ResortQuest Hawaii has assumed management of the former Kaua'i Coconut Beach Resort from Marriott International as part of a $70 million purchase of the oceanfront hotel.

A private real estate investment fund and ResortQuest's parent company bought the 311-room hotel most recently known as the Courtyard by Marriott Kauai at Waipouli Beach.

The four-story hotel set amid a coconut grove on 10 1/2 acres of leasehold land owned by Niu Pia Land is now the ResortQuest Kaua'i Beach at Maka'iwa.

Just more than 90 percent of the hotel's roughly 200 employees were rehired by ResortQuest, which gave first priority to existing workers.

"The vast majority have continued to stay on, and we're very pleased with that," said Kelvin Bloom, ResortQuest's regional vice president. "We're extremely pleased with the staff on the property."

ResortQuest said hotel guests and business partners should experience a seamless transition.

The sale is in part a testament to Hawai'i's surging visitor industry in which more visitors have been arriving and paying higher hotel room rates over the past couple of years. Investors have responded to the market's strength with lots of interest in acquiring hotel properties.

California-based boutique hotel operator Presidio Hotel Group LLC acquired the Kaua'i hotel in 2003 for about $10 million, introduced Marriott's management and spent another roughly $20 million on renovations that it bet would improve operations substantially.

After repositioning the renovated property under Marriott last year, Presidio began marketing the hotel for sale.

Mark Bratton, an agent with Colliers Monroe Friedlander representing Presidio, said there was much initial interest to convert the hotel to condominium ownership wherein a buyer resells the hotel by the room to individual investors who have an option to use their units or rent them out through a management firm.

But Bratton said the so-called condotel market has softened, and ResortQuest saw an opportunity to expand.

"I think they see Kaua'i beachfront as a great market with rates rising," he said.

ResortQuest, via its Tennessee-based parent Gaylord Entertainment Co., partnered with an investment fund managed by a unit of Deutsche Bank to buy the hotel in a deal in which Gaylord invested $3.8 million and retained 19.9 percent ownership.

The Kaua'i hotel was Gaylord's second such purchase. Last year, the company partnered with a Deutsche Bank fund to buy what is now the ResortQuest Waikiki Beach Hotel for $107 million. Gaylord invested $4.7 million in that deal and retained 19.9 percent ownership.

ResortQuest now manages 28 hotels and condo resorts in Hawai'i, including five on Kaua'i.

Colin V. Reed, Gaylord Entertainment chairman and chief executive, said in a statement that the company's latest addition follows a strategy of investing in high-profile vacation destinations while securing long-term management contracts.

"This beautiful hotel will be an outstanding addition to ResortQuest's portfolio," he said.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.