By HARRY EAGAR
Staff Writer - Maui News
October 25, 2000
WAILUKU — Amfac has sold its North Beach time-share project to SVO Pacific Inc., the time-share arm of the giant
Starwood hotel chain, for $19.5 million.
Amfac/JMB Realty President Gary Grottke told the Maui Planning Commission Tuesday about the sale in requesting
a transfer of a special management area permit to Starwood.
Amfac Property Investment Corp. “wanted to develop” the Kaanapali Ocean Resort, Grottke said, but “unfortunately,
market realities set in. We were unable to secure financing.”
Raymond “Rip” Gellein, chairman of Starwood Vacation Ownership Inc. (SVO Pacific), said SVO would generally follow
Amfac’s plans for the 280-unit resort and will begin construction about Dec. 1.
He said Starwood, with annual cash flow of $700 million to $800 million, can easily finance the resort out of current
earnings.
He and Grottke both promised a “first-class” project, “marketed and sold in a first-class manner.”
That means no sales on Front Street. Nor, said Gellein, will Starwood use discounted activities such as luau to
lure potential buyers.
Starwood, operator of 770 hotels around the world, owns the Westin and Sheraton chains, which gives it two properties
within Kaanapali: the 761-room Westin Maui and the freshly renovated 510-room Sheraton Maui.
For the Kaanapali Ocean Resort, Gellein said Starwood’s target market will be people already vacationing at Starwood
resorts. Sales offices will be in the hotels, and the incentives offered to potential buyers will be vacation amenity
packages and discounts at Starwood properties.
(Through its Westin subsidiary, Starwood also markets a large number of Hawaii resorts, including the Westin Maui
Prince.)
SVO was an independent business, Vistana, until it was bought by Starwood last year.
It does not manage any time shares in Hawaii now but has operations in top resort locations, such as Scottsdale,
Ariz., and St. John, Virgin Islands.
Gellein said his company admired the overall design that Amfac worked out for the Kaanapali Ocean Resort and would
make only minor changes to conform to SVO’s overall corporate standards.
That probably will include elimination of the spa, since SVO can co-market with existing spas at The Westin Maui
and Sheraton Maui.
Amfac had to ask planning commission approval to transfer the special management area use permit it obtained in
1998. A condition restricting a permit transfer was imposed in a settlement of a contested case filed by a group
of west-side residents.
One of the intervenors, Buck Buchanan, told the commission the change is “a good proposal.”
“The greatest thing, to me, is that promotion and sales of the vacation units will occur as described,” he said,
that is, without hawking on Front Street.
Amfac is on schedule on meeting other conditions of the permit, including a “vision” statement for use of its extensive
Lahaina-Honokowai properties.
A citizens group that worked with Amfac is scheduled to report its “Kaanapali 2020” results at the Nov. 14 meeting
of the Maui Planning Commission.
Gellein said the new resort will be built in three phases, and the inventory of time-share units could be sold
in about five years.
There will be 280 units, although the use of “lock-out” rooms means that unrelated vacationers can share one unit.
Some critics protested that it will allow a higher density than a simple 280-unit hotel.
Density within the 96-acre area was an obstacle to development for years, with West Maui residents objecting to
increasing traffic congestion. There had been a condition barring development of the North Beach area until a bypass
highway was constructed around Kaanapali.
At the time, Amfac had plans for developments to accommodate more than 3,000 visitor units at North Beach.
Some Mauians lobbied the county and federal government to purchase North Beach to preserve it from development.
But the value of the beach was guessed at anywhere from $60 million to $90 million. No government offered to pay
that kind of money.
The $19.5 million sale price for the Kaanapali Ocean Resort indicates the guesses were realistic, though the price
includes the value of the design and planning done by Amfac.
Amfac remains obligated for various conditions related to the rest of North Beach, including provisions for public
access and drainage systems to protect the shoreline from runoff.
But the company is under financial pressure. It stopped production of sugar at Pioneer Mill last year, citing continuing
losses. This year it announced it was getting out of sugar entirely by closing its plantations on Kauai. It has
put up vast tracts of land for sale on Kauai, saying it will focus on development of its Maui properties.
But Amfac also has sold off hundreds of acres at Olowalu and Launiupoko, on the south end of the former Pioneer
Mill plantation.
Grottke said the company is paying its bills and he is confident that SVO will develop the time share “the way
we represented it to the community.”
The commission voted unanimously to approve transfer of the permits, which will take place when the real estate
conveyance is final.
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