Kaluakoi Resort finds buyer

By Andrew Gomes
Advertiser Staff Writer

After several failed sale efforts, the owner of the closed Kaluakoi Resort has struck a deal to sell the 4,000-acre Moloka'i property to nearby landowner Molokai Ranch Ltd.

The Kaluakoi Resort's hotel and golf club have fallen into disrepair since owner Kukui (Molokai) Inc. shut down the operation in January. Brierley Investments Ltd., as the buyer, plans to look for investors to help revitalize the resort. Advertiser library photo • April 2001

The purchase contract is expected to close Dec. 12. There are, however, no immediate plans to reopen the 138-room hotel or its 18-hole golf course, both of which have fallen into disrepair since Kukui ceased operations in January and laid off 99 of its 111 employees.

Scott Whiting, Molokai Ranch president, said the company is buying the Kaluakoi to bring some stability to the property, which over the past year or so had attracted a variety of prospective purchasers and redevelopment proposals — all of which fell through.

The property, marked with long-dead coconut trees, also was negatively influencing Molokai Ranch's lodge and recreational activities a few miles away.

Molokai Ranch plans to seek investors to help revitalize Kaluakoi or possibly buy parts or all of the resort. "We're completely open (to options)," Whiting said. "It's going to be quite a load to carry."

At the same time, Molokai Ranch will continue to seek investment partners to help with development of its other resort property. The company had been trying to establish a joint-venture in which it was to sell certain lodging and recreation assets to a Mainland development partner, but that deal fell through in August, Whiting said.

For Kaluakoi, Molokai Ranch's priority will be to bring water and sewer systems on the property up to standard, Whiting said. As it is, the system is in violation of state Health Department regulations.

Kukui will retain its obligation to satisfy $400,000 in outstanding state-imposed penalties. Kukui to date has paid about $230,000 of an original $644,800 settlement reached last year, but potentially faces up to nearly $120,000 in additional fines for not meeting correction deadlines.

Molokai Ranch had no estimate of how much it will cost to correct the resort's water and sewer systems, but combined with other rehabilitation needs, Whiting said it will be several million dollars.

Reopening the golf course — the only 18-hole course on the island — will be another priority that would benefit Molokai Ranch, which owns 53,000 acres on the west end of the island.

Molokai Ranch got into the tourism business in 1997, and operates three 40-unit campsites with tent-like cabins and a 22-room lodge that could be expanded to 60 rooms. The company also runs horseback riding, mountain biking, fishing and other excursions.

Brierley bought Molokai Ranch in 1988, and has a 20-year master plan to convert operations from cattle ranching to eco-tourism and residential development. In 1999, the company invested $30 million in its Moloka'i property, including construction of the $14 million lodge.

The Kaluakoi was developed as the Sheraton Molokai Hotel in 1975 by a subsidiary of the Louisiana Land & Exploration Co. The resort opened in 1977. Kukui bought the property in 1987 for $35 million, but ran into difficulties following a drop in tourism and the Asian economic crisis of the past decade.

Marsha Wienert, executive director of the Maui Visitors Bureau, said Kukui really hadn't marketed the property for years, which made it harder for Molokai Ranch and others to attract visitors to the island.

Privately owned condos in and around the resort have had particular difficulty renting units, according to Maria Holmes, executive director of the Moloka'i Visitors Association.

"The property needs help," Holmes said. "It's all going to take time. We're just waiting for the plans to unfold."

Besides the hotel and golf course, the Kaluakoi property includes some 300 home sites and about 1,600 acres of undeveloped land. Recently, the Maui County Council changed the designation of 75 acres of Kaluakoi property from hotel and multi-family use to open space as part of the Molokai Community Plan.

Maui County Mayor James "Kimo" Apana, who supports reopening the Kaluakoi, said in a statement: "The sale of Kaluakoi Resort is welcome news. I have full confidence that Molokai Ranch will be a good steward of the property."

Wienert said just the opportunity for Molokai Ranch to expand with the Kaluakoi and restore the golf course to playing condition is exciting for the west side of the island. "We look forward to some wonderful things over there," she said.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.