Pat Fitzgerald
If you are heading toward the Four Seasons and take the right hand turn before the driveway to the Spa and Trading Company you will drive up to Building “L”. This is the administration building for Hualalai Resort. This is where Patrick Fitzgerald has his office. As practically everyone knows, Pat is the CEO of Hualalai Resort. He was hired to run Hualalai in 2005 by Kajima, the Japanese Company that built the resort, yet it was a very short time after he arrived that Kajima sold Hualalai to MSD Capital and the Rockpoint Group.
Over the last eight years Pat has dealt with the sale of the resort, the expansion of the resort, the purchase of Kona Village, the remodeling of the Spa, the closing of Kona Village for an upgrade, the Great Recession, the reopening of Kona Village, the Tsunami (and the restoration of the Hualalai Resort immediately thereafter) and the ongoing nightmare of trying to resurrect Kona Village. Needless to say, Pat’s been pretty busy and I was pleased that he took time out so I could interview him for the blog.
What follows are Pat’s responses to my questions.
Hualalai property before any construction
First, Pat, can you give us a short history of the development of Hualalai?
Cosmo World, the Japanese Company that purchased Pebble Beach several years ago, began the process of developing Hualalai in the late eighties. Originally there were to be two multi-story hotels with a design very much like the Four Seasons on Maui. One hotel would sit where the current hotel lobby sits and the second hotel was to in the area of the 17th hole of the Hualalai golf course. Construction began on one of these high-rise hotels and Cosmo World began planning for about 1,000 residential units on the 500+acre property. (Hualalai Resort was later expanded to 865 acres around 2000.)
Around 1991 Cosmo World had some financial problems and and another construction/development company was directed by the lenders to assume the lead role in the development of the Hualalai project. That entity was Kajima. Kajima engaged the Athens Group to lead the development effort and the first thing they did with Kajima was redesign the project. The new vision for Hualalai was that no building would be higher than 2 stories and the focus would be ocean views and landscaping. Success would be determined by two things: golf and residential property sales. Four Seasons committed to running the 243-room hotel, the new plan for which spread the buildings out over much of the waterfront, implementing Kajima and the development team’s desire for each room to have a view of the water and the lush landscaping, resulting in the decision to put the rooms in semicircles or crescents. This plan also substantially reduced the number of rooms originally envisioned for the two multi-story hotels.
One item that was in the plans was to have four lagoons opened up off the beach and on a Friday in 1996 equipment began breaking up the reef in front of the Seashell Pool and was ready to move down the coastline. However there was local outcry and by the next Monday there was a court order to stop the opening up of shoreline. Thus, only the one lagoon remains in front of the Seashell Pool that offers easy access to ocean swimming.
Installing the iconic Wiliwili tree
On September 23, 1996, the Four Seasons – Hualalai and Hualalai Resort officially opened and Hualalai Resort was operated by Kajima. At that time golf was a major sport in resort communities in the U.S. and Japan and Kajima, like other Japanese entrepreneurs, was focused on creating great golf clubs and communities. Hualalai grew slowly at first. It took a few years until the Four Seasons at Hualalai got noticed as one of the top hotels in Hawaii. At that time Maui was taking all of the honors and publicity. But our Four Seasons hotel’s reputation grew and more and more people started purchasing property at the resort.
In 2005 Pat Fitzgerald was hired by Kajima to be the CEO of the resort. Then in 2006 Kajima sold Hualalai Resort to MSD Capital and the Rockpoint Group. MSD Capital manages the capital of Michael Dell and his family and Rockpoint is a Real Estate Opportunity Fund. The ownership by these two entities is basically split 50/50.
In September 2006, the same group also purchased 7,500 acres of land around Nanea Golf Club. That property stretches from the Queen Kaahumanu Highway to the Mamalahoa Highway. Though it’s the same investors the entity of ownership is different than Hualalai. At one point before the recession there was talk of developing this property for a mountainside lodge, equestrian center, five acre horse parcels as well as specially priced residential units for staff, etc. However, since the recession all those plans and discussions have been put on hold.
In March of 2007 Kona Village was purchased by the same investment group under the entity of Kona Village Investors. Again plans were developed to fully renovate the resort with a construction loan in place, however when the recession hit the following year, those plans, too, were put on hold.
As we all know Kona Village continued functioning until the 2011 Tsunami hit. The property, which is leasehold, has about 34 years remaining on the lease from Kamehameha Schools/Bishop Estate, and is currently going into receivership. The restoration of Kona Village has been complicated: six insurance companies are involved and the resort was not only old, but it was quickly discovered that the infrastructure had been jury-rigged from the very beginning and needed substantial upgrades simply to bring it up to Code compliance. For example, fire trucks couldn’t reach many of the hales, and the resort was still off the grid being powered by old, diesel-powered generators. Add to that the issues of leasehold land that needed to be renegotiated as well as Hawaiian requirements for shoreline management, burial grounds, cultural protections, etc. and it has been a difficult process for everyone.
While many challenges exist, Pat is still hopeful that all will work out at Kona Village. Those of us who are residents of Hualalai were allowed to use Kona Village’s assets for five years and enjoyed the relationship that was established between the two resorts. We will keep our fingers crossed that there will eventually be a positive outcome.
My next question was a bit simpler: Where do we currently stand with the residential build-out of the resort?
Hualalai is currently about 60% built out. There are an estimated 300 residential units already built with a little over two hundred more to be sold and built. Considering that it has taken 17 years to build out to 300 units Pat estimates that it will be another 10 to 15 years until the resort is fully built out.
I asked Pat when we might see our facilities return to being opened all the time. His response was they will continue watching utilization of all the facilities. As more members join and more members utilize the facilities they will likely keep them open longer. There will always be very slow times, when it makes good business sense to close one of the facilities when hardly anyone is using it. Furthermore, Pat added, the club operations is still being subsidized by MSD Capital and Rockpoint Group. When asked when he thought the club operations would be supported solely by members’ fees he estimated that it would be when there are about 400 members in the Club.
What, I then asked, is the status of the relationship between Hualalai Resort and the Four Seasons? The Four Seasons has a long term management agreement that will last for anpther 45 years or so. The relationship between the Four Seasons and Hualalai Resort is very close. Not only did many homeowners first stay at the hotel, but many of our owners still utilize the Four Seasons facilities. Both the Resort and the Hotel recently reconceived Ulu, The Beach Tree and The Grill. In fact both entities are working together to solve some back-of-the-house redundancies. For example, linen purchases/services have joined up to reduce costs, which has also occurred with some food purchasing. In the future we may see more cooperative ventures between the two entities; such things as the Human Resources Departments may be combined, as well as some unified training and supervision of staff. The full nature of that relationship is being explored by Hualalai Resorts and Four Seasons and is being done slowly with safeguards to protect the club’s unique needs.
Any imminent construction on the horizon? The only thing planned for 2014 is the remodeling of the comfort stations on the golf courses to bring them up to the standard set by other high-end golf clubs.
I asked Pat what would his personal list for changes at Hualalai would be if he could wave a magic wand. (After a hesitation as if he were afraid to say it out loud, followed by a smile): I’d really like to have a 3-sided pool at the Canoe Club, better access into the water by the Canoe Club, more ocean front pools which is impossible given the footprint of the hotel and a Commercial Center off the highway.
I also checked on a couple of rumors I’ve heard:
Is Hualalai for Sale? No.
Are homes going to be built around Nanea? No, we don’t have any plans for any development at this time on the land we own across the Queen K Highway.
That was pretty much the end of the formal Q&A, but it wasn’t the end of the conversation. Pat is excited that the greater Hawai’i Island Community is supporting the Palamanui Community College (partnered with the University of Hawaii and supported by the Hunt Companies and Charles R. Schwab). This new educational institution in Kona will benefit everyone on the coast, at last allowing young people to get an education right near home and offering all of us the opportunity to take courses and enjoy the intellectual stimulation of higher education without having to drive all the way to Hilo. It will definitely be an asset.
Pat also said that there is a good chance that the Kona airport will become an international airport with arrivals and departures from other countries than the U.S. Mainland, opening up the island to more accessible tourism.
He also sited another proposal that he hopes will come to fruition for the community at large: namely, that Queens Hospital in Honolulu will enter into a working agreement with The North Hawaii Community Hospital. A number of us utilize this facility and it is very difficult for small hospitals to survive anymore without being closely affiliated with a major hospital.
On the negative side, Pat sees that as tourism and the economy pick up it will again be difficult to find local qualified people to employ. This may have a slight impact as time moves on.
We ended the interview because he was soon heading off to NYC for more meetings about Kona Village. I appreciated him taking the time and I’ll follow up later next year with another interview.
Mike Sack
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