Posted on: Friday, July 16, 2004
Grand vision of resort revived
By Andrew Gomes
Advertiser Staff Writer
After years of being a lesser-known Hawai'i visitor destination, Princeville is taking a big step toward achieving its originally envisioned status as one of the state's major resorts with its pending sale to developer Jeff Stone.
The longtime local developer said he'd like to add one or two more name-brand hotels, homes, employee housing and other improvements to the Kaua'i resort over the next decade.
"We look at Princeville as a beautiful canvas that is still not painted," said Stone, who yesterday announced an agreement to buy the Hanalei-area property from three Japanese companies for a price estimated at more than $200 million.
Stone's acquisition, in partnership with Morgan Stanley Real Estate Funds, includes 9,000 acres under and around the 252-room Princeville Hotel, two championship golf courses, pro shop, tennis club, health club, spa and Princeville Shopping Center on Kaua'i's North Shore.
Princeville was envisioned for about 4,000 hotel rooms and 7,000 homes by its initial developer in the late 1960s, but was stunted over the decades by changes in ownership, the tourism industry, local economy, and a hurricane.
Stone said in an interview there are two or three sites approved for hotel development, plus several residential-zoned parcels at the resort, though he stressed that the scale and pace of development will largely be defined by the community, county government and market demand.
"Princeville is a resort community that needs to grow slowly and carefully," he said. "We feel we are the right group because we are local and we're very sensitive to the community. We're long-term players."
Stone kick-started a partially developed resort at O'ahu's Ko Olina Resort & Marina, which he acquired with partners in 1998 and has since attracted development of hundreds of homes and a time-share complex. He has deals in the works to add an aquarium, more hotels, residential homes and time-share units.
Industry observers said they expect Stone to repeat his development strategy at Ko Olina, where he arranged for other companies to buy the Ihilani hotel and undeveloped land for home and time-share developments.
Some local development professionals said Texas-based Centex Homes, which is building homes at Ko Olina, is considering a similar role at Princeville, while Starwood Hotels & Resorts could acquire the hotel it manages at Princeville.
Stone said he would like to introduce to Princeville some of the companies involved with Ko Olina, but would not confirm roles for Centex or others.
A Centex representative declined to confirm or deny any role at Princeville. A Starwood official said the company has plans to develop a time-share on a piece of property it already owns at Princeville, but beyond that nothing was certain.
Princeville development planning would likely start at the beginning of next year, following an expected closing of the sale by the end of this year.
Stone said more immediate improvements to the resort would be employee housing and fixing up the resort's shopping center.
Over the long-term, development of the resort would probably not be as extensive as originally envisioned, though there will be major expansion, Stone said.
"It needs someone to come in and establish it as a better-known resort destination by developing the property," said Kevin Aucello, director of CB Richard Ellis Hawaii Inc. hotel advisory group CBRE Hotels.
Local real estate consultant Ricky Cassiday said Kaua'i doesn't have a major resort like Wailea or Ka'anapali on Maui. Po'ipu, he said, is chopped up. But Princeville could become a major resort destination. "They will kick-start it," he said. Princeville "has a chance of living up to its potential."
Princeville was developed in the early 1970s by a subsidiary of Denver-based Consolidated Oil & Gas Co., which initially built a 27-hole golf course and sold home lots. The hotel was added more than a decade later. Another 18 holes of golf opened in 1990.
Consolidated spun off Princeville Corp. into a public company that was acquired in the late 1980s by Australian firm Qintex Ltd. In 1990, three giant Japan firms acquired Princeville Corp.
The liquor company Suntory has a 51 percent interest; the remaining 49 percent is owned by the banking company Nippon Shinpan and diversified trading company Mitsui.
Joseph Toy, president of local visitor industry consulting firm Hospitality Advisors LLC, said Princeville has been doing very well over the past several years because of demand and tight hotel inventory on the island.
But other industry analysts said the current owners were not aggressive in developing the property, which also has been challenged by other resorts with better beaches and less rainy weather.
Takashi Nishii, Princeville Corp. president, said the company made significant investments in the resort over the past 14 years, even during tough economic times.
"Selling this one-of-a-kind resort was an extremely difficult decision for us to make," he said. "But the time has come to refocus on each shareholder's core business."
The resort's roughly 600 employees are expected to be offered employment by the new owner.
"We are truly honored to take on the stewardship of Princeville, and to help take this magnificent resort into an exciting new era," Stone said.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
