HEALTH, HEALING TO BE MARKETING FOCUS, NEW HOTEL OWNER TELLS HANA COMMUNITY

By HARRY EAGAR
Maui News Staff Writer

July 9, 1999
HANA -- Mark Ward, one of two general partners in the new ownership of Hotel Hana-Maui and Hana Ranch, told the community Tuesday night that the business strategy of former hotel owner Rosewood "never got a chance."

Though details are yet to be worked out, Ward and general partner Keith Dixon are planning to try it for real.

Ward lived in Hana for a year and a half overseeing the construction of the Sea Ranch Cottages, when Rosewood, a Texas company, doubled the size of Hotel Hana-Maui. Ward said one problem was that, ever since, the hotel has been either under construction or underfunded.

The cottages were intended to attract, among others, top-level, small groups -- "boards of directors of Fortune 500 companies," for example.

But there was never money to market the concept, he told some 70 people at Helene Hall.

Questions from the audience concerned liquor licenses, golf courses, development and foreign interests.

Ward emphasized that no decisions have been made, because he and Dixon did not gain access to financial and business records until mid-June.

So he could not rule out a golf course, but he was applauded when he said, "My personal opinion is, I don't see how that works in this environment."

What will work, he is confident, is a spa-wellness center. "Not just an exercise room," said Ward. "Hana is a healing place.''

That line got applause, too.

Preliminary surveys suggest the hotel physical plant will need $5 million to $10 million in repairs and renovations, Ward said.

Management is wide open. He said the partners will ask for proposals of operators of high-end hostelries and consider awarding a management contract, forming a joint venture or even selling the hotel property.

Ward himself has a company that manages the 59-room Inn of the Anasazi in Santa Fe, N.M., but he said his organization is too small to take over Hotel Hana-Maui by itself.

Inn of the Anasazi (named for the "ancient ones" of the Indian tribes in the Southwest) emphasizes the culture of the local area, and Ward said he expects a similar mission statement for Hana.

As for making money off very small hotels, he said before the meeting, "It's very difficult."

Particularly under 75 rooms. But with the business outreach to high-end customers, it is also difficult to maintain the level of attention desired with more than 100 rooms.

Hotel Hana-Maui has just under 100 rooms.

The only way, Ward said, is to charge very high room rates. But the hotel's problem has been less prices than length of stay -- typically under three nights.

Therefore, said Ward, some amenities will have to be added, like the spa, and there must be a first-class dining room, to keep guests longer.

He said Hana Ranch will continue to be operated as is. Asked about plans for the land, he said, "There are no plans whatsoever."

He described the land (about 5,000 acres) as the most valuable part of the purchase, though not perhaps in an economic sense. He said owning the land is "like owning a Picasso."

The buyers believe the real economic potential is in the hotel.

He also said, in an interview, that the hotel does not have the potential for the kind of return on investment that bigger hotels have.

And he said his financial backers "took it on faith" that this is "one of the most valuable properties in the world."

He had lobbied Dixon for years about the potential of the Hana properties if Keola Hana Maui Inc., which took over from Rosewood, ever had to disgorge. The money-losing company held out until its major lender, Long-Term Credit Bank of Japan, was forced by the Japanese government to clean up its balance sheet of nonperforming loans.

When the opportunity arose, Ward was able to raise the purchase money from a group he describes as "semi-retired'' Chicagoans with backgrounds as securities traders.

These investors, whom he declined to name, make passive investments in real estate and other businesses, he said, but Ward and Dixon will be the decision-makers.

The Chicago millionaires, operating through Fox River limited partnership, used Meridian Financial Resources LLC to buy the hotel.

It bought the mortgages, then negotiated a deal with Keola that Ward said resembled a quitclaim deed.

By that arrangement, Keola remains responsible for all outstanding debts, except county taxes (paid current by Meridian last week) and union-related obligations.

Meridian took ownership of the hotel, the ranch, the waterworks and the commercial properties.

Ward thanked County Council Member J. Kalani English, who arranged the community meeting, for helping get the hotel a temporary liquor license.

A long-drawn application for liquor licenses helped stall a previous purchase attempt by the Chanshrichawla family of Thailand.

The temporary licenses last through October, when the new owners will have to go through the detailed process of permanent licensing, including hearings.

Ward told the audience he would "be doing a lot of listening" over the next 90 days.

In answer to another question, he said no foreign investors are involved with Meridian. That also was an applause line.

Attendance at this meeting was comparatively small, because employees had had a private meeting with Ward earlier, and many were too busy helping bring a state Little League baseball tournament to town to take time out to hear Ward again.