Keauhou Beach Hotel to Close – Workers to be Laid Off

Kamehameha Schools (KS) announced today that it has directed its for-profit subsidiary, KBH, Inc., to give Outrigger Hotels’ management formal notice that it will close the Keauhou Beach Hotel at the end of October.

“This hotel has been a place of rest and play for so many people in its past 40 years — myself included,” said Kamehameha Schools CEO Dee Jay Mailer. “It has employed wonderful people who have served its customers and this community well; however, times have changed. Despite the good work of many committed and talented people, financial losses at the hotel over the last six years have been substantial. To return the Keauhou Beach to possibly compete in the Kailua-Kona hotel market would take tens of millions in further investment that would be very difficult to recover.”

Mailer noted that KBH, KS and various independent consultants had, over the last 18 months, studied a number of options as alternatives to closing the hotel, but the analyses came to the same conclusion: selling, renovating or re-purposing the hotel would create an unacceptable financial risk for Kamehameha Schools and its educational mission. In addition, none of the alternatives could be justified within KS’ emerging vision of Kahalu‘u ma kai as a center for culture and place-based learning.

“Kamehameha Schools’ intention has, for many years, been to re-establish Hawaiian culture and learning as the major attributes of our lands at Kahalu‘u and Keauhou ma kai,” Mailer said. “We have been working closely with Outrigger’s management team to integrate the Keauhou Beach Hotel’s activities with our cultural vision while attempting to bring the hotel back to profitability. Unfortunately, profitability has not been easy.”

Outrigger Hotel management and ILWU leaders have been informed of this decision, and earlier today CEO Mailer and KBH President and CEO Kyle Chock, along with Outrigger management representatives, met with the majority of the hotel employees to let them know of this difficult decision in person.

Transition Plans for People and Property

The operations of the Keauhou Beach Hotel will be wound down in compliance with all applicable laws and regulations. The hotel will honor all reservations currently booked up to October 31, 2012. For bookings already in place for beyond that date, the hotel will be in contact with those groups and individuals to assist them in finding other accommodations and function space.

“This decision has been very difficult because of its impact on the people here,” said KBH’s Kyle Chock. “Many of these employees have given years of dedicated service to the Keauhou Beach Hotel, and we owe them our sincerest thanks and appreciation. We, along with Outrigger management and the ILWU, will do all we can to assist those affected by the closure.”

Representatives from Kamehameha Schools, Outrigger and the ILWU are scheduling meetings to discuss ways to help ease the transition for hotel employees. Details will be shared with hotel employees through Outrigger management and ILWU representatives in the coming days.

Once the hotel closes, the property will be turned over to Kamehameha Schools for ultimate disposition. Planning is underway to demolish the hotel structure itself in order to create the opportunity for Kamehameha Schools to re-claim and restore a portion of the cultural landscape in Kahalu’u ma kai that has been covered or impacted by the hotel and its surrounding structures for decades. Examples of such restoration work are already visible at Hapaiali‘i, Ke’eku and Mākole’a heiau, and when the hotel structures are removed, additional cultural restoration can begin.

Future Uses

The decision to close and demolish the hotel marks a pivotal point in Kamehameha Schools’ stewardship of these lands that were planned and developed for resort uses in the 1960s.

“Over the past 10 years, Kamehameha Schools’ connection to and recognition of the deep cultural and historical significance of its lands at Kahalu‘u ma kai has grown stronger,” said Greg Chun, Ph.D., Vice President of KS’ Keauhou-Kahalu‘u Education Group. “This complex was a leadership, intellectual and spiritual center for the region and, ultimately, the pae ‘aina, so the first phase of bringing new uses to the hotel site includes re-establishing the cultural footprint of the complex with the extension and completion of our restoration projects including Ke‘eku heiau, Kapuanoni heiau and Po‘o Hawai‘i.”

Chun also said modest facilities will be needed within the complex to support outdoor learning programs, including traditional ceremonial and teaching hālau, interpretive paths and observation areas, and a multi-purpose facility to accommodate group functions and overnight camping for learners participating in programs offered there. The architectural theme will be traditional with building methods consistent with the nature of the complex (e.g., Uhau Humu Pohaku or dry stack masonry). Improvements to the open space areas will be made that can support cultural and community functions and uses, including out-plantings of native landscaping that would be typical of such a complex and that functionally support the cultural practices that would have been occurring there.

“Our plans are still conceptual, though the vision emerging for this area has roots in the history and mo‘olelo of this place and its people, which has been passed on to us through years of work and conversation with many in this community,” Chun said. “We will be continuing that conversation with our community and educational partners in the next six months to discuss our plans and refine our vision for the future of this property.”

“We envision creating a place for teaching and learning of applied Hawaiian knowledge,” CEO Mailer adds. “A place where a broad range of culture and ‘āina-based learning experiences that recognize and respect the legacy of this place and our kupuna, integrates contemporary knowledge and technologies, and that align with Kamehameha Schools’ mission and values will be developed, practiced and refined. This requires us to rely heavily on the ‘ike and mana‘o of our community here on Moku o Keawe. These are the early stages of planning for what will take shape on our property at Kahalu‘u ma kai and that will, ultimately, benefit learners across the island, our state and beyond.”

Q & A:

  1. What happened? Why are you closing the hotel?
    Keauhou Beach Hotel is being closed as a result of several factors:

    1. Financial losses have been significant over the past six years;
    2. The cost of renovating or re-purposing the hotel would be prohibitive — tens of millions of dollars would be required and there would be a very low probability of recovering that investment, and
    3. Kamehameha Schools’ overall vision for these properties has shifted away from resort operations and toward a culture and ‘āina based-learning center that will connect to the rich culture and history of our people and the land, not just for visitors from other places, but also for learners of all ages who live in Hawai’i.
  2. What is your timeframe for closing the hotel?
    KBH, Inc. expects to close the hotel on October 31, 2012. At which point the property will be turned over to Kamehameha Schools for future cultural and educational programming at the site.
  3. Was consideration given to selling the hotel versus closing it?
    Yes, we considered several options, including selling the hotel or even turning the property into a time-share operation. Our analysis and that of independent consultants came to the same conclusion: continued operation of the hotel was not economically feasible. And since the thinking at Kamehameha Schools was already evolving toward creating a center for Hawaiian cultural learning in this place, it made good sense to shift entirely in the direction of restoring the cultural footprint at this site for future educational programming.
  4. What will happen to the people working there?
    Representatives from Kamehameha Schools will be meeting with Outrigger and ILWU representatives to discuss possible ways to help ease the transition for Keauhou Beach Hotel employees. Hotel employees will be able to get more details and updates from their Outrigger Human Resources associates and ILWU representatives in the coming days.
  5. How many people will lose their jobs when the hotel is shut?
    The Keauhou Beach Hotel currently employs 112 full- and part-time workers.
  6. The Keauhou Beach Hotel was known for its support of many community events every year, like the Kona Coffee Cultural Festival, Ironman Triathlon World Championship, Kamehameha III’s Birthday Celebration, Slack Key Festival, several hula demonstrations, Earth Day and others. What kind of support will Kamehameha Schools give to these kinds of events in the future?
    We recognize the important support this hotel and its staff contributed to community events in the past. We will look to support and promote community activities that respect the legacy of our kupuna in this place and have strong alignment with the values and mission of our school.
  7. What will happen to the tennis courts?
    Too soon to say for sure, but if we can work through the security and access issues, we may be able to keep the tennis courts open on a month-to-month basis while we go through the permit process to demolish the hotel.
  8. What will happen to Kalani Kai Bar?
    Security and access issues will necessitate closing the Kalani Kai Bar at the end of October. Hotel staff will work to move those groups utilizing Kalani Kai to other locations.
  9. Will the educational/cultural programs at this site be for Hawaiians only?
    No. While there may be a few exceptions, the types of learning experiences that are being considered for this site would be open for participation by the entire community.
  10. What are you doing to relocate the various groups and events that have booked into the Keauhou Beach Hotel?
    Hotel staff will be working with all groups and events that are currently booked into the hotel after October 31, 2012 to help them relocate to other Kona hotels and function areas.
  11. What will happen to the weekly Farmer’s Market?
    If we can work through the various security and access issues we may be able to keep the Farmers Market open on a month-to-month basis while we go through the permit process to demolish the hotel.
  12. What will happen to the shops and tenants at the hotel?
    We will be working with the three business tenants currently at the hotel to see how we might assist them in relocating their businesses. We haven’t had any formal conversations with them yet, so we look forward to meeting with them soon.
  13. Will there be access through the property for those wanting to utilize the shoreline?
    We are exploring options on how to accommodate those wishing to practice traditional and customary gathering rights during this transition.

4 Responses

  1. My heart breaks for the wonderful staff. I hope they all got good jobs elsewhere.

  2. Very sad…got engaged here 4 years ago. Bad decision by the management group taking the easy way out at the expense of 112 dedicated employees

  3. This February 2013, would have been our 4th year in a row at this hotel. We love it and are very sad. It is a truly special place.We have reservations for two weeks and have not been contacted by the hotel yet.

  4. Why was it built in the first place?

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