David Carey remembers the silence that followed one of his colleague’s questions at an annual capital budget review meeting in the early 1990s. The executives were discussing the need to renovate 11 aging hotels, all located around the Lewers St. block of Waikiki. One of them asked if they’d ever considered a master plan of the entire area.

“Dead silence,” says Carey, the president and CEO of Outrigger Enterprises Group, a Hawaii-based hospitality company with properties throughout the Asia Pacific region.

Even the idea of a complete overhaul was too daunting. Outrigger had never done anything like a master-planned mixed-use development and even more challenging were 20-year-old local ordinances created to slow—and almost halt—any new Waikiki development.

A month after the budget review, one of the properties on the block came up for sale and Outrigger started to consider the idea. It started buying parcels of land, looking into the local code and Carey hired Mel Kaneshige, executive vice president of real estate and development, to work with Waikiki on enabling serious redevelopment. The process began in 1995, amendments to the Waikiki Special District zoning ordinance were approved a year later and the master-planned project was formally announced in 2001.

Construction began in April 2005 and after more than a decade and $585 million, the Waikiki Beach Walk debuted in January 2007. The mixed-use development features hotel, entertainment, retail and soon-to-be residential components.

Of the 3,100 rooms in 11 hotels in need of rehab 15 years ago, only one—the Outrigger Reef on the Beach—remains, and really only in name. After a $110-million makeover finished early this year, the 858-room hotel now has 638 larger rooms, a striking new porte cochere and open lobby.

The other 10 hotels don’t exist anymore, although in their place are a two-tower 421-room Embassy Suites connected by a stunning rooftop pool, a 195-unit Wyndham Vacation Ownership Resort, a 462-unit Trump Hotel set to open this fall and an in-progress 127-room luxury boutique hotel, the only real casualty of the recent economic downturn. There are also 50 tenants covering some 90,000 square feet of retail and restaurant space and plenty of landscaped open areas at ground level for pedestrians and local entertainment, a key piece to the puzzle.

“Part of the design criteria was to bring the locals back in,” Carey explains. It gave the city what it wanted, but it has also won over the community and tapped into a market that had been forgotten. “It was like bringing back the old image of Waikiki,” he adds. A deep lawn in front of the two-story open-air retail walkway hosts weekly concerts with local performers that’s drawn crowds of Hawaiians and tourists, a boon to both the shopping and restaurant businesses.

Carey calls it “resort-impulse retail,” which he says is perfect for vacationers window-shopping for local, interesting and not necessarily expensive art, jewelry, clothing and makeup. It perfectly complements the high-end luxury shopping available a block away on the main strip through Waikiki and at the nearby Royal Hawaiian resort, which followed suit with a massive redevelopment in part because of the eased ordinances.

“That area has been called the Rodeo Drive of Hawaii,” says Kaneshige, adding the Beach Walk has become the dining capital of Hawaii with additions like Ruth’s Chris Steak House, Roy’s Waikiki, the Ocean House Restaurant, Yard House and many more dining venues.

Outrigger, which makes up the ownership group called ABW Lewers with local developer Richard Gushman and San Diego-based American Assets, is the leasing agent for all the retail. Outrigger also owns a piece of the Embassy Suites and operates it, quite successfully, considering it’s one of the top performing properties in the Hilton chain.

Outrigger is the sole owner of the renovated Reef and the Islander, the yet-to-be-completed boutique hotel waiting for a partner. Carey says construction has paused there, but could be completed in six months once it’s restarted.

Outrigger has no stake in the Wyndham, but it does manage the on-site operations—everything but the timeshare sales. “As the latest addition to our portfolio of more than a dozen resorts in Hawaii, Wyndham Waikiki Beach Walk has proven to be a great success for us,” says Franz Hanning, president and CEO, Wyndham Vacation Ownership. “Our owners really enjoy vacationing in Hawaii, which is why our occupancy rates remain flat in that market despite the turbulent economy.”

The Trump International Hotel is the only piece Outrigger doesn’t have a hand in. It’s scheduled to open this November and set a record in 2006 when all 462 units were pre-sold in one day for $700 million. Carey said the condo-hotel expects to have 60 to 70 percent of the units in a rental pool.

The total development will add up to almost a billion dollars when all is said and done, counting the Trump and renovations at the Reef, which both aren’t technically a part of the Waikiki Beach Walk. It’s been a trying, but tremendously rewarding experience for Carey and Outrigger.

“A lawyer friend came up to me just the other day and said what you guys did at Waikiki Beach Walk is fabulous,” Carey says. “On a personal basis, it was absolutely worth it. We changed the face of Waikiki and gave the destination hope and also encouraged others to do the same with the zoning process. The whole place has been lifted. Plus, even in a down market, from that 1992-95 portfolio, we’re invested up.”

The Waikiki Beach Walk has received more than just local recognition, including a design award from the International Council of Shopping Centers. The success has Carey and Outrigger looking for more mixed-use opportunities. They’ve recently made a bid to redevelop the International Market Place in Waikiki, where they manage five nearby hotels.

“I’d like to do it again,” says Carey. “We learned a lot. We were very successful in many places, but there were some things we could do better.”