Plans for an "ultra luxury" Maui condominium-hotel associated with French crystal manufacturer Baccarat have been shelved by a global investment firm and local development partner The Kobayashi Group.

The decision is a stunning swing for a project that attracted $300 million in unit sales during an initial offering in 2007, and represents one of the biggest casualties among Hawai'i real estate development projects tied to the international credit crisis.

The 193-unit Baccarat Wailea Resort & Residences was announced in July 2007 by Greenwich, Conn.-based Starwood Capital Group led by hotel-empire builder Barry Sternlicht in partnership with minority owner and development manager Kobayashi Group.

Originally slated for completion next year, the Baccarat Wailea was to be a five-star resort built on the 15-acre beachfront site of the former 345-room Renaissance Wailea Beach Resort, which Starwood Capital closed in September 2007.

The project was envisioned as the first jewel in a string of Baccarat-branded hotels featuring items such as chandeliers and other decor from the fine crystal maker. But recently, a sign at the Wailea property heralding the project was blotted out.

Starwood Capital spokeswoman Laura O'Hare in New York said the project is on hold and is being reworked. O'Hare said Starwood Capital is not elaborating on when or how the project might change.

The developer also wouldn't say what specific factors — such as unit sales, financing difficulty or other circumstances — led to the decision. Nor would the company disclose how many people committed to buy Baccarat Wailea units to date.

In a written statement, Starwood Capital said: "We are going to take some time and pause to determine the proper course of action for our properties and evaluate some additional possibilities. Our goal at Starwood Capital Group continues to be a promise to deliver the most exceptional lifestyle experience for our future residents and guests."

An official with Kobayashi Group deferred comment to Starwood Capital.

The Wailea Group, a Maui real estate firm working as exclusive broker for Baccarat Wailea units, did not return a call seeking information about sales.

DELAY NOT SURPRISING

"V.W." Volker Weiss, a Wailea-based real estate agent with Coldwell Banker Island Properties, said he wasn't surprised that the project didn't go forward as planned.

Weiss said there was a perception among some prospective buyers that too many of the units were one-bedroom, one bathroom units.

He said other luxury condos in Wailea have continued to sell well despite the broad real estate market downturn.

Wailea, as Hawai'i's most upscale visitor destination where hotel room-rate averages run more than $500 a night, is regarded as more recession proof than the rest of the state's tourism and real estate markets. And the Baccarat project was sited on a prime beachfront parcel in the area.

But Joseph Toy, president of local consulting firm Hospitality Advisors LLC, said the market for condotel units, which boomed in the first half of this decade, had lost momentum by 2007 and was in bad shape with an oversupply of units last year.

"Obviously, the market really hurt them," he said of the Baccarat Wailea project.

OTHERS AFFECTED

Other Hawai'i condotel projects that have been affected by the market include a planned 400 to 500-unit project called The Nai'a at Ko Olina that was canceled by a Miami developer in 2007 and a plan to convert 343 Ilikai Hotel rooms to condotel units that is in foreclosure.

For Starwood Capital, the Baccarat Wailea isn't the only project caught up in the market's slide. Plans for other Baccarat hotels, including one announced last July for Dubai, don't appear to be moving forward.

Also, a chain of eco-friendly luxury hotels dubbed 1 Hotels hasn't been developed as planned by Starwood Capital.

The first 1 Hotels project broke ground in Seattle in June 2007, but after demolishing an old hotel on the site, construction of the new condotel halted in late 2007. A mid-2009 opening had been planned.

Baccarat and 1 Hotels were envisioned as grand growth opportunities for Starwood Capital, a real estate investment behemoth established by Sternlicht in 1991.

RESORT HISTORY

Sternlicht, through Starwood Capital, built Starwood Hotels & Resorts, which he led until 2004, and has invested about $6 billion in more than 300 deals valued at more than $20 billion.

One of the acquisitions included a majority stake in the Baccarat company.

The Renaissance Wailea hotel was acquired by Starwood Hotels under Sternlicht's leadership for $86 million in 2003 from Shinwa Golf Group, a company in Japan that was forced to sell assets to clear up bad loans in part stemming from $1 billion invested in Hawai'i hotels and golf courses during the 1980s and 1990s.

Starwood Hotels initially planned to convert the property into a W hotel, one of the company's brands.

But Sternlicht's Starwood Capital and Kobayashi Group later acquired control of the property, and shifted plans to developing a condotel where hotel units are sold individually to investors.

Under the model, condotel unit sales help pay for development costs, and the developer often retains a share of unit rental revenues if owners rent out their units through the on-site management company.

In August 2007, Starwood Capital announced that an exclusive gala launch party for the project attracted $300 million in sales, or 85 units at an average price of $3.5 million.

At the time, only 144 of the 193 units had been released for sale in an initial sales phase, and the developer said the results exceeded its expectation.