By Glenn Scott
Advertiser Staff Writer
The owner of the Aston Keauhou Beach Hotel on the Kona coast is in discussions with its landlord about developing a new hotel on the adjacent, long-vacant site of the Kona Lagoon Hotel.
Kamehameha Investment Co., a subsidiary of Kamehameha Schools, has selected Southwest Value Partners, owner of the Aston hotel, from a pool of applicants and are in early stages of talks, said Rick Robinson, commercial assets manager in the trust’s Kona office.
"We’re having ongoing discussions with them," Robinson said yesterday. He cautioned that a deal could come quickly or not at all, as in many business negotiations.
If talks were to bear fruit, though, the new hotel construction would signal an encouraging change for the coastal destination south of Kailua Town, where 1970s-era hotel properties suffered from overambitious acquisitions and the collapse of the Japanese investment bubble. Azabu Building Co. owned both the Keauhou Beach and the Lagoon in the mid-1980s. Beset by financial troubles, Azabu gave up control of the Keauhou Beach property in 1998.
The Lagoon has been empty for 13 years.
The 311-room Aston Keauhou Beach, which sits on 10 acres beside Kahalu‘u Bay, went through its own $15 million renovation in 1999 under the Mainland-based Southwest Value. Since then, said general manager Mark McGuffie, the hotel has seen a gradual resurgence, with occupancy rates hitting 85 percent this month.
With that progress in mind, McGuffie said yesterday that revitalizing the Lagoon property was necessart to return more economic vitality to greater Keahou.
He said the community needs to see both the Lagoon property and the vacant Kona Surf Hotel redeveloped, adding, "I’m definitely interested to see more development in relatively short order."
The Lagoon structure is in such poor shape, he said, it needs to be demolished before a developer can come in with plans to build a new hotel. "The community wants it," he said. "It’s in everyone’s interest to see that eyesore dealt with."
In recent years, newer and richer resorts along the black-lava country of the Kohala coast have attracted the attention of tourists and travel writers. But McGuffie said the more tropical Keahou district offers its own benefits, including bays excellent for snorkeling and sites rich with history from the era of Kamehameha the Great.
The Kona Surf, once the most prominent destination along the Kona coast when it opened in the early 1970s, was shut down in June 2000 when owner Otaka Inc. of Tokyo said it was losing more than $3 million a year in operations. Otaka is involved in foreclosure proceedings on the property.
Robinson said Kamehameha officials have tried to inform the parties about "what we’d be looking for" in renovating the Surf property. He said the nonprofit trust is focused on redeveloping the properties as a means of generating revenue to operate its educational programs.
Kamehameha Schools holds leases for the three hotels as well as for Kona Village and the Four Seasons at Hualalai. It also holds a portion of the lease for the Royal Kona Resort.
Glenn Scott can be reached by phone at 525-8064 or by email at gscott@honoluluadvertiser.com.
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