Company to end management of hotel — not close
its doors
By BRIAN PERRY, City Editor
reprinted courtesy Maui News 9/1/09
MAKENA - With a pending foreclosure and uncertainty about continued funding for Makena Resort operations, the Maui Prince Resort gave notice to employees Monday that it would terminate its management contract and cease being the hotel and golf course operator as of Sept. 16.
Donn Takahashi, president of Prince Resorts Hawaii, emphasized Monday night that his company is ending its management of the hotel, not closing it.
"We don't know what the future will be after we leave," he said.
If the resort doesn't stay open, 380 full-time, part-time and casual staff will be out of work.
The announcement comes one week after a consortium of lenders led by Wells Fargo Bank filed a foreclosure complaint against Makena Hotel LLC, which owns the Maui Prince and the two golf courses.
Barry Sullivan, an attorney for Wells Fargo Bank, said the bank today planned to ask the 2nd Circuit Court to appoint a receiver who would arrange new management for the resort.
''We look forward to a smooth transfer with Prince Hotels,'' Sullivan said in a statement.
The foreclosure complaint filed last week accused the partnership of Maui-based developer Dowling Co. Inc. and Morgan Stanley Real Estate of defaulting on a $192.5 million loan taken out to buy the 1,800-acre resort in 2007.
The partnership bought the resort from the Seibu Group of Japan for $575 million, the largest amount ever paid for a Maui hotel and housing development. The company had plans to build up to 1,100 luxury homes, condos and apartments in the Makena region of West Maui. The 15-year project was expected to cost $800 million.
The partnership's total debt for buying the property from Seibu amounted to $411 million.
Everett Dowling, the lead investor in a group that purchased the resort, said: "I hope that the Mainland lenders will allow common sense to prevail and reconsider the action as it will certainly harm the reputation of the resort in addition to harming the dedicated employees."
Willie Kennison, Maui Division director of the International Longshore and Warehouse Union, said the news was broken to the resort's more than 300 bargaining unit employees during a meeting Monday at the hotel.
"The employees are very, very upset," Kennison said late Monday afternoon. "They're very concerned about their livelihoods, their jobs."
Kennison said he didn't know if the resort has another buyer waiting to take over, "but we're hoping."
The resort could go up for auction to any buyer, he said.
Kennison said he spent most of Monday meeting with Makena Resort employees, trying to soothe their concerns.
"We're going to take it one step at a time right now," he said.
ILWU bargaining unit employees include those in housekeeping, food and beverage and golf course workers, Kennison said.
Management of the Maui Prince Hotel pledged to honor all obligations, including severance pay and vacations, he said.
All employees will receive up to 60 days of wages and benefits in compliance with the Hawaii Dislocated Workers Act and the federal Worker Adjustment and Retraining Notification Act, Takahashi said.
Takahashi said Prince Resorts Hawaii took the action after it became evident the lenders seeking foreclosure on the resort may not be providing adequate funding to pay employees and vendors and meet other obligations.
The resort management's action is not irreversible, Takahashi said. If the resort lenders want to keep the resort open, "we will sit and listen and discuss it with them," he said. "But our first concern is to take care of our employees and our guests."
In a written statement, Takahashi said: "Maui Prince Hotel LLC has been in discussions with representatives of the lenders to secure funding for the hotel's payroll and account payables and adequate assurances of the continued funding of the hotel's future payroll and account payables that were previously the responsibility of the Makena Hotel LLC, as owner of the Maui Prince Hotel.
"Maui Prince Hotel LLC cannot continue to operate the hotel without adequate assurance that funds will be made available to pay for payroll and operating expenses for the hotel and golf course," Takahashi said. "As of our deadline, Friday, August 28, we did not receive funding from the owner or the lenders to pay for past due account payables, and as of our deadline today, August 31, we had not received a favorable indication from the owner or the lenders that they are willing to guarantee funding going forward."
Takahashi said the hotel's management understands the lenders are trying to get a receiver appointed by the court as soon as possible. That would allow the receiver to step in and continue the operations of the hotel and golf course with another operator, he said.
"We plan to work closely with the receiver during this transition process," he said. "This is a heartbreaking scenario. The Maui Prince Hotel is a well-run operation with a great heritage, excellent potential and wonderful employees that has fallen prey to the economic downturn. The majority of these employees have worked at the resort over five years, with many going back to the opening of the hotel in 1986."
The state Department of Labor and Industrial Relations said it was dispatching officials to help affected employees sign up for unemployment and medical benefits. The state will also be offering career planning and skills training to the newly unemployed.
* Brian Perry can be reached at citydesk@mauinews.com. The Associated Press contributed to this report.
reprinted courtesy Maui News 9/1/09, original link www mauinews.com/page/content.detail/id/523055.html?nav=10
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