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The Honolulu Advertiser
Posted on: Saturday, February 27, 2010

Many consider bid for Big Isle hotel

By Colin M. Stewart
Hawaii Tribune-Herald

As the bid deadline nears, a number of companies and individuals have shown interest in taking over the Volcano House.

Among the interested parties are big companies like Hawai'i-based hotel chain Aqua Hotels & Resorts and Connecticut-based hospitality company Centerplate, as well as smaller, homegrown groups like The Volcano Project, a nonprofit organization that wants to operate a hotel, culinary institute and job training help center with a focus on at-risk youth.

March 16 is the cutoff for parties to submit their proposals to the National Park Service on running the food and lodging for the facility, which lies along the edge of Kīlauea Caldera in Hawai'i Volcanoes National Park. The park service will award a 10-year contract to the successful bidder.

A list obtained through a federal Open Records Law information request reveals that a total of 28 people representing up to 14 interested concessioners and architectural firms attended a tour of the Volcano House in mid-January.

The successful bidder will have to undertake a series of renovations at the property once the National Park Service has completed nearly $3 million in seismic retrofitting and fire suppression upgrades. Big Island restaurateur and hotel manager Mark Kissner said that his company, Kiawe Kitchen LLC, is currently considering making a bid on the property, but several concerns may prevent him from seeking the contract.

"Frankly, it's a mess out there," he said. "It needs an enormous amount of work, money and time.

"But we know what we'd like to do with it."


The Volcano House shut down at the beginning of January for its renovations, and the National Park Service anticipates turning the property over to the new concessioner on July 1. The concessioner is expected to complete its own round of renovations in six months and be open for business on Jan. 1, 2011.

"That's a little optimistic," Kissner said. "It would certainly be worth taking a little longer with it. I would say we should be given nine months, absolute minimum. That's my basic assessment."

Kissner said he couldn't go into detail concerning his company's plans on making a bid, or what they planned to do at the site, but he did say he and his partners were "crunching the numbers."

Kailua, Kona, entrepreneur David Warganich, of Orchid Gem Villas LTD, said he, too, was tentative about pursuing the concession.

"We're still deciding whether to move forward with the bid," he said. "The property obviously needs a lot of work. With an investment like that, and not being able to start our own renovations ... it's just a small amount of time to turn around on the investment. I don't think that's realistic."

Warganich said that he had been contemplating seeking the concession for about five years, but once the National Park Service released the terms of the new contract, he had reason for concern.

"We've been doing a lot more thinking once we learned that the concession fees are a lot higher than they have been," he said.

The recently expired contract with Ken Fujiyama, who ran the hotel for the past 26 years, required a minimum of 5.5 percent in franchise fees. The new contract is for 12.5 percent.


Aqua Hotels & Resorts Vice President of Development Bill Henderson said Tuesday that his company is "working on another operation that might incorporate (Volcano House), but at this point, we're not ready to go public with that."

According to its Web site, Aqua operates a total of 14 "hip boutique and budget hotels" on Oahu, as well as three resorts, on Kaua'i, Maui and Moloka'i.

Another interested party, Centerplate, bills itself as "one of the largest hospitality companies in the world, with more than 140 North American sports, entertainment and convention venues."

According to Centerplate's Web site, "We are the largest food service provider for the NFL, a major provider to professional baseball, and we partner with five of the top 10 most active convention centers.

"No stranger to marquee events, we've hosted countless landmark occasions, including 11 Super Bowls, 19 World Series, 15 official U.S. Presidential Inaugural Balls, more than 100 major College Bowl Games and the largest plated dinner in history at the Alpha Kappa Alpha Centennial Celebration."

Calls to Centerplate seeking comment were not returned.

Also hoping to take the reins at Volcano House is the nonprofit The Volcano Project, headed up by co-founders and husband-and-wife team David Howard Donald and Anne Lee. According to Donald, a nonprofit concessioner makes perfect sense in the context of a national park, which is owned by the public.

"I can't get into a lot of details," Donald said, "since it's a competitive bid, and we're going up against some top concession management corporations which run parks across the United States."

However, he did say The Volcano Project had been the only interested party that had openly broadcast its intention to make a bid on the Internet and elsewhere.

"These concessions are monopoly concessions, and right from the start, we felt there was something incongruous about that arrangement," he said.

By offering a working hotel, restaurant and culinary institute, Volcano House has the opportunity to not only provide a destination for tourists, but a valuable training ground for local students, he said.

Donald offered as an example the Culinary Institute of America, which operates a nonprofit restaurant in Hyde Park, N.Y.

"We thought this would be an interesting concept for Hawai'i, to keep money in Hawai'i and have Hawai'i residents benefit from that," he said.