Turnaround in Hana

The Hotel Hana Maui woos back visitors and locals

December, 2003

When Doug Chang first reported to his new job as the general manager of the Hotel Hana Maui in November 2001, his initial impression was “how sad.” The former president of the Native Hawaiian Hospitality Association had left a general manager post at the Kauai Marriot in Nawiliwili to head the fabled hideway on the remote northeastern corner of Maui. He found two decades of neglect, resulting in pervasive wood rot, chipped tiles, buckled rain gutters and tired room furnishings. Even though the hotel offered the only fine cuisine in Hana, the empty dining room echoed. “Spiritually you could just feel that it wasn’t what it used to be,” recalls Chang.

Chang’s arrival was part of a turnaround effort by Passport Resorts. A Bay Area company headed by lawyers-turned-hoteliers Peter Heinemann and Michael Freed, Passport purchased the Hotel Hana Maui as well as the Hana Shopping Center and the Hana Gas Station in August 2001 for an undisclosed sum. Closely held Passport already owned and operated two posh boutique resorts, the Post Ranch Inn along California’s Big Sur Coast and the Jean Michel Cousteau Fiji Islands Resort in Fiji .

Heinemann and Freed had reputations as savvy operators able to please super high-end guests with environmentally friendly and culturally sensitive properties. Their resorts regularly topped “Best of” polls in top publications such as Travel & Leisure. Long-time visitors to Hana, Heinemann and Freed felt the property fit their motif of sumptuous digs in unmatched settings. “The spirit of the people up there is magical. And we have always thought it is one of the most beautiful places on Earth,” says Heinemann.

The arrival of Passport sparked hope, but also suspicion. With more than 200 jobs, the hotel is by far the largest employer in Hana and a bulwark of the community. That bulwark had rotted. At its nadir in the mid-to-late 1990s, occupancy ran in the low double digits. The property bled cash. Although Meridian Financial Resources, which owned the hotel from 1999 through the Passport purchase, had put about $3 million into renovations and managed to push occupancy back up to 50 percent, Heinemann and Freed faced daunting challenges. In the summer of 2001, dengue fever raged in Hana. Rockslides threatened to close the Hana Highway – the only significant land passage to the resort – for months. The federal government announced cuts in airport subsidies for Hana. A closure would have proven particularly damaging to Passport, which needs air access to please its high-end clientele.

The duo decided to push on. Their decision now looks wise. Dengue disappeared. Hana Highway closures have been intermittent at worst and the airport remains open. Chang now walks the property with obvious pride. Passport has sunk $8 million into repairs, including new electrical systems and a complete renovation of public spaces. Kula designer Hunton Conrad gave the ocean-view Sea Ranch Cottages a dose of Hawaiian-themed tropical chic. Heinemann and Chang recruited Larry Quirit, a former chef at the Post Ranch, who was working at the Grand Wailea Resort, to turn around the kitchen with new menus.

When Chang first arrived, hotel guests comprised 100 percent of the diners at the pricey main dining room, which rarely ran 50 percent full. Now, just 40 percent of diners are hotel guests, even though the number of plates served on an average evening has soared. Chang believes the higher percentage of nonguests indicates affluent part-time Hana residents have taken a liking to the new chef’s creations, a good omen for cash flows.

All of this plus blanket coverage of the rejuvenated hotel in big travel publications has boosted average occupancy above 60 percent, with 90 percent nights common on weekends. Room revenues alone will total between $10 million and $20 million in 2003. Heinemann says the hotel only needs to run in the mid-60-percent range to stay in the black, due to the $450 per night average room rate. A 9,000-square-foot spa, due to open in December 2003, should help profitability.

Chang says Passport is winning over local trust. J. Kalani English, the Hawaii state senator who represents the Hana district, says, “There is a good ethic behind what they are trying to do. They are committed to the long-term here.” More importantly, some of the guests who had fled the decay have started to come back. Says Chang, “Those guests are saying how wonderful it is, and they talk about the spirit, the intangible that is back in Hana.”

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Alex Salkever