Four years after Oracle co-founder Larry Ellison bought 98 percent of Lanai for a reported $300 million, the island is open for business—but what, exactly, is it selling?
by Alyssa Giacobbe | June 22, 2016 4:30 pm
The veranda of the Four Seasons Resort Lanai overlooks the obscenely picturesque Hulopoe Bay, a crescent-shaped, palm tree and bougainvillea-lined white sand marine preserve on the south side of the island of Lanai. Spinner dolphins and humpback whales splash around in the distance, and if your sunglasses are too dirty to see them clearly, one of the hotel’s well-trained staffers will be by shortly to pluck them from your nose, buffing smudges with one hand while refreshing your iced Kona coffee with the other. A few months in, the resort, which recently unveiled a lobby-to-roof renovation—a reported $75 million revamp that includes Hawaiian and Polynesian art and antiques scattered throughout the property; fully, creepily automated Toto toilets in the guest rooms; and outposts of Jimmy Choo, Nobu and Helene Henderson’s Malibu Farm—is already being hailed as “Hawaii’s, if not the world’s, best new hotel resort,” a place where room rates can reach $21,000 a night and good days are all but guaranteed.
But it wasn’t that long ago that the bad days on Lanai appeared to outnumber the good. The island—the smallest of all the publicly accessible Hawaiian islands, with around 3,000 full-time residents living in the colorful bungalows of a town so quaint it has not a single traffic light—has been privately owned since nearly a century ago, when James Drummond Dole paid $1.1 million to purchase most of the land, on which he eventually built a pineapple empire. By the mid-1980s, Lanai had become part of the personal portfolio of California billionaire David Murdock, who’d bought the company that had acquired Dole. After the last of the pineapples were picked, in 1992—the island was fertile, but no match for overseas growers who had begun to produce the fruit faster and cheaper—Murdock envisioned Lanai’s future as one rooted in tourism. With views like these, the idea made sense. The only problem: It didn’t work.
Or, at least, Murdock couldn’t make it work. In the early 1990s, he began construction on two luxury resorts, one by the ocean and the other a few miles away, in Lanai City, and eventually contracted the Four Seasons to run both. The two hotels—now known as the Four Seasons Resort Lanai and the Lodge at Koele—attracted some guests, but not nearly enough to pay for their own upkeep (or compete with upscale offerings elsewhere in Hawaii). By 2012, Murdock—a “curmudgeon, and a penny-pinching one at that,” in the words of one islander—had taken out multiple mortgages on the island, laid off a number of employees and stopped making necessary repairs to the houses and buildings in and around Lanai City, including closing down the popular community pool. Desperate to find a way to make the island profitable, or not quite such a money pit, Murdock began to explore the potential of building a wind farm that could produce electricity they could then sell to Oahu. One plan had some 200 windmills covering nearly a quarter of the island.
The opposition to the project that became known as “Big Wind” was strong and vocal and extremely divisive. Two-hundred windmills was a lot, but many islanders saw the scheme as their only way out of an increasingly dire situation. “As my wife put it at the time, the despair was palpable,” says Robin Kaye, a retired management consultant who’s lived on and off on Lanai since the 1970s, and settled here with his wife in 2005. “Big Wind so decimated the fabric of the community. It pitted everybody against each other,” he explains. “Friends weren’t talking. Families refused to allow the word windmills in their houses because brothers, sisters, moms and dads disagreed. It was a really intimidating, dreadful time.”
So when residents learned that Murdock had jumped ship, so to speak, the mood was one of what Kaye describes as “cautious optimism.” In June of 2012, then-governor Neil Abercrombie announced the sale of Lanai—or a full 98 percent of it, the remaining two percent being government and homeowner property—from Murdock to another California billionaire: Oracle co-founder Larry Ellison, the Silicon Valley eccentric who provided the inspiration for Robert Downey Jr.’s portrayal of Tony Stark in Iron Man. Abercrombie described Ellison as a man with “a longstanding interest in Lanai” and a “passion for nature, particularly the ocean.” The purchase price: a reported $300 million, which seems like a lot until you find out just how tiny a fraction of Ellison’s estimated $49 billion net worth it actually represents.
But what exactly Ellison intended to do with Lanai wouldn’t become clear for some time—not until October of that year, when, during a CNBC interview with Maria Bartiromo, he described Lanai as a “very interesting project” and announced plans to transform the 90,000-acre island into a fully green community: electric cars, organic farms watered by drip irrigation, solar power. “It is going to be a little, if you will, laboratory for sustainability in businesses of small scale,” he told Bartiromo. The island wasn’t producing anything; aside from fish or the occasional hunted deer, most of what its residents ate or used had to be flown or shipped in. Under Ellison, farms would provide enough produce to both feed the island and export for income. A proposed desalination plant would turn saltwater into fresh and reduce the need for imported water, which had become expensive. The threat of Big Wind, meanwhile, appeared to be over; Ellison made no mention of windmills. Sounded pretty great.
What could go wrong?
Toronto entrepreneur Chris Krolow, CEO and founder of island brokerage firm Private Islands, Inc., and the host of HGTV’s Island Hunters, says that while the private-island industry is “thriving,” it’s a certain type of person who seeks out what is almost always the hassle—and an expensive one—of owning an island. Simply put, he says, “most people who buy private islands are looking for a project.”
The thought of being part of some grand Silicon Valley experiment unnerved many residents of Lanai. They weren’t looking for another “feudal lord,” as one resident described Murdock, and yet here before them was a man whose arrogance was so famous it inspired a 2003 biography titled The Difference Between God and Larry Ellison: God Doesn’t Think He’s Larry Ellison. “We who live here have always thought of this as ‘our island,’ ” Kaye says. “I don’t feel like I don’t belong or know anyone who feels like they don’t belong. But when he spoke of Lanai as a laboratory, that word has become kind of anathema to many people. It has such negative connotations. We’re not a lab; it’s a community. We live here.”
Eco-intentions or not, absolutely no one was surprised that Ellison’s plan for Lanai would include a push for tourism. This is Hawaii, after all, and up till now, Lanai’s white sand beaches had spent most of their time deserted. Between the two luxury hotels established under Murdock and the 11-room Hotel Lanai—a classic Hawaiian lodge built by Dole in 1923 that served as the island’s only “affordable” option—the place accommodated fewer than 700 tourists at any given time. And that’s if the hotels were at capacity, which they never were. Which was a puzzle, since the island’s varied microclimates and network of unpaved roads meant it truly offered something for everyone. Sandy Keel, a Jacksonville, Florida, travel agent who sends 80 percent of her clientele to Hawaii each year, says Lanai has always been a sort of “best kept secret” among well-traveled “golfers, naturalists and honeymooners” who want to “get away from the fast-paced islands.” The trick has been getting people to consider Lanai as a destination rather than a side trip: The majority of tourists, according to Keel, have simply taken the 45-minute boat ride from Maui and returned to Maui the same day. “Most clients don’t want to be quite that isolated,” she says. “They want more of a mix, with nightlife options.”
But just because Murdock couldn’t make Lanai a destination on par with Maui or Kauai didn’t mean it couldn’t, or shouldn’t, be done. And, well, something needed to pay for all the sustainability. “From a physical point of view, Lanai is a place of amazing contrasts,” says Tom Roelens, who, as the general manager of both Four Seasons hotels, has lived and worked on Lanai since 2008. “Just 20 minutes away from our beach, you’ve got desert-like moonscapes, tropical gardens, rocky pine forests. It’s raw, it’s beautiful and it’s got great people—an amazing sense of aloha. I can say after all these years I’m still behaving like a first-time visitor taking pictures every day.”
New Yorkers Jessie and Miles Wixon traveled to Lanai in March with their 6- and 8-year-old daughters, only coincidentally timed to the reopening of the Four Seasons Resort Lanai. It was their eighth trip to Hawaii, but their first to Lanai. “We’d heard lots of things about what Larry Ellison was doing to keep the natural allure and local culture alive without crowding,” says Jessie, who as a photographer was also drawn to the variety of landscapes Lanai offered. “I can’t imagine living there, but it was the perfect place to visit as a family. Being on a deserted beach with not one person—it’s hard to beat.”
By most accounts, Ellison’s approach to developing Lanai has indeed been thoughtful and moderate, a concerted effort to retain at least most of what Roelens calls Lanai’s “amazing sense of aloha” while imparting real change. Ellison set up Pulama Lanai, a management company to oversee day-to-day operations, and hired as COO Lanai-born hotel veteran Kurt Matsumoto. Under Matsumoto, the company set out to clean up the town, rebuilding the community pool and giving the movie theater a $4 million face-lift. The cat shelter, home to some 400—that’s right, 400—homeless cats, got an expansion. Plans for the desalination plant to extract fresh water from salt water and an industrial park were set in motion.
But not everything has run so smoothly. The company put the plans for the desalination plant on hold after the town planning commission granted the project a 15-year permit instead of the 30 it had requested, leaving many residents frustrated. Last June, both Four Seasons hotels were shut down for renovations at the same time, effectively halting tourism entirely. Displaced employees found jobs elsewhere on the island or at other Four Seasons properties, but anyone else on the island whose livelihood depended on tourist-generated revenue struggled. Lately, says Kaye, residents have started to see “No Trespassing” signs throughout the island, closing off certain areas. “In a small community it’s noticeable,” he says. “There’s some beginnings of ‘Keep Out.’”
Ironically, part of the Four Seasons Resort Lanai marketing strategy has been to emphasize the “unparalleled access” that comes with being a hotel guest, with an effort to rebrand the resort experience “Lanai by Four Seasons.” Or as Roelens puts it, “There’s lots and lots of beautiful resorts in Hawaii and around the world but very few where as a guest you have access to 90,000 acres of different microclimates. So we’re able offer experiences that you wouldn’t be able to have in other locations or in other Four Seasons properties.”
That is, of course, if you ever leave the property. Jessie Wixon says that many of the other families they met while hanging out at the Four Seasons had not ventured from the hotel grounds, not even once, and didn’t plan to. Which is what worries islanders the most, especially in the context of Pulama Lanai’s latest proposal, which would construct helicopter landing pads at both the Four Seasons and, when it opens at the end of the year, the Lodge at Koele. From a conservation standpoint, the idea makes little sense: Helicopters would bring added noise and environmental pollution in the name of shortening what is already a short trip from the airport—a seven-minute drive, at most. Keeping guests as close to the hotel as possible makes sense if you’re the Four Seasons, especially around meal time, when a salad and a glass of wine can go for $90. But as far as residents are concerned, if tourism is going to benefit the island, it should benefit the island. Already, the Four Seasons has reduced the frequency of its hotel-to-town shuttles to just once a day between Hulopoe Bay and Lanai City, notably leaving after breakfast but returning in time for sunset cocktails.
When Kaye first came to Lanai in 1972, 75 percent of the population was Filipino. Most worked for Dole. He was a hoele then—the Hawaiian word to describe people who aren’t—but says he instantly, and always, felt welcome. That’s why he stayed. “I knew every house, every neighbor,” he says. “We kept our keys in the car and never locked the house. My son might wander off, disappear and end up at a neighbor’s home.” By the time he returned full time in 2005, all that had changed and change has continued. In some cases, change shows up in the form of strangers jostling him in line at Richard’s Market. In others, it might show up as the woman the Wixons met their first night attempting to catch the sunset at Kaumalapau Harbor, a favorite swimming spot for locals. “She told us where we wanted to go was clear across the island,” says Jessie. “It wasn’t.”
While Jessie insists that particular experience was the exception to the many welcoming ones they had while on Lanai, it’s a hint at the conflict many locals feel. Although it’s been four years since Ellison bought Lanai, the reopening of the Four Seasons Resort Lanai is just the start of what, in both the best and worst cases, will be the island’s tourism heyday. Construction continues at the 100-room Lodge at Koele in Lanai City—at 1,700 feet above sea level and surrounded by Cook Island pine trees, a very different sort of Hawaiian experience—and is expected to wrap by the end of the year.
No one employed by the Four Seasons or Pulama Lanai—and that’s 50 percent of the island—would talk on the record, about life, or business, on the new Lanai. But you needn’t spend more than a few days there to understand there is a significant amount of red tape in anything involving land use, owning and operating a business or, for that matter, driving a car on the island. One community project involving regrowing a certain type of seaweed required a right-of-entry application and several months of waiting for approval. Many entrepreneurs, especially younger ones, struggle to get the kind of insurance coverage required to operate a small business; indeed, it’s worth noting that we barely got the insurance coverage required to take the photographs which accompany this story
But the biggest change, says Kaye, is one that seems eerily familiar—a communication breakdown that emphasizes what are now the two sides of Lanai. On one side: those who work for Pulama Lanai. On the other: those who don’t. “No one talks about the company or what the company is doing except when you’re in private homes and nobody’s really listening,” he says, adding in what seems like only half-jest, “though, to be honest, they probably know we’re talking right now.” All employees are bound by confidentiality agreements and, some suggest, intimidation. Even Roelens was told he could not answer any questions that had to do with “ownership,” even as they related to the Four Seasons guest experience.
All this means that, two decades after the end of pineapple farming, Lanai is once again something of a company town—$1,100 rooms and $25 cocktails and complimentary sunglass buffing have simply replaced pineapples as the island product. But that’s not the only difference. In the plantation days, a person’s success depended on the success of the group; people had to work as a team. In tourism, though, people are rewarded for individual acts. “It’s not any better or worse in that way,” says Kaye. “But it does make for a change in the underlying tenor of the community. At the same time, we’re very hopeful that tourism survives.” Because if it doesn’t, then what?
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