as to what an Outrigger was. In an effort to bank on the name awareness that the Outrigger brand had developed with consumers, the on-beach properties became upscale fullservice hotels under the Outrigger brand. The condos, also typically on-beach upscale locations, maintained the Outrigger brand. Conversely, the OHANA brand was positioned to cater to the budget traveler looking for value on offbeach properties. Perry Sorenson, COO, explained the OHANA value proposition:OHANA hotels are something between a Holiday Inn and a Hampton Inn. No expectation of restaurants, but expectations that you have a friendly staff, that the room is going to be clean, and you will be taken care of. Not a lot of extras, but good value. Condominiums represented an increasingly important share of the total portfolio of properties (see Exhibit 6.4), even though the firm had sort of stumbled upon the opportunity condominiums offered. Condominiums appealed to the independent traveler who would do much research and planning on his own. Condominiums were also very complex, non-standard products that travel agents and wholesalers found hard to sell. As Sorenson explained: The addition of condominium properties was a customer driven initiative. We kept receiving inquiries about condominium vacations and had to direct customers to competitors who also ran hotels. That did not make any sense.

As the firm learned over time, condominiums were very different than traditional hotel and resort operations. While management agreements with condominiums varied substantially, unit owners typically had the option to join a pool of units that Outrigger was responsible for marketing and managing. Owners typically received 55% of the gross income the units generated and Outrigger funded its operations with the remainder. Beyond labor costs, the primary expenses included the costs of marketing and selling the properties, front desk and housekeeping operations, and in-unit maintenance. Maintenance of the common areas, defined as anything from the units inside wall paint outward, was the responsibility of the AOAO (the owners association) and was funded through annual dues. This state of affairs was simpler in the Australian condominiumsreferred to as strata title properties. There, the management company had to buy and control the lobby area, and the contracts were generally 25 years in length and required standardization of revenue splits. This approach created simplicity and clarity that made it more efficient for the management company to operate. Because condos were rarely built as business ventures but rather were designed as primary or vacation homes for the tenants, they offered little office or staging space for management companies to operate in. They also lacked many of the typical hotel services and departments such as food and beverage, room service, laundry, and daily maid service. Working with a relatively unsophisticated and widespread ownership base, with some condominiums having almost one owner (i.e., one contract) per unit, presented significant challenges. Jim Hill, Regional DirectorMaui, summarized the challenge: The thing that is hardest to do in condos is to change anything. Youll sit in a board meeting with the association and theyll say no, no, no, when the next property over offers a more appealing layout and better amenities. But that same person will ask you in another meeting why isnt the revenue higher? These difficulties notwithstanding, Outrigger found the condo business appealing when it made its first foray into it in the early 1990s, because it provided a means for expansion through management contracts without the need to acquire expensive properties. Condo products varied widely, ranging from studios to two bedroom apartments, and did not have all the services typically associated with a hotel, like room service, on-property restaurants, and retail shops. Outrigger had grown to a sizable firm, encompassing about 3,600 employees (of which about 230 were at corporate), a portfolio of properties exceeding U.S. $1.4 billion, 2 and approximate revenues of U.S. $45 million.