The new owner of the Ilikai Hotel said it plans to reopen the hotel soon after reaching an agreement with UNITE HERE Local 5 late last night.

Istar Financial, in a release, said the agreement is subject to a ratification by union members.
“Once it is ratified, the Ilikai Hotel will reopen as soon as practically possible under a new management team and operational structure,” the release said.
Further, “The new collective bargaining agreement provides for improved operational efficiencies, an improved cost structure, and the rehiring of approximately 50 hotel employees, many of whom have been with the hotel for more than 30 years. We understand that those employees who are not offered positions will be paid a severance allowance.”
Andrew G. Backman, iStar Financial’s senior vice president of investor relations and marketing, said. “We are pleased that this new agreement will allow all of us to move forward. We believe in Hawaii and recognize the importance of this iconic property to the community.”
The company said that the new agreement “will not by itself ensure the long-term viability of the hotel and that the benefits of a more efficient hotel operation need to take effect along with improvements in the overall economic conditions and the Hawaii tourism industry."

Local 5 officials said that most of the Ilikai employees will be rehired under the agreement.
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Under the new union contract, wages, benefits and job security provisions will remain intact, according to the union. “This agreement accomplishes what our members most desired,” said Eric Gill, chief negotiator for the union.

“We will now have a real chance to work to rebuild the business and restore the reputation of this important hotel, and the opportunity to safeguard our future by working hard to make the new Ilikai a success,” Gill said.

The new owners will offer employment to Ilikai workers by seniority, he said. And the union said all Ilikai workers will receive vacation pay they had accumulated prior to yesterday’s closure, and workers not rehired will have the opportunity for severance pay.

Ilikai workers will gather today at the union’s new headquarters to meet with union negotiators to review the agreement.

Active hotel operations for 203 units of the hotel were closed at midnight this morning.

“This decision was made after iStar made every attempt to identify sufficient cost savings and operational efficiencies that would allow the hotel to continue active operations after it took possession of the property on July 10, 2009,” the company said. “These ongoing efforts included exploring cost-cutting measures, improving outdated operational procedures and practices at the hotel, enhanced management, and expanded marketing efforts. “

The Ilikai complex also has 1,009 total residential units, some occupied by full-time residents, some by time-shares, as well as units being used as part of the hotel operations for nightly, weekly and monthly rentals. Only the 203 units used for the hotel operation are affected by the agreement. The other units are not affected, the company said.