The shoreline in the area is eroding one-to-two feet per year, allowing water to rush into seawalls and a hotel restaurant bar during south shore swells and peak high tide.
The state Department of Land and Natural Resources is covering more than half the cost. The Hawaii Tourism Authority and Kyo-ya Hotels and Resorts, the owner of the Moana Surfrider and other Waikiki hotels, are each contributing $500,000.
William Aila, the department's director, said after the blessing the state will aim to minimize the impact the project has on beachgoers. He predicted the finished product will be more enjoyable for everyone.
"It will just be a nicer experience for the tourists and the residents here," he said.
For the blessing, Kahu Kordell Kekoa of Kamehameha Schools led Aila and other officials gathered for the ceremony past sunbathers and people building sand sculptures.
The officials symbolically began the effort by forming an assembly line to pass sand from the water to the beach.
The actual work won't begin until at least Jan. 23.
Then, a contractor will pump sand from two spots offshore to the beach where it will dry in the sun before it's placed along the shoreline. A one-third mile stretch of the beach -- from the Kuhio Beach swim basin near the Duke Kahanamoku statue to the Royal Hawaiian groin -- will be replenished.
Today, the shoreline along much of this area is narrow and jammed with people lying on towels and beach mats. A pile sandbags sits next to oceanfront bar at the Moana Surfrider to prevent further erosion.
Kevin Fields, a visitor from Ontario, Canada, said the project should make the beach more attractive.
"It would be a shame for the rest of it to erode and not be here," he said while enjoying the sun with his wife. "You can see how populated the beach here is -- the more room the better."
The state used a similar method to replenish the sand at Kuhio Beach -- a stretch of Waikiki next to the current target area -- in 2006. That effort pumped only 10,000 cubic yards of sand, or less than half of the current proposal.
Waikiki naturally has a narrow beach, and people have been adding sand to the shoreline to make it wider for decades.
The earliest beach replenishment projects are believed to date to the 1920s. The first well-documented case was in 1939.
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