Hawaii Business Magazine February 2024

HOUSING SOLUTIONS, CONDO CRISIS & RAIL HUBS

Private Equity Now Owns 29% of Local Hotel Rooms

L O C A L LY O W N E D , L O C A L LY C O M M I T T E D SINCE 1955

Is that good or bad for Hawai‘i?

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Healthy employees.

Healthy company.

We’re not the biggest health insurer or the oldest. But caring for your employees is our kuleana.

We’re UHA Health Insurance. Join us.

Learn more about UHA at: uhahealth.com

Celebrating the gift of eduCation Mahalo to everyone who participated in our annual Scholarship Luncheon!

The college awarded $1.18 million in scholarships to more than 300 students during the 2022-2023 academic year.

Special thanks to our Gold Level Sponsor

Mahalo to keynote speaker Ren Hirose, BBA ‘85, former regional vice president of HEI Hotels and Resorts, for delivering a truly inspirational message!

L to R: Vance Roley, Dean of Shidler College of Business; Marielle Ellorin, recipient of the Ren Hirose Family Endowed Scholarship; Jordan Reed, graduate student speaker and recipient of the Shidler College of Business Visionary Distinguished Scholarship, the Jack & Zelie Myers Scholarship and the Michael and Judy Pietsch Endowed Study Abroad Scholarship; Ren Hirose, former regional vice president of HEI Hotels and Resorts; Jett Zenthoefer, undergraduate speaker and recipient of the James P.D. Thropp Scholarship for the Shidler College of Business, Oscar and Rosetta Fish Fund for Excellence and William R. Johnson, Jr. Study Abroad Endowment; Tim Dolan, University of Hawaii Vice President of Advancement and UH Foundation CEO.

Mahalo to our Media Sponsor

To learn more about our scholarship program, contact Jennifer Lieu, director of development, at (808) 956-3597 or jennifer.lieu@uhfoundation.org.

shidler.hawaii.edu

@shidlercollege

02.24

CONTENTS

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An Update on Housing Built Near Rail Stations One of the big promises of rail was transit-oriented development: homes, stores, workplaces and transit hubs along the rail line. Here is what’s happening.

A view from Skyline’s Keone‘ae rail station shows The Element, an apartment complex with affordable rentals that opened in 2020. Nearby is UH West O‘ahu.

Is Private Equity Good or Bad for Hawai‘i?

Private equity companies own almost 30% of Hawai‘i’s hotel rooms, a huge increase in the past two decades. Our 12-page report investigates the pros and cons.

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Five Smart Solutions to the Housing Crisis Sterling Higa, executive director of Housing Hawai‘i’s Future, provides commonsense and innovative ways to break through a problem decades in the making.

28 Climate Catastrophes Lead to a Condo Crisis High prices for hurricane insurance mean hundreds of Hawai‘i condo complexes have less than 100% replacement coverage. That affects sales of individual units.

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O N T H E C OV E R

Illustration by Kalany Omengkar The artist combined the architecture of several private equity-owned hotels in Hawai‘i to depict money flowing in from guests and collecting as profit in the waterways. The idea was that money is “hiding” in plain view in an opulent hotel.

Industry Outlook Local companies share previews for 2024 on their specific industry.

9 Shipping, Air and Transportation Your 2024 guide to one of Hawai‘i’s most vital industries.

35 2023 Ho‘ohuli Awards Honoring commercial interior design excellence in Hawai‘i.

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HAWAII BUSINESS (ISSN 0440-5056) IS PUBLISHED 10 TIMES A YEAR BY PACIFICBASIN COMMUNICATIONS. ©2024 PACIFICBASIN COMMUNICATIONS, LLC. ALL RIGHTS RESERVED. ANY UNAUTHORIZED COPYING, DISTRIBUTION, OR ADAPTATION IS STRICTLY PROHIBITED AND WILL RESULT IN LIABILITY OF UP TO $100,000. EDITORIAL, ADVERTISING AND BUSINESS OFFICES AT 1088 BISHOP STREET, SUITE LL2, HONOLULU, HI 96813. TELEPHONE (808) 534-7520. POSTMASTER: SEND ALL ADDRESS CHANGES TO HAWAII BUSINESS, P.O. BOX 913, HONOLULU, HI 96808. SUBSCRIBERS NOTIFY THE SAME OFFICE. PLEASE INCLUDE NEW ADDRESS AND OLD ADDRESS (MAILING LABEL PREFERRED) PERIODICALS POSTAGE PAID AT HONOLULU, HAWAI‘I, AND AT ADDITIONAL MAILING OFFICES. SUBSCRIPTION: ONE YEAR $24.99 / TWO YEARS $34.99 / THREE YEARS $44.99. FOREIGN: ONE YEAR $53.99 (US FUNDS). FOR SUBSCRIPTION INQUIRIES, ADDITIONAL RATES, INFORMATION, NOTIFICATION OF CHANGE OF ADDRESS AND SUBSCRIPTION SERVICE, PLEASE CALL (800) 788-4230. FEBRUARY 2024 VOL. 69/NO.7

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PHOTO: AARON YOSHINO

“Forest Bathing” Helps Reduce Your Stress A certified forest-therapy guide says she leads visitors and locals on transformative visits to Lyon Arboretum and Camp Pālehua.

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to provide kamaaina with insurance they can trust. Today, as a Top 50 nationally-ranked property and casualty insurer, Island

remains true to its local values in service to its customers and communities.

From protecting local businesses of all sizes, to growing families like the Mariotas,

Island Insurance understands Hawaii and is always here to help.

Marcus and Kiyomi Mariota, Island Insurance customers

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Contact Your Independent Agent • (808) 643-4000 • islandinsurance.com

F R O M

A N

T H E

E D I T O R

O P E N

M I N D

Nuance Over Simplicity, Plus a Journey to Bali

W

E ALL WANT SIMPLE ANSWERS

to important questions like: Should I buy or rent a home? Is going into debt to pay for college worth it? Is cardio or strength training more important for longevity?

We’d rather not hear the answer, “It depends and here’s what you need to know” followed by a nuanced explanation, but that factual nuance creates better understanding and can guide smart decisions. Too bad that many people prefer pundits, prognosticators and politicians who always provide answers with conviction in 30 seconds or less.

If that’s what you want, look elsewhere. Discriminating readers know reality’s complicated, and that’s why the team at Hawaii Business Magazine likes to spend their time investigating and telling you what we find. We stress facts, explanations, tight writing, clarity, context and, when warranted, nuance.

Tourism is Hawai‘i’s No. 1 industry and hotels are its foundation, so it’s important to know who owns them and how they operate those properties. That’s why Staff Writer and Engagement Editor Noelle Fujii-Oride spent five months investigating private equity ownership of local hotels.

This is not your father’s hotel industry. Families that helped pioneer the hotel business in Hawai‘i have sold and though iconic hotel companies like Hilton and Marriott still operate and franchise thousands of hotels worldwide, including some locally, they own only a tiny fraction.

The new big players are private equity companies, which have paid billions of dollars to increase their stake from 4% of Hawai‘i hotels in 2003 to 23% today. More importantly, they now own 29% of all local hotel rooms.

That’s power and until now, how private equity wields that power has gone largely unreported. Noelle’s 12-page article starting on page 16 remedies that situation. It’s informative and compelling reading.

FROM HAWAI‘I TO BALI

Back in April and May 2023, Hawaii Business Magazine hosted Gumilang “Gugum” Reza Andika, a senior impact measurement officer for Kopernik, an Indonesian research and development lab that addresses social and environmental challenges.

Gugum came to study how we create and organize our events to inform people on important issues so he and his team could do the same in Bali. His fellowship was sponsored by the U.S. State Department’s Young Southeast 6

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Asian Leaders Initiative.

He was mentored by Hawaii Business Co-Publisher Kent Coules and Events Manager Magdalena Durak Hershey, who also helped him complete one of the fellowship’s requirements: submit a proposal for a project in his home country. I’m not surprised that Gugum’s proposal was one of only two funded by the State Department.

Kent was invited to attend Gugum’s event on regenerative tourism in Bali during November – at the State Department’s expense. Now, you know Indonesia is southwest of Hawai‘i, but you also know the cheapest flight between two points is not always the most direct. And the State Department booked Kent on probably the cheapest flight available.

That’s why Kent started his journey to Indonesia by flying in the opposite direction, northeast to Seattle. Kent’s advice: “Do not let the State Department make your flight plans.”

His outward leg departed Seattle at 10:30 p.m., flying to Seoul, before finally arriving at midnight two days later in Denpasar, the capital of Bali.

HE ENJOYED GETTING LOST

Nonetheless, Kent enjoyed his stay in the Indonesian province of Bali. “My best travel experiences are never planned and usually involve getting lost. Same on this trip,” he says.

“I hit ‘walk mode’ on Google Maps for a planned 49-minute journey. The route eventually takes me through a parking lot, snakes between two restaurants, across a beautiful wooden bridge and onto a trail traversing a farm and rice paddies. It is my favorite memory.”

Bali lags behind the developed world on infrastructure, sewage and garbage, but Kent found several shining examples of regenerative tourism, including one with a Hawai‘i connection.

“Our conference host, Mana Earthly Paradise, was started by a couple who studied at UH. Their next-generation eco-villas were built of earthbags; there was a probiotic restaurant, an eco-conscious store and the wastewater feeds the compost garden. They put sustainability at the forefront of everything.”

STEVE PETRANIK EDITOR AND EXECUTIVE PUBLISHER

THIRTY YEARS OF

HEALTHCARE WITH ALOHA In 1994, Hawai‘i’s community health centers founded AlohaCare to ensure that all Hawai‘i’s people have a voice and equal access to health care, regardless of changes in the healthcare landscape. Today AlohaCare proudly celebrates 30 years of providing a safety net health plan focused on health equity and whole person care. AlohaCare would like to recognize the staff, providers and community partners who help care for their members every day.

“It takes an entire community to create this type of lasting impact. Working well with our community is crucial for our members, now more

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Thirty Years of Healthcare with Aloha

alohacare.org

than ever before,” says AlohaCare CEO Francoise Culley-Trotman. “Together with our partners, we will continue to develop innovative, culturally responsive programs that address the diverse needs of our communities.”

By offering high quality care that meets people where they are, AlohaCare continues to honor its founders’ vision to support empowered individuals living in healthy communities. Their commitment remains the same: AlohaCare will be here for Hawai‘i -- caring for all communities and inspiring a hopeful and healthy future.

Francoise Culley-Trotman AlohaCare CEO

HB EVENTS CONNECT WITH HAWAII BUSINESS MAGAZINE

L O C A L LY OW N E D , L O C A L LY C O M M I T T E D SINCE 1955.

Our goal is to strengthen the local economy and help our communities thrive.

STRESSED TO STRONG: M E N TA L H E A LT H A N D WELLNESS CONFERENCE

Make Mental Health a Strength of Your Workplace TH U RS DAY, FE B RUARY 1 5 , 2024 11 : 00 A . M . TO 4 :30 P. M .

Japanese Cultural Center of Hawai‘i

UPCOMING EVENTS:

Learn new strategies for building a resilient and thriving workplace at this half-day conference. In between opening and closing keynote sessions will be four breakout sessions to choose from, on topics like helping employees achieve financial security and how to create a safe, reassuring work environment. Register here: mentalhealth. hawaiibusiness.com.

THURSDAY, MARCH 14, 2024

FRIDAY, APRIL 5, 2024

20 for the Next 20

Best Places to Work

YWCA Laniākea, Elizabeth Fuller Hall

Hilton Hawaiian Village

For more information on events, visit hawaiibusiness.com/events or contact Magdalena Durak Hershey, Events Manager, at magdalenad@ hawaiibusiness.com 8

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Editor & Executive Publisher STEVE PETRANIK stevep@hawaiibusiness.com • (808) 534-7584 Editorial Managing Editor CYNTHIA WESSENDORF cynthiaw@hawaiibusiness.com • (808) 534-7529 Staff Writer & Engagement Editor NOELLE FUJII-ORIDE

noellef@hawaiibusiness.com Staff Writer CHAVONNIE RAMOS chavonnier@hawaiibusiness.com Copy Editor ELROY GARCIA Interns KALAWAI‘A NUNIES, AIMEE WICKLER Design & Photography Creative Director KELSEY IGE kelseyi@hawaiibusiness.com • (808) 534-7179 Art Director MALLORY ADAMS-NAKAMURA malloryan@hawaiibusiness.com Staff Photographer AARON YOSHINO Digital Digital Marketing Director JOELLE CABASA joellec@hawaiibusiness.com • (808) 534-7531 Digital Media Specialist MICHELLE TAN michellet@hawaiibusiness.com Sales & Marketing Co-Publisher KENT COULES kentc@hawaiibusiness.com • (808) 364-5869 Account Executive PAM SAITO pamelas@hawaiibusiness.com • (808) 364-5897 Account Executive YONGCHAE SONG yongchaes@hawaiibusiness.com • (808) 228-5078 Senior Account Coordinator REBECCA BROOKING rebeccab@hawaiibusiness.com • (808) 534-7560 Events Manager MAGDALENA DURAK HERSHEY magdalenad@hawaiibusiness.com • (808) 534-7578 Circulation circulation@pacificbasin.net Connect with us on social media: HawaiiBusiness HawaiiBusinessmagazine Hawaii Business is published by

Chairman DUANE KURISU Chief Executive Officer SUSAN EICHOR Chief Operating Officer BRANDON KURISU Chief Revenue Officer PATRICK KLEIN

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INDUSTRY OUTLOOK Hawaii Business Magazine asked companies on the following pages to provide our readers with an assessment of their industry in the coming year. The information provides a glimpse into the opportunities and challenges facing each one.

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INDUSTRY OUTLOOK 2O24

ALTRES

S TA F F I N G A N D H U M A N R E S O U R C E S

Q&A WITH:

Emy Yamauchi-Wong Staffing Manager, Office & Tech Division ALTRES Many of your clients are facing huge challenges this year. What are those challenges and how can you help them?

We are finding more companies reaching out to us to help them with filling their open positions, many of whom have never used

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a staffing firm before. This reflects how difficult it is to find qualified applicants, as well as the solid reputation that ALTRES has built over the last 54 years. Our focus is not only filling an employer’s need for a certain job, but also the long-term fit and potential for success of that candidate in the position.

What is the most important change or trend impacting your industry in 2024?

Recently, there has been a lot of focus on utilizing AI to match candidates to jobs, as well as data analytics to forecast workforce trends.

However, there is much more to recruiting than simply matching key words on a resume to a job opening.

Ensuring the best possible match for jobseekers and employers requires building relationships. We carefully listen and help guide candidates to make the choice that fits their needs, and even advise on opportunities they may not have considered. Another big change in 2024 is the new law requiring pay transparency in job listings for employers with 50 or more employees. Most of our positions already list pay ranges, but we will be making changes as needed to abide by this new legislation.

be a continually shrinking job market in Hawai‘i. But we view this as a way to continually better ourselves and improve the experience of finding the right match for both the employer and jobseeker. ALTRES was built on innovation, but we also know that a human touch should always be a vital part of the process.

What is your company’s biggest challenge in the coming year?

An ongoing challenge is hiring and retaining good workers, in what seems to

ALTRES (808) 591-4900 ALTRES.COM

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INDUSTRY OUTLOOK 2O24

iHeartMedia

MEDIA

demic business environment affected iHeart?

Did you know that Honolulu is consistently rated one of the top 3 worst traffic congested cities in the country? This is good news for iHeart because IN-CAR LISTENING is back too.

Our TOTAL TRAFFIC NETWORK reaches 300,000+ listeners in Honolulu during AM & PM drive time which gives advertisers a massive captive audience.

How does Radio stand out compared to other media?

Q&A WITH:

Scott Hogle President, iHeartRadio Honolulu What challenges are advertisers facing in today’s media landscape?

Consumer attention spans continue to shorten, there is a lot of noise in the marketplace, and time spent with media is spread out more than ever. Advertisers want proven strategies (not just fancy dashboards and sales pitches) to maximize their marketing budgets and drive R.O.I. iHeartRadio helps advertisers stand out from the crowd with popular morning shows, an audience size

of almost 400,000 weekly listeners, and digital ad technology only available through iHeart.

What are the trends in audio?

Podcasting is growing significantly. In fact, iHeart has 173 million monthly podcast subscribers with over 300,000 million monthly downloads nationwide. IHeart got out in front of the audio revolution and as a result became the #1 podcast publisher on the planet. Adding this strength to our 900 AM & FM radio stations across 150 U.S. cities, iHeartRadio now reaches more people than Facebook and Google.

How has the post pan-

It dominates in many ways.

In a time of crisis when the electricity is out, radio is the only media that listeners can turn to for life saving information. Also, radio is the ONLY media you can take wherever you go, even behind the wheel.

AM/FM radio was voted the most TRUSTED source of media in the U.S. In fact, iHeartRadio has the only LIVE & LOCAL RADIO NEWS DEPARTMENT during AM & PM drive times in Honolulu. Iconic brands and market leaders like KSSK and NewsRadio 830 KHVH-AM assist our news department in producing accurate and relevant news and information to all of our radio stations in Hawaii.

What is NEW for iHeart Honolulu?

We recently launched

POP 101.9, America’s first 100,000-Watt Asian Pop Music Station. It’s taken off beyond our wildest dreams and now joins the #1 and Exclusive line up of legendary Honolulu stations like 92.3 KSSK, Island 98.5, Star 99.1, and others.

Our programming strategies have led us to a higher level of influence, reaching as many as 200,000 female listeners a week. This is a big deal for advertisers as women make 70-80% of purchasing decisions within a household.

What is your secret to success?

We created a culture of growth and personal development decades ago. I have always believed that the best way to grow a company is to grow the people in it. Our community focus continues to be on serving our listeners, our customers, and non-profits. We are intentional about using resources to serve and strengthen others. There is nothing more rewarding than helping local businesses succeed. We all have to make a living, it’s nice to be able to make a difference too.

I H E A RT M E D I A 650 IWI LEI ROAD SU ITE 400 HONOLU LU, H I 96817 SCOTTHOGLE@I H EART M EDIA .COM

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INDUSTRY OUTLOOK 2O24

Hawaii Dental Service D E NTI STRY

In 2023, the HDS Foundation awarded $110,000 in scholarships for Hawai‘i students pursuing careers in dentistry and dental hygiene.

The scholarships are an investment in oral health professionals who will be serving Hawai‘i residents in the years to come.

Q&A WITH:

Diane S.L. Paloma, PhD President & CEO, HDS What are some of your company’s focus areas for 2024?

HDS continues to be at the forefront of oral health for our members and the broader community.

Through our HDS Foundation and our involvement with the Hawaii Oral Health Coalition and partnerships with community partners,

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and health organizations, we’re focused on eliminating barriers to dental care through our initiatives, outreach, and increasing oral health education in underserved areas.

We’re looking forward to 2024 being a year of growth for our HDS employees. As part of our leadership team’s commitment to nurturing the talents and skills of our employees, we are increasing professional development and training opportunities and team building to strengthen the foundation of our organization and ensure we can provide the local, high-quality service our members expect of a homegrown Hawai‘i company.

Another focus area is investing in our State’s dental

community to ensure our HDS members and Medicaid beneficiaries have access to the best dental care in the years to come. HDS is committed to workforce development, collaboration with dentists to increase oral health education and access to care, and scholarships for students pursuing careers in dentistry and dental hygiene.

economic stress and has taken a toll on their emotional and physical health and well-being. Last year, the HDS Foundation invested more than $1.6 million in the community, including support of services for impacted and displaced residents on Maui.

This included emergency funds for the Community Clinic of Maui for dental equipment and a grant to supply and equip the mobile van run by Hui No Ke Ola Pono, the Native Hawaiian Health Care System for Maui. HDS and the HDS Foundation will continue to look at ways to further improve access to care in underserved communities to ensure a healthier future for all.

Many of your customers and clients are facing huge challenges this year. What are those challenges and how can you help them?

Our hearts continue to go out to those on Maui as families recover from the devastating August wildfires. The disaster created

HAWAI I DENTAL SERVICE 900 FORT STREET MALL SU ITE 1900 HONOLU LU, H I 96813 HAWAIIDENTALSERVICE.COM

INDUSTRY OUTLOOK

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G70

ARCHITECTURE

What is the most important change or trend impacting your industry in 2024?

Q&A WITH:

Charles Kaneshiro, AIA, LEED AP President & COO, G7O Many of your customers and clients are facing huge challenges this year. What are those challenges and how can you help them?

High construction costs and permit delays continue to be two of the most pressing challenges facing

the construction industry.

One strategy to reduce construction costs is to pursue the Adaptive Reuse of existing buildings.

Rather than building new, Adaptive Reuse retains the existing foundation, structure, and main infrastructure systems. G70 has a multitude of Adaptive Reuse projects for private and public clients throughout the state. A key to making these projects work is doing an early due diligence study of the potential project. This evaluation studies the structure and infrastructure to learn whether a renovation is viable and what the potential cost might be.

Permit delays continue to be a challenge for all projects. While there are

no magic formulas for getting permit approvals, we have developed strategies to reduce the time involved. Early involvement of your design team is vital to making these strategies work. Addressing Historic/Cultural Preservation is key to expediting the permit process, if your building is over 50 years old, an evaluation of the historic character of the building may be required.

The archaeological characteristics of the land must also be evaluated whether you have an existing building on the land or not.

G70’s Planning division is extremely well versed in this area of practice with several individuals who specialize in historic/cultural preservation.

Resiliency is top of mind for everyone especially after the Maui wildfires. How do we avoid future wildfires in other communities in our state?

How do we provide temporary and permanent housing?

What do we rebuild and how can we create a more sustainable/resilient future?

These are huge questions before all of us. G70 is involved on multiple fronts on Maui but the answers to these vital questions must come from leadership, and ultimately from the community.

Link to full article here:

G7O 111 S. KI NG STREET, SU ITE 170 HONOLU LU, H I 96813 (808) 523-5866 G70. DESIGN

H AWA I I B U S I N ES S

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NAME: PHYLLIS LOOK JOB:

CERTIFIED FOREST THERAPY GUIDE

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PH OTO BY A A R O N YO S H I N O

M Y

J O B

Forests and Trees Are a Balm for Our Stress Owner and director of Forest Bathing Hawai‘i provides guided tours for locals and tourists

BY KA LAWA I‘A NUNIES

BEGINNINGS: Phyllis Look’s strong connection with trees and forests began in childhood.

“When I was in elementary school, Mānoa Elementary, I had a friend who lived on the woodland side and her front yard had a huge banyan tree, and it was really climbable,” she says.

“It had the roots and all sorts of branches, and you could go everywhere in it. We spent a lot of hours in the banyan tree imagining all sorts of things.”

TRAINING: Look says she has held a variety of jobs with Berkeley Repertory Theatre, Olomana Loomis ISC and Hawai‘i Public Radio. She founded Forest Bathing Hawai‘i in 2018 after completing training and certification as a forest therapy guide with the Association of Nature and Forest Therapy. Now she provides tours for locals and tourists.

“This practice is really powerful – something the world needs – and so in sync with the spirit of Hawai‘i and what this land has to offer.”

TOURS: Look takes her guests ei-

ther to Lyon Arboretum in Mānoa Valley or to Camp Pālehua (formerly Camp Timberline) in the Wai‘anae Mountains above Makakilo. A typical tour includes an informal land acknowledgment, then a process of destressing by connecting with the forest and trees, and ends with a tea ceremony using māmaki gathered from Mānoa Valley.

She says forest bathing connects people with a more natural and less stressful part of humans’ past. “Most of that time before the Industrial Revolution we were outdoors – 99.99% of our human history has been mostly outdoors. This forest is where we come from.”

Look encourages companies to consider group tours to create bonds among employees and teams.

Marjorie M., a reviewer on Yelp, said of Forest Bathing Hawai‘i’s tours: “If you want to remember why life is worth living, to appreciate the beauty of nature, and to bring you back to yourself and the experience of just being a human in a world of many beings, this is definitely for you!”

JAPANESE ORIGIN: In October, the

Association of Nature and Forest Therapy sent Look and other forest therapy guides to Japan to learn more about shinrin-yoku, which inspired forest bathing.

A 2010 study published in the journal Environmental Health and Preventive Medicine found that people participating in shinrin-yoku had lower pulse rates, lower blood pressure and other measures of greater calmness than people in urban environments.

PERSONAL CONNECTION: “Lyon Arboretum is a 20-minute walk from my home. It is in the valley that my family has lived in for more than 60 years. So it’s a place that I feel deeply connected to.

It’s home, it’s what drew me back from the mainland.”

Look says she also feels a close connection to Tuahine, the gentle rains that fall on Mānoa. “Tuahine is more than auntie to me. She has gone in the tomatoes and lettuce that I consume. She is actually a part of my being.”

THIS INTERVIEW HAS BEEN LIGHTLY EDITED

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H E R E ’ S W H Y T H AT M AT T E R S .

Local tourism leaders say private equity ownership is part of the industry’s continued consolidation and that these firms often invest in major upgrades that attract higher spending visitors. But private equity ownership across the mainland has had devastating social impacts on retail, nursing homes, rental housing and other industries, and some local residents worry about the consequences of private equity in Hawai‘i and on jobs in tourism, our No. 1 industry.

BY NOELLE FUJII- ORIDE Illustrations by Kalany Omengkar H AWA I I B U S I N ES S

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IT’S COMMON FOR MAJOR HAWAI‘I HOTEL TRANSACTIONS TO MAKE HEADLINES. A M O N G T H E M WA S T H E $ 1 .1 B I L L I O N P U R C H A S E O F T H E G R A N D WA I L E A and the $275 million purchase of the Ritz-Carlton

Kapalua in 2018. In 2019, the Holiday Inn Express Waikiki went for $205 million; two years later, the Royal Lahaina Resort was sold for $430 million and the Sheraton Kona Resort & Spa at Keauhou Bay for $90 million Each was acquired by a private equity firm, a type of investment company known for using lots of debt to buy companies and then doing quick flips designed to maximize profit. While private equity investments can help their acquired companies access needed capital and innovate, they’ve also caused devastating social impacts.

KKR and other firms drove Toys R Us into bankruptcy and laid off 30,000 workers, initially without severance pay. KKR has also come under fire for patient abuse, neglect and deaths that occurred at group home operator BrightSpring Health Services, spurring an investigation by four U.S. senators. The United Nations accused Blackstone, one of the world’s largest corporate residential landlords, of contributing to the global housing crisis for undertaking aggressive evictions, pushing out low- and middle-income tenants, inflating rents and imposing an array of fees.

Private equity firms manage about $12 trillion in U.S. assets and currently invest in 14,300 companies, according to Morningstar, a financial services and research firm. Private equity’s harmful impacts have been so dire in some cases that U.S. lawmakers in recent years introduced legislation to force them to take responsibility for the outcomes of the companies they acquire and to tax institutional investments in single-family housing to discourage such purchases. President Joe Biden’s administration is also imposing a rule to require nursing homes that accept Medicare or Medicaid to disclose their owners.

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Despite this national controversy, the large stake that private equity holds in Hawai‘i’s tourism industry has largely gone unnoticed. An analysis by Hawaii Business Magazine shows that two dozen private equity firms own 33 of the state’s 144 hotels – controlling nearly 30% of all rooms – raising questions about whether some larger impacts of Wall Street control could be felt here. And West Maui, which was devastated by the August Lahaina wildfire, has the highest concentration of these owners: five of the 11 hotels are owned by private equity. In 2003, private equity owned only 4% of the state’s hotels.

The 33 properties include hotels that private equity owns directly and hotels they own through local subsidiaries or as part of ownership groups. And the count includes one 18-room Lahaina property that was destroyed in the fire but excludes military hotels, timeshares and condo-hotel properties, which have different ownership structures.

Community activists and others say that the increasing presence of Wall Street investors in Hawai‘i is one example of how the hotel industry is increasingly being run by real estate corporations more interested in their bottom lines than in providing excellent guest service or in the long-term impacts on local communities.

“It seems more and more the concentration of wealth and power are in the hands of the few, and it looks like the trend for hotels, resorts, short-term rentals – so all the tourism-related lodging,” says Keani Rawlins-Fernandez, a Maui County Council member.

Maui’s nine private equity-owned properties control half of the island’s hotel rooms. Rawlins-Fernandez worries what will happen if more hotels are owned by private

equity firms that maximize shareholder profit at the expense of their employees and the environment: “I’m very concerned about the health and well-being of Hawai‘i and Maui.”

Local hotel consultants and private equity owners say these private equity firms are responsible for major property improvements. Keith Vieira, principal of KV & Associates Hospitality Consulting, says those improvements have helped bring in higher spending visitors and that their investments in hotel upgrades are a large reason why Hawai‘i, before the Lahaina fire, was expected to generate nearly $1 billion during 2023 in transient accommodations tax revenues, the so-called hotel room tax.

He says that private equity is sometimes criticized because most firms are not based in Hawai‘i. Denver-based KSL Capital Partners, which manages $21 billion of assets, owns the Sheraton Kauai Coconut Beach Resort and, through its ownership of Outrigger Resorts & Hotels, eight properties. Blackstone, which manages $1 trillion of assets worldwide from its New York City headquarters, owns the Turtle Bay Resort, Grand Wailea, Ritz-Carlton Maui and King Kamehameha’s Kona Beach Hotel.

“It’s been better for us because they’re putting so much investment into these resorts,” he says. “But that’s not recognized.”

C O R P O R AT E I N V E S T O R S rivate equity firms invest by assembling large pools of money from insurance companies, endowments, foundations, pension funds, family offices and wealthy individuals. These funds typically have 10-year lifespans. The firms use that time to create funds and raise money for them, and to then buy and manage their investments before finally selling them. Though a private equity firm generally puts in only about 1% to 2% of a fund’s capital, it makes all the decisions regarding acquisitions, use of debt and portfolio management.

The goal of private equity firms is to overhaul the companies they invest in to increase their value and then sell them for a profit. They do that by finding costs to cut, increasing the efficiencies of operations, and making physical improvements to their assets. They also take out loans through their acquired companies to pay dividends to themselves and their investors.

Their companies, not the private equity firms, are on the hook for those loans. For hotel acquisitions, private equity firms tend to use about 50% to 65% debt, according to local consultants and owners. That’s about the same for other types of hotel buyers.

Private equity also makes money by charging performance fees, typically 20% of their funds’ profits. That financial structure encourages them to aggressively pursue profits and shareholder value, though they also make money even if the acquired companies suffer losses. That’s done through annual management fees charged to their investors, which is usually 2% of a fund’s committed capital.

Jeff Hooke is the author of the 2021 book “The Myth of Private Equity: An Inside Look at Wall Street’s Transformative Investments” and a senior lecturer at the Johns Hopkins Carey Business School. He says private equity firms largely operate in the shadows thanks to minimal disclosure requirements imposed on them by state and federal governments.

“There’s no sheriff in town, there’s no pullup cop on the beat,

as far as private equity goes,” he says. “It’s the Wild West.”

A few private equity companies, like Blackstone, KKR and Apollo Global Management, are publicly traded and subject to Securities and Exchange Commission regulations. But for the most part, the minimal disclosures often make it difficult to determine whether a company or property is owned by private equity. For this report, determining the ownership of Hawai‘i hotels often involved digging through layers of shell companies; those layers sometimes obscured the full ownership of the properties.

Unite Here Local 5, which represents about 7,000 Hawai‘i hotel workers, had been tracking private equity hotel ownership and shared its findings with Hawaii Business Magazine. I also searched news articles, company websites, business filings, property tax records, Bureau of Conveyances records, the Hawai‘i Information Service’s tax map key database, and PitchBook, a capital markets research company. These searches may not have captured all private equity-owned hotels.

Hawaii Business Magazine’s goal was to determine the extent of private equity’s presence in Hawai‘i’s hotel industry and how that presence has impacted their employees and the surrounding communities.

Ian and Shay Chan Hodges are community organizers on Maui who have worked for over 20 years to integrate environmental care, social responsibility and good governance into investment policies and practices. They say more awareness is needed about private equity’s presence in the Islands.

“There's this huge sort of hole in our information about people who are coming in here and understanding what their motivations are,” Shay Chan Hodges says. Her and her husband’s concern is that private equity’s profits will always take precedence over impacts to local workers and communities.

H AWA I I B U S I N ES S

19

Nationally, private equity-owned businesses employ about 12 million people, according to the American Investment Council. Justin Flores, director of labor and jobs at the Private Equity Stakeholder Project, says that number has grown from about 8 million a decade ago, and many of those workers do not know they’re working for private equity-owned companies. PESP is a nonprofit financial watchdog organization that researches and reports on private equity investments and their impacts.

“Private equity claims that their model is to buy low, make improvements in operations and then have a more valuable asset at the end of their ownership period,” says Alyssa Giachino, director of investment engagement at PESP. “They don’t always achieve that. Sometimes they degrade the quality of the asset because of their thirst for quick profits.”

She adds: “But that doesn’t mean there aren’t examples … where they may have invested into property improvements that would allow them to charge higher rates, and that helps stabilize the cash flow for them, so they do end up with a more valuable asset. Investing in the workforce is another way to accomplish that benefit.” Giachino previously researched private equity and helped organize hotel workers when she worked for the Unite Here union on the mainland.

M U LT I - D E C A D E P R E S E N C E ig private equity firms based outside Hawai‘i have owned local hotels since the 1990s. They entered the local market as Japanese companies sold their invest-

A DIFFERENT PRIVATE EQUIT Y MODEL Some local and mainland hotel owners are using private equity to help them obtain and hold properties long-term.

That’s the case with Ken Cruse, the former CEO of Sunstone Hotel Investors, a public real estate investment trust. In 2018, he created Soul Community Planet, a California wellness hospitality brand, whose vision, he says, is to help make the world a kinder, better place. SCP, with an institutional private equity limited partner, owns the 138-room SCP Hilo and four other hotels on the mainland.

He says SCP is a long-term investor that’s more focused on building its brand and operations than gener-

20

FE B R UA RY 2 0 24

ments, says Kevin Aucello, principal of Powell & Aucello, a hospitality real estate consulting and brokerage firm.

One early player was Colony Capital, which acquired what’s now the Hilton Waikoloa Village in 1993 with Hong Kong-based PanGlobal Partners and Hilton Hotels. In 1998, Oaktree Capital Management acquired an interest in Turtle Bay Resort, local firm Trinity Investments acquired majority ownership of what’s now the Fairmont Kea Lani with Apollo Group and the Goldman Sachs Whitehall Fund, and KSL Recreation Corp., a subsidiary of KKR, acquired the Grand Wailea.

KKR is famous for popularizing the leveraged buyout model in the 1970s and 1980s, and KSL Capital Partners grew out of KSL Recreation Corp.

Under Oaktree, Turtle Bay Resort faced labor disputes, and community opposition when it wanted to build 3,500 additional hotel and residential units. The property was deeded to a consortium of investment firms to avert foreclosure. At the time, it was one of more than a dozen hotels in distress, according to a 2011 Hawaii Business Magazine article.

Various private equity firms have come and gone in the decades since. Sometimes, private equity acquires foreclosed or distressed hotels. That’s what happened to the now-demolished Mākena Beach & Golf Resort and former Sheraton Kona Resort & Spa Keauhou Bay, now an Outrigger resort. But, often, it just depends on the market and what’s available.

Honolulu’s Kobayashi family has been investing in

ating a high internal rate of return.

Since acquiring the former Hilo Seaside Hotel in 2021, he’s brought over SCP’s Every Stay Does Good program.

Through the program, each stay at the hotel contributes to organizations helping adolescent mental health, children with life-threatening illnesses and global reforestation. SCP Hilo also created a partnership with the Hawai‘i Wildlife Fund. Through that alliance, each stay at the hotel helps facilitate HWF’s recovery of 2.2 pounds of marine debris from local beaches.

Cruse says his focus is to start with what’s best for the community.

“If we don’t have a Hawaiian that can buy this hotel and take this hotel over, this is it (the best alternative) for us,” says Breeani Kobayashi, GM of SCP Hilo. Her grandfather, Richard Kimi, built the hotel in 1956. “I thought to myself this is the type of

human that should be buying hotels in Hawai‘i, if at all,” she says of Cruse.

Cruse knows that his goal of holding hotels long-term goes against the private equity model, which typically expects to realize returns in less than a decade. He says he’s dealt with that through liquidity events. These events might include refinancing offers so that investors can receive their cash and exit, or offers to buy out an investor or to consolidate a property’s equity under SCP’s own balance sheet.

“The worst thing that could happen to a hotel is to continually trade it and have like a two-year or threeyear cycle where it’s sold, new brand comes in, new management company comes in, new philosophy of how they operate comes in,” he says. “The hotels succeed or fail mostly around the team that’s operating the hotels.

If you have a stable, well-trained,

“

(PRIVATE EQUITY HAS) BEEN BETTER FOR US BECAUSE THEY’RE PUTTING SO MUCH INVESTMENT INTO THESE RESORTS.” KEITH VIEIRA

Principal of KV & Associates Hospitality Consulting

capable team that really loves what they’re doing, guest experiences are great.”

Ben Rafter of Springboard Hospitality takes a similar approach. He has owned a handful of smaller hotels with other local and mainland investors. Those investors are a mix of individuals, private equity firms, REITs and family offices. (Family offices are companies that manage assets and investments for wealthy families.)

He says the hotels he targets aren’t typically sought after by institutional firms because they tend to be smaller properties, often with shorter land leases, like the 250-room Ohia Waikiki Studio Suites and the 94-room White Sands Hotel.

“We’re trying to put together groups that can hold for longer periods of time and might be focused on either holding real estate in Hawai‘i or an equity multiple instead of internal rate of return, or just having the flexibility to do what we want over time,” he says.

“If it’s tied into a fund structure, that’s not any better or worse, it just means there’s going to be some restrictions on it. And most of the time, that means within five to seven years, you’re trying to monetize that asset because the fund has invested all of its proceeds, all its funds and is returning proceeds to the investors.”

hotels for over 20 years. In 2009, BlackSand Capital was created to do that work on behalf of the family and other investors in the form of a private equity fund, says BJ Kobayashi, chairman and CEO of BlackSand Capital.

And 80% of its investors are based in Hawai‘i.

“I really do think it makes a difference that if we make a dollar, if 80 cents stay in Hawai‘i, that’s just different than if you have a company that’s private equity that the investors are outside of Hawai‘i,” he says.

It currently co-owns the Royal Lahaina Resort and Twin Fin with Rockpoint, a Boston private equity firm with $14 billion in assets under management, and Highgate, a hospitality management and investment company. BlackSand also co-owns the Kaimana Beach Hotel with Tsukada Global Holdings, a public company in Japan. BlackSand says it looks for hotels with good locations in submarkets with high barriers to entry. It also looks for hotels to which it can add value.

Trinity Investments, another locally based private equity company, takes a similar approach. It has owned, often with mainland private equity firms, the Ritz-Carlton Kapalua, Kahala Hotel and Mākena Beach & Golf Resort. It currently co-owns the Westin Maui Resort & Spa in Kā‘anapali with Oaktree, a firm with $183 billion in assets under management. Greg Dickhens, Trinity’s principal and managing partner, says the firm tends to reposition its hotels as more upscale destinations through physical improvements to the property, bringing in top-tier management and, sometimes, rebranding. Trinity also invests in hotels in the U.S., Mexico and Europe and manages about $5 billion or $6 billion in assets, Dickhens says.

In some cases, mainland-based private equity giants have gained control of hotels through the local companies that run them. Cerberus Capital Management, for example, had ownership stakes in the Japan-based parent companies of Honolulu’s Kyo-ya Hotels & Resorts and Prince Hotels & Resorts from the mid-2000s to the mid-2010s. In Hawai‘i, the two local hotel companies once owned eight hotels on three islands.

Blackstone owned or managed a handful of Hawai‘i Hilton hotels when it owned the Hilton Hotels Corporation from 2007 to 2018. In 2016, Denver’s KSL Capital Partners acquired Outrigger Resorts & Hotels, which operated, owned or managed 37 hotels in Hawai‘i, Guam, Fiji, Thailand, Mauritius and the Maldives. Outrigger had been owned and operated by the Kelley family since 1947. According to PitchBook, KSL is the most active private equity hotel investor in the U.S.; in the last five years, it made 26 investments.

Hawai‘i continues to be attractive for private equity buyers because it’s one of the highest performing hotel markets in the country, says Tim Powell, principal of Powell & Aucello. A big allure: It’s unlikely that new hotels – and thus new competition – will be built due to strict zoning regulations.

Ben Rafter, a hotel owner and president and CEO of hotel operator Springboard Hospitality, says that many of the large private equity firms are looking to write checks H AWA I I B U S I N ES S

21

for $100 million or more to buy properties, and Hawai‘i is one of the few markets where they can do that.

In the last two years, Outrigger acquired four properties in Hawai‘i and four in Thailand and the Maldives. Those include the 18-room Plantation Inn that was destroyed in the Lahaina fire and the 350-room condo-hotel Kaua‘i Beach Resort & Spa. An Outrigger spokeswoman says Outrigger manages the Kaua‘i Beach Resort as a traditional hotel and owns most of the units, but she could not provide specifics on unit counts. David Carey, the longtime CEO of Outrigger until its sale by the Kelley family, says that thanks to KSL’s ownership, Hawai‘i-based Outrigger is expanding in the way he always dreamed.

“When we were buying and selling hotels, the average price of those hotels were somewhere between $25 million and $125 million a property,” he says. “Now, if you look at hotel prices, it starts $200 million and up, $200 million, $400 million. So that’s more capital than a small family business could put in.”

HOTELS BECOME MORE UPSCALE n 2021, the Westin Maui Resort & Spa debuted the jewel of its three-year, $120 million propertywide transformation: its 217-room Hōkūpa‘a tower, named for the North Star.

It’s the first and only hotel-within-a-hotel concept in Kā‘anapali, says GM Josh Hargrove. The rooms have wood floors and modern furniture and designs that evoke the sand and sea of Kā‘anapali Beach. Guests who stay there have perks that other hotel guests don’t, like access to the tower’s second-floor club, The Lānai at Hōkūpa‘a, where they can swim in an infinity edge pool, enjoy cocktails made by a certified mixologist and attend exclusive Hawaiian cultural activities.

Hargrove says the Westin increased its Hōkūpa‘a tower nightly rates by about 80% after it was renovated. That attracts visitors with more money to spend in the surrounding community and leads to higher employment levels due to the elite service required.

“All the other businesses that come after and then rely on tourism thrive when you have an increase in customer or visitor spend and discretionary income,” he says. “It's not only the renovations. All of the aftermath of that just lasts for years or decades, as we make sure this worldclass destination competes with the best of the best all around the world.”

The Westin Maui, which was built in 1971, is undergoing a $30 million renovation, expected to be complete in early 2024. That project includes a transformation of its Ocean Tower rooms and the creation of a social entertainment space with Topgolf swing suites, bowling, virtual reality games and a bar.

Hawai‘i hotels have completed more than $2 billion in improvements since 2019, Vieira says. Significant investments like that are needed if hotels here are to compete on a global luxury level, he says.

“Why private equity has been so good for Hawai‘i is when they come in and buy something, they don’t plan to sit on it for seven years and then 22

FE B R UA RY 2 0 24

sell it with maybe more profit,” he says. “They go in and they go, ‘What can be done to reposition and rebrand, upgrade, create a luxury tower?’ Then in generally seven or eight years, they’ll sell it to the next private equity firm, which will do the same thing. What this has done for Hawai‘i is it has created significant investments.”

Dickhens was the president of Kyo-ya Hotels & Resorts during the Cerberus era. He says Kyo-ya invested over $350 million to reposition its Sheraton Waikīkī, Moana Surfrider and Royal Hawaiian properties, which hadn’t seen significant capital investments in a while.

The Prince Waikiki also completed major upgrades in 2017, just as Cerberus fully exited from Seibu Holdings.

Dickhens was VP of Prince Resorts from 2014 to 2016.

Outrigger Resorts & Hotels has made major reinvestments, too, in the years since it was acquired by private equity company KSL. Jeff Wagoner, president and CEO of the Honolulu-based company, says the company has infused over $300 million into its properties.

That includes an $80 million renovation at the Outrigger Reef Waikīkī Beach Resort. The project paid tribute to the area’s voyaging past and included transformed guest rooms, the Kani Ka Pila Grille and openair Herb Kāne Lounge. It also created a permanent Hawaiian cultural center. Kaipo Ho, Outrigger Hospitality Group’s former director of cultural experiences, says the Reef’s renovations showcase a huge leap in Outrigger’s longstanding commitment to Hawaiian culture. He helped Outrigger create its values-based corporate culture in the ’90s and assisted employees through the transition to KSL. He retired in 2020 after 27 years with the company.

PRIVATE EQUIT Y- OWNED HOTELS IN HAWAI‘I, 2023 Private equity firms own 33 of the state’s 144 hotel properties and control about 29% of the state’s 42,000 rooms.

BY P R O P E R T Y C O U N T

ISL AND

TOTA L H OT EL S

PR I VAT E EQ U I T Y H OT EL S

% PR I VAT E EQ U I T Y

H AWA I ‘ I

27

7

26%

L Ā N A‘ I

3

0

0

M AU I

29

9

31%

O ‘A H U

69

14

20%

K AUA‘ I

16

3

19%

BY R O O M C O U N T

ISL AND

TOTA L ROOMS

PR I VAT E EQ U I T Y ROOMS

% PR I VAT E EQ U I T Y

H AWA I ‘ I

5,762

2,012

35%

L Ā N A‘ I

320

0

0

M AU I

7,494

3,735

50%

O ‘A H U

25,513

5,716

22%

K AUA‘ I

3,212

739

23%

A Note About Our Data: These numbers are only for properties classified as hotels in the Hawai‘i Tourism Authority’s 2022 Visitor Plant Inventory. While some hotel properties may have timeshare, condo-hotel or vacation rental units, only their hotel units are included in our count. In some cases, Hawaii Business Magazine updated the number of hotel units and added properties that were not in the 2022 inventory. I did not include military hotels, timeshare properties or condo-hotels in my research, though this list does include four Lahaina properties that were damaged in the August wildfire.

Renovations of the Outrigger Kona Resort & Spa and ‘Ohana Waikīkī East are expected to be complete in 2024. And Outrigger’s newly acquired Kā‘anapali and Kaua‘i resort properties will undergo complete renovations in the coming years, Wagoner says.

The Grand Wailea is also working on a property-wide renovation. The Grand Wailea already unveiled new dining concepts and its updated exclusive Napua Tower.

Kalei ‘Uwēko‘olani, cultural programming manager and leadership educator, says the resort’s new Kilolani Spa, which will open in 2024, will offer signature treatments and programming inspired by the Hawaiian lunar calendar and traditional Hawaiian wellness practices. And the Humuhumunukunukuāpua‘a restaurant will also incorporate local culture into the dishes, such as through ingredients, the way they’re served or how they look.

The resort wants to add 151 new guest rooms and make other enhancements, too, but those efforts are still in limbo as the project goes through a contested case hearing at the Maui Planning Commission.

Several of the private equity owners used loans to fund their renovations. For example, BlackSand Capital took out a $240 million loan when it acquired the 27-acre, 500-room Royal Lahaina Resort, which was not touched by the fire. Some of that loan is being used for a “much-needed” renovation of the lobby, retail, and food and beverage areas, along with upgrades to the resort’s 122 villas, Kobayashi says.

Powell and Aucello, the hotel consultants and brokers, say that it’s more common for an existing hotel owner to pay for renovations using funds from their replacement reserves, rather than get another loan.

Other times, an owner will refinance their property and do a renovation as part of that process.

B OT TO M - L I N E F O C U S ocated on 40 acres in South Maui, the Grand Wailea was built in 1991. Developer Takeshi Sekiguchi spent $600 million on the 787-room hotel, which included $30 million worth of fine artwork, an entry waterfall, expansive gardens and a 2,000-foot-long pool with slides and rapids.

In 1998, the hotel underwent financial restructuring and was sold to an affiliate of investment company Credit Suisse First Boston. Five months later, it was picked up by KSL Recreation Corp..

Former state Rep. Tina Wildberger worked there in the late ’90s in food and beverage. She says under Sekiguchi, taking care of guests and employees was emphasized. But under KSL, the focus shifted to numbers.

“KSL came in hard and started threatening people” who weren’t working the number of hours that it expected them to, she says. “I’ll never forget the number 1,560. They came in and were threatening if you don’t have 1,560 hours in annual that you worked, you’re getting your benefits dropped, your job is in jeopardy.”

Others also describe how things changed at hotels H AWA I I B U S I N ES S

23

THESE AREAS HAVE THE HIGHEST CONCENTR ATIONS OF PRIVATE EQUIT Y- OWNED HOTELS AREA

TOTA L H OT EL S

PE H OT EL S

% PE H OT EL S

TOTA L ROOMS

PE ROOMS

% PE ROOMS

W E S T M AU I

11

5

45%

3,674

2,250

61%

S O U T H M AU I

11

4

36%

3,253

1,485

46%

WA I K Ī K Ī/A L A M OA N A

55

12

22%

22,254

5,144

23%

KO N A

9

3

33%

2,073

1,210

58%

KO H A L A / WA I M E A / K AWA I H A E

9

2

22%

2,716

629

23%

where they worked after private equity took ownership. On a Friday afternoon, Renee Minshall, a worker at the Hilton Hawaiian Village, proudly says she worked at the property when it was owned by the Hilton Hotel Corp. She says those were the “good old days” and fondly describes seeing guests’ babies grow up and get married as families returned again and again.

“We were empowered to go above and beyond for our guests, and do whatever it took to make them happy,” she says.

“And we kind of don’t really have that anymore. It’s been lost in the shuffle of all the changes and cutbacks and stuff.”

The changes began after Blackstone acquired Hilton for $26 billion in 2007, Minshall says. Shortly after, a company came in to monitor and evaluate employees’ movements. She later learned they were trying to identify redundancies, and if employees had too much downtime because of the redundancies. She vividly remembers, with tears in her eyes, HR telling her that her position was cut. She ended up interviewing at other companies, but because she was already older, she says, no one wanted to hire her. The union was eventually able to restore her job. When she lost her job, Minshall had just returned to the property after a handful of years living on another island. Before that move, she had worked at the Hilton Hawaiian Village for 12 years.

“It still bothers me until this day that that happened to me,” she says. “You know, and all the years of service I put in, and 24

FE B R UA RY 2 0 24

that’s how they treated me. And they had like no value for me even though I valued everything I did every day.”

She now works in the bell department, which helps guests with luggage and provides other services, and has moved up in seniority, but she worries that a layoff could happen again. And others in her department are now suffering the ramifications of owners focusing on profits over people and guest service, she says.

The Hilton Hawaiian Village is currently owned by Park Hotels & Resorts, a public lodging real estate investment trust, or REIT, spun out from Hilton Worldwide Holdings. REITs, like private equity firms, aim to generate income for investors but are different in that they must pay at least 90% of their taxholder incomes in the form of shareholder dividends each year and are open to individual investors, rather than only institutions or accredited investors. About 7% of Hawai‘i’s hotels are owned by REITs. Minshall says the number of workers in her department is down 40% since Covid. The property sometimes sees 800 to 900 check-ins a day, so her team is constantly moving across the 22-acre property. When we spoke in early December, her team, made up entirely of full-timers, was struggling with shifts being cut from eight hours a day to five or even four. Employees must work 20 hours a week to maintain their health benefits,

so they were barely making the cut some weeks.

Current and former workers at the Turtle Bay Resort and Grand Wailea, owned by Blackstone since 2017 and 2018, respectively, say they’ve been doing more work with fewer staff members. The employees I spoke with – all but one had 10 or more years with their hotels – asked that the magazine not use their names. Some of those who still work at the hotels feared retaliation; others who’ve moved on to new jobs didn’t want to risk their relationships with their new employers.

Some of the Grand Wailea workers say they’re so overwhelmed with their workloads that it’s impacting the cleanliness of the hotel and the speed with which they can respond to guests’ requests. It’s also taking tolls on them physically. One says she has back pain and has hurt herself from having to work fast enough to keep up with everything that needs to be done.

In other cases, some with lower seniority aren’t getting enough hours to maintain their health insurance. One worker says he got so few shifts that he didn’t make enough hours to keep on as a full-timer and lost his health insurance. He's since had to stretch his medications to compensate.

“I’m totally understanding this is about making money,” he says. “But you cannot mistreat people that you used to make that money. To me, they look at us as just not human beings.”

Workers at both the Grand Wailea and Turtle Bay say they love their jobs but it feels like they’re being pushed out, particularly longtime employees who know the properties and cultures best. And, like the Hilton Hawaiian Village worker, they say the tools they need to express Hawai‘i’s aloha spirit to customers have been taken away, along with the time it takes to do that.

“I think my whole takeaway from this whole thing is what’s sad about Turtle Bay is that it’s not like how it was before,” says a former worker. “Like it really isn’t. The Turtle Bay when I first started, I loved.

Everything was about guest experience. Now it’s not.”

That worker adds that returning guests told her that they felt the resort’s aloha spirit felt forced and that everything was about money.

The Grand Wailea, one of Maui’s largest private employers, is part of a class action lawsuit filed by nonunionized spa workers who allege that hotel operator Waldorf Astoria and owner Blackstone “willfully” misclassified them as independent contractors to avoid pay and benefits. There were 115 named plaintiffs as of mid-December, according to Brittany Harmssen, lead counsel for the plaintiffs.

Harmssen says the median tenure of the plaintiffs is 15 years, though many have been with the property since its original owner, which “speaks to their vulnerability and the ability of the hotel to exploit them, essentially.”

She adds that many plaintiffs have told her that the resort’s original owner provided some of the best working conditions and that conditions have worsened since.

And some of the issues they faced seemed to originate under Blackstone, she says. For example, spa workers haven’t received their full tips because the hotel takes a percentage of the mandatory 20% gratuity charged to spa clients. They also have not been paid for providing free services, at the direction of the hotel, to hotel employees and VIP clients.

According to Hawai‘i U.S. District Court records, the court cancelled a settlement conference that was scheduled for early December.

A spokesperson for the Grand Wailea wrote in an emailed statement: “While we believe this case is without merit, Grand Wailea cares deeply about our workforce and we remain committed to being a bestin-class employer.”

LARGER PICTURE ric Gill, the former head of Unite Here Local 5, which represents hospitality and health care workers in Hawai‘i, says the perceived increased focus on profits over operations and employees is a result of more properties being controlled by real estate companies, rather than hoteliers.

Unite Here Local 5 says it has about 1,400 fewer hotel union members now than in 2019. The International Longshore and Warehouse Union (ILWU) says it’s down by about 2,000 hotel members. At the same time, Hawai‘i hotels are charging higher average room rates and dealing with lower average occupancy rates.

Up until October, except for August, hotels statewide each month in 2023 had average daily room rates that were 30% to 40% higher than the same time in 2019.

Statewide revenue per available room was 20% to 32% higher, according to Hawai‘i Hotel Performance Reports compiled by the Hawai‘i Tourism Authority. Meanwhile, occupancy rates ranged from 72% to 77%. In 2019, occupancy rates ranged from 78% to 85%.

“Our (total) work hours have improved but the total H AWA I I B U S I N ES S

25

amount of jobs have not returned,” says Cade Watanabe, financial secretary-treasurer of Local 5. “So that means that not only are the owners reaping the huge benefit from a higher room rate, but they’re reaping the benefit from understaffing our jobs.”

Gill says that Hawai‘i needs a tourism industry that its people will support and feel good about. And that can’t happen when there are fewer jobs yet more tourists putting more pressure on local communities, he says. Visitor arrivals are expected to increase to over 10 million after 2024, according to the state Department of Business, Economic Development and Tourism’s third quarter economic outlook.

“We’re getting shortchanged here.

And I think (in) the long-term, this is something these corporate entities aren’t going to attend to no matter what they say,” Gill says.

He explains the implicit social contract behind Hawai‘i’s hotel industry: “We gave them our beaches, so they’d provide the jobs.

They shouldn’t get to keep the beach and eliminate the jobs, which are the benefit that we get from them operating in our island.”

In an emailed statement, Blackstone wrote that staffing at Turtle Bay Resort has increased by 10% post-Covid and that it anticipates adding new jobs at the Grand Wailea once its spa reopens in 2024.

“Blackstone has invested more than $650 million to ensure our Hawai‘i hotel properties remain iconic destinations and top employers for generations to come, and we are proud that these investments have created more than 1,300 local jobs,” the firm wrote.

“During our ownership, the average compensation for employees across our hotel properties has grown by nearly 25%, we have supported more than 700 local businesses in the past year alone and, together with our portfolio companies, have donated millions of dollars to the community, including $1.5 million in response to the recent devastating Maui wildfires. We look forward to investing in Hawai‘i over the long term and will continue to be a responsible steward of our properties.”

The firm added that the Grand Wailea has donated more than $5 million to nonprofits in the last seven years, and its Turtle Bay Foundation has awarded over $1 million in grants and scholarships since its inception. The Ritz-Carlton, Maui Kapalua, meanwhile, has donated more than $440,000 to nonprofits over the last five years.

Marty Leary, director of research at Unite Here, the parent of Local 5, says private equity hotel owners tend to cut costs when they have trouble exiting investments, but, in general, reducing staffing is not the primary way they try to increase the value of their properties before they sell them. Instead, their primary strategy is to reposition the hotel with higher room rates and renovations and then try to sell it at the right time in the real estate cycle. Properties that have unionized employees, for example, didn’t see too many impacts on labor costs when private equity firms took advantage of cheap credit after the financial crisis to buy and sell properties.

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M AU I I M PA C T S n a weekday afternoon in early November, Hanaka‘ō‘ō Beach Park is largely empty, except for the area housing the Kahana, Nāpili and Lahaina canoe clubs.

There, 20 to 30 people gather under a green tent to organize the “Fishing for Housing” protest that began on Nov. 10 at Kā‘anapali Beach. They were prepared to stay as long as it took for the state and county to use their emergency powers to house displaced Lahaina residents, who have been shuffled around various hotels and condos since August.

Kai Nishiki, a West Maui community organizer, walks over to meet me at a picnic table. At the time, she only knew of one property that was going to renew its contract to house displaced residents after November. The Federal Emergency Management Agency reimburses hotels and condos for housing survivors but not at their full rates.

“Hotel ownership is increasingly important because whoever owns a property determines what the goals and priorities are,” Nishiki says. “And most of the time, if you aren’t from here and aren’t living here, the community’s needs aren’t the priority. The bottom line is. And that likely means more extraction and exploitation for the people who are here.”

She says the fact that over 7,000 residents have been moved around and asked to leave so that visitors can return is indicative of that: “That says profits are more important than people.”

Chris West, president of ILWU, says the aftermath of the Maui fires revealed a lot of intent and sincerity on behalf of some of the hotel owners – and lack thereof among others. He says BlackSand Capital, the Honolulu-based co-owner of the Royal Lahaina Resort, was the most helpful to members impacted by the wildfire.

“They helped us the most by far and have been the most willing to take the loss to help local families, and it’s evident,” he says. “There’s a big difference between a locally owned private equity family” and other kinds of owners. He says Blackstone also stood out for the assistance it gave ILWU members.

In an emailed statement, Blackstone wrote that its community commitment is illustrated by the more than $1.5 million in relocation relief, assistance payments and charitable donations that the firm and its portfolio companies provided to support its hotel employees and others impacted by the fire. It also helped provide thousands of meals through its Maui hotels, donated supplies, and provided laundry services and fresh linens to those in need.

“In moments like that I think it’s really, really important to take a step back and realize why we’re all here,” says Kobayashi of BlackSand Capital. “It’s not just to make investments and make money.”

LO O K I N G A H E A D ucello and Powell say that the private equity-owned hotels are still seeing positive cash flows even if they’ve exceeded their timelines for exiting their investments. That means that they can refinance their loans and share some of the proceeds with their investors while still owning the hotel. The Westin Maui, for example, refinanced its existing $360 million loan for $515 million; that includes a $145 million cash-out for sponsors, according to CoStar, a commercial real estate analytics company.

They and other experts don’t expect to see a major change in the types of buyers that have been purchasing Hawai‘i hotels over the last five or 10 years: Private equity firms, for the most part, will continue to sell their larger properties to other private equity firms or to REITs. “You’ve got to be dedicated and want to get into this market,” says Mark D. Bratton, senior VP of Colliers Hawai‘i. “It’s not inexpensive, it’s not for the faint of heart, it’s not fast money.

It’s long-term, it’s a very limited supply of what you can get.”

Dickhens of Trinity Investments says hotel owners in Kā‘anapali and Wailea are generally large institutional investors who hold their properties for a long time, and they’ll continue with that strategy despite the Lahaina fire.

WHICH PRIVATE EQUIT Y FIRMS OWN THE MOST HAWAI‘I HOTELS? KSL CAPITAL PARTNERS:*

BLACKSTONE:

BLACKSAND CAPITAL :

ROCKPOINT:

*All but one property are owned by Outrigger, which is owned by KSL Capital Partners. Its properties include the 18-unit Plantation Inn, which was destroyed in the August Lahaina fire, and the 350-unit condo hotel, the Outrigger Kaua‘i Beach Resort and Spa, which it operates as a regular hotel.

He adds that while private equity firms might be required to sell due to the life of their funds, there are ways they can recapitalize and stay in a project under a different ownership form.

Rafter says the market will continue to consolidate. That means investments will continue to get bigger and the pool of investors will continue to shrink.

It also means there will be fewer people like him investing in smaller hotels with short ground leases.

Leaders at Unite Here Local 5 and the ILWU say that 2024 will be a big year for hotel contract negotiations. They say they’ll fight to increase worker wages and address increased workloads.

In Southern California, thousands of Unite Here Local 11 hospitality workers have been striking on and off since summer after 60 hotel contracts expired.

They’ve been demanding better wages – ones that keep up with the rising cost of living – plus improvements to their health and retirement benefits. As of mid-December, the California union had reached tentative agreements with 10 hotels.

“I'll be honest, I don't care who owns it, I just care if you’re paying our workers living wages,” says West of ILWU. “That for me, that’s what it’s more about. … As a whole, the tourism industry has definitely changed and has shifted more towards profit margins than necessarily (visitor) experiences.”

Both Local 5 and ILWU have been able to negotiate with private equity owners. About 40% of the private equity-owned hotels have union employees.

The boutique Hyatt Centric Waikiki Beach is owned

by KKR, a private equity firm that manages $528 billion in assets. It has been a union property since 2018.

Local 5 recently negotiated a new six-year contract that will bring Hyatt Centric workers’ pay up to the union’s standard, says Anson Leaeno, who has worked at the property since it opened in late 2016.

The contract also provided severance pay to food and beverage workers impacted by the property’s restaurant closure. Leaeno says he’s enjoyed working in the hotel’s housekeeping department and is paid well.

Minshall, the Hilton Hawaiian Village worker, says it shouldn’t matter who owns a hotel, but there’s a disconnect between a hotelier, like the old Hilton Hotels Corp., and an investment company.

“They’re only investing for their shareholders and to make money, right? They’re not making us happy,” she says. “They’re making their pockets happy and bigger and bigger and bigger every year. And we know the numbers, right? I’m sharing the numbers of my people now and making them aware of what's going on. And now they’re aware, now they’re more willing to speak up for their rights. Now? Yeah, because we’re the ones that run the hotel. We’re the ones that work.”

The reporting of this story was supported by the Poynter Institute through a grant from the Omidyar Network. The two organizations had no role in the reporting or editing of this story.

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Increasing housing density within existing urban and suburban areas is a smart solution in many ways. It prevents sprawl and preserves ag land and open spaces; it makes use of existing infrastructure instead of building costly new infrastructure that raises housing prices; and it allows people to work, live and play in close proximity – and avoid long commutes.

FIVE WAYS TO BUILD MORE HOUSING FOR HAWAI‘I Sterling Higa is a former contributing writer for the magazine and now the executive director of the nonprofit Housing Hawai‘i’s Future, which advocates for housing reform on behalf of Hawai‘i’s young people. Hawaii Business Magazine asked him to write about smart solutions to the Islands’ housing crisis. Here is his report.

by S T E R L I N G H I G A SOLV ING OU R STATE’S HOUSING CR ISIS requires

PHOTO: AARON YOSHINO

that we be honest about the scale of the problem: • For decades, Hawai‘i didn’t build enough housing to keep pace with population growth. Meanwhile, demand for second homes and short-term rentals nibbled away at inventory. Now, we face a statewide housing shortage. Maui faces an even more dire shortage, with thousands of homes destroyed by fire.

• Hawai‘i’s four counties have the most

burdensome housing regulations in the country, limiting new supply. “Exclusionary zoning” policies that favor detached single-family homes have led to suburban sprawl. That sprawl has attracted the opposition of environmental and Native Hawaiian groups, who now form a significant anti-development lobby.

These groups are joined by established homeowners who want to preserve their communities in amber and prevent any redevelopment or change.

The combined political influence of these groups stymies housing reform.

• Unprecedented demographic changes await. The state has weathered seven consecutive years of population decline, a trend that shows no sign of slowing, despite optimistic projections by our state economists. Our population is aging and our labor force is shrinking. Young people are marrying later than their parents and grandparents and having fewer children. It seems that after decades of rapid population growth, our state has reached a plateau.

Opponents of growth cheer, while their children weep for lack of economic opportunity and affordable housing.

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F I V E W AY S T O B U I L D M O R E H O U S I N G F O R H A W A I ‘ I

• As an American state, Hawai‘i is at the mercy of the Federal Reserve, which sets the country’s monetary policy. Rising interest rates normally reduce housing prices. But the Federal Reserve’s recent rate hikes have not lowered housing prices in Hawai‘i. Instead, the high rates have further increased the unaffordability of homeownership for many local families. And out-of-state demand for Hawai‘i real estate remains strong.

• Covid devastated the local economy, with more families slipping into the just-above-poverty status of ALICE (asset-limited, income-constrained, employed) despite federal assistance. And the fires on Maui interrupted the recovery. The state and county must support displaced families, replace infrastructure and rebuild. And they may be on the hook for billions in damages, pending the outcome of civil litigation.

• Slowing economic growth means less tax revenue to support the basic functions of government, including building and maintaining infrastructure or issuing housing permits. Our political system works well when the economic pie is expanding; more can be given to competing factions each year. But growth has slowed in recent years, making future decisions more difficult.

With population shrinking, interest rates high and economic growth slowing, we need a paradigm shift in the way we solve housing and other problems.

Here are five ways to solve our housing crisis once and for all.

1.

END THE SPRAWL SPR AW L IS U NSUSTA INA BLE . But it’s not inevitable.

Zoning is the basic policy of land use, and it’s set by the counties. Two aspects of zoning contribute to suburban sprawl: single-use zoning and limits on density.

We should change both.

• Single-use zoning is designed to separate residential, commercial and industrial uses. It makes sense to separate homes and factories; it’s counterproductive to separate residential and com30

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mercial uses. The most vibrant cities in the world (think: London, Paris, Tokyo) favor mixed-use development. And charming small towns do too. This is as true in Hawai‘i as it is everywhere else.

For example, it’s no coincidence that the most popular towns to visit on Maui were all developed before the county’s current zoning code was adopted in 1960: think of Hāna, Makawao, Pā‘ia, Wailuku and pre-fire Lahaina. Compare those quaint towns with Kīhei, the land of strip malls.

• Density is the key to sustainability. On islands with limited land, we cannot afford to sprawl endlessly. Sprawl is bad for the environment (think: vehicle emissions and that Joni Mitchell song about paving paradise to put up a parking lot). Sprawl is an inefficient use of land that could be used for open space, agriculture or renewable energy.

And sprawl is terrible for quality of life: Time spent driving is time spent dying. A person spending two hours a day sitting behind the wheel is sedentary and more likely to suffer from obesity.

And commutes reduce time spent with family, volunteering in the community or getting civically engaged.

Recommendation: Allow dense, mixeduse development near job centers.

2.

INCREASE CERTAINTY AND SPEED TIM E IS MON EY. And with high inter-

est rates, time is more expensive than ever. To keep housing affordable, developers need certainty and speed in the entitlement process.

• Certainty means that so long as projects conform with existing zoning and building codes, they are automatically approved, without discretionary approvals required by government employees or elected politicians.

• Speed means that projects are approved quickly. Policymakers often ignore the impact of time on the cost of development, but the costs contribute to higher home prices and discourage housing construction.

Developers take on substantial risk, fronting tens or hundreds of thousands of dollars before construction begins. On large projects, pre-development costs can run in the millions. And it’s not uncommon for small developers to mortgage their homes to finance projects.

A project that starts out affordable can easily become unaffordable over time. For example, a developer may plan to offer for-sale units affordable to families earning the area’s median income.

But if interest rates are raised before the project receives approvals, borrowing costs may force the developer to convert for-sale units into affordable rentals.

Meanwhile, every day developers wait for entitlements, their labor and material costs are increasing. If an affordable rental project is delayed too long, it could be scrapped or converted into a market rate project.

Recommendation: Allow what is called “by right development.” That means none or fewer discretionary approvals, which involve elected or unelected officials picking and choosing the projects they allow. When discretionary approvals are necessary, use a “shot clock” to speed decision making.

3.

FOCUS ON ADAPTIVE REUSE AND REDEVELOPMENT DEM A N D FOR COM M ERCI A L R E A L ESTATE declined during Covid, and

widespread adoption of remote work means demand has not returned to its pre-pandemic peak. This means a hollowing out of urban and town cores. But it also creates an opportunity to return people to the town cores and to make those places multidimensional, where people live, work and play.

Efforts are already underway to convert some commercial space into residences. In Downtown Honolulu, The Residences at Bishop Place is an example of an office building converted to residential apartments. And many offices in the Davies Pacific Center are slated for conversion into apartments.

However, more can be done across the state. Building code and zoning changes are necessary to allow conversions from commercial to residential

adaptive reuse that addresses the typical challenges local developers face.

• Second, adaptive reuse often includes changing zoning or adding residential use to underlying commercial zoning.

This rezoning process should be streamlined. Ideally, counties should rezone whole areas they’d like to see revitalized rather than relying on developers to pursue spot zoning for individual parcels.

• Third, infrastructure capacity must increase to support additional residents.

As urban and town core infrastructure nears the end of its service life and must be replaced, counties should upgrade with core growth in mind. This is, in the long term, a more sustainable approach than sprawling out.

Recommendation: Enact building code and zoning reforms to enable adaptive reuse and redevelopment. Support adaptive reuse projects with infrastructure investments.

4.

S E E K I N N OVAT I V E FINANCING MODELS INNOVATI V E

PHOTO: DAVID CROXFORD

The shift to remote work has left some office and commercial buildings underused. Many of the offices at Downtown Honolulu’s Davies Pacific Center are being converted to apartments – an adaptive reuse of space that could prove cheaper and more environmentally friendly than tearing down the building and constructing a housing tower from scratch.

use. So too are investments in infrastructure and tax incentives to support adaptive reuse and redevelopment.

Consider Maui, where the Queen Ka‘ahumanu Shopping Center lies in the middle of Kahului. Many storefronts have been vacant for years, and the massive parking lot is largely empty even on Black Friday. It’s space enough to fit hundreds of housing units, perhaps a thousand. Why not build housing there,

sparing greenfield development and revitalizing the area? Similar opportunities abound throughout the state.

A few challenges await: • First, some exemptions from building codes should be permitted to speed adaptive reuse. Instead of slavishly adopting international building codes, each county should adopt a general framework for

FINA NCING

MODELS

can unlock new opportunities for affordable housing development. One model is the community land trust, where the community collectively owns the land via a nonprofit, helping to stabilize housing costs and prevent speculation-driven price increases. Nā Hale O Maui, PAL Kaua‘i, and Hale O Hawai‘i are three examples of local community land trusts, and for now, all operate at small scale.

We should provide resources and support to help them grow.

Another model is the housing conservancy. In this model, a nonprofit serves as an investment fund manager for a for-profit investment fund. The fund invests in developing or acquiring workforce housing, keeping it at a price that the local workforce can afford. Social impact investors accept a lower rate of return than they would earn with private equity.

The Washington Housing Conservancy in D.C. and the Austin Housing Conservancy in Texas are two examples of successful housing conservancies. All that’s necessary is to orgaH AWA I I B U S I N ES S

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nize a conservancy and attract capital, which shouldn’t be too difficult: Local banks and insurance companies, union stabilization funds, Kamehameha Schools and the state Employee Retirement System all have deep pockets and an interest in creating and preserving workforce housing in Hawai‘i. They should invest in workforce housing.

And our billionaire malihini should throw in their fair share.

Recommendation: Support community land trusts and establish a workforce housing conservancy in Hawai‘i.

5.

INVEST IN INFRASTRUCTURE ROA DS, BR IDGES A N D HIGH WAYS,

electrical power, water, wastewater, broadband. Ports, airports, rail. They’re some of the basic infrastructure of modern life. To this list, we could add schools

(the infrastructure of workforce development). But not all infrastructure is good infrastructure.

Our state has a bad habit of building infrastructure without a plan to maintain and replace it. It’s easy to see why: Short-term political pressure on elected officials makes them focus on the present with little consideration for the future.

Deferred maintenance is the norm, with Hawai‘i receiving a D+ grade for infrastructure from the American Society of Civil Engineers.

It’s more exciting to build something new than to take care of what we already have. There’s no ribbon-cutting ceremony for a water main replacement. And an upgraded wastewater treatment plant doesn’t make for a good photo op.

But infrastructure remains long after officeholders are gone. So we should get it right. Before we make investments in infrastructure, we should an-

swer three fundamental questions: • Will this infrastructure support the pattern of development we want for our grandchildren?

• Will this infrastructure support economic activity to fund its maintenance and eventual replacement?

• Will this infrastructure provide benefits for the general public or only for a narrow elite?

Then we should consider the potential for sea-level rise and ensure that infrastructure is resilient to natural disasters. Much of our infrastructure will need to be relocated or hardened to prevent future damage.

Finally, we need to fund infrastructure. A few things will help.

• First, we must elect leaders who will

Building | Commercial | Heavy (Civil) | Waterfront & Foundation | Power & Industrial

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SPONSORED CONTENT ADDRESSING O‘AHU’S HOUSING CRISIS ONE PROJECT AT A TIME prioritize long-term infrastructure needs over short-term political pressure.

• Second, we need more programs like House Maui to align federal, state and county resources. House Maui has prepared three regional infrastructure plans that link proposed infrastructure improvements to the affordable housing and community facilities supported by that infrastructure. These plans are a jumping off point for discussion among stakeholders about the value of infrastructure investments.

• Third, we should explore different methods of funding infrastructure. For instance, tax-increment financing provides a way to capture the future tax benefits of real estate improvements to pay now for the cost of those improvements.

Another example is community development districts, which is the way that Kaka‘ako was redeveloped. Community development districts plan, finance, construct, operate and maintain community-wide infrastructure, charging property owners an assessment similar to their property tax. Every option should be on the table.

Recommendation: Invest in infrastructure that supports economic activity and benefits the public.

Explore different methods of infrastructure funding, like community development districts and tax-increment financing.

Other solutions exist, but these five steps taken together are enough to solve Hawai‘i’s housing crisis and provide better lives for our residents. The time for action is long overdue. Where do you stand?

It’s no secret that O‘ahu’s housing demand exceeds our supply. It’s a crisis that we can only address if elected officials, developers, industry leaders, and the community all work together. Our company, ProsPac, is well poised to help meet this need.

ProsPac is a boutique development firm committed to delivering a wide array of homes—from affordable rentals to market condominiums—to meet the diverse needs of Hawai‘i residents. Each ProsPac project, like Azure Ala Moana, revolves around livability and creating quality homes within reach for kama‘āina families.

To learn more, visit prospacholdings.com.

William Chen serves as the vice president of ProsPac, established in Honolulu with a desire to create a brighter future for the people of Hawai‘i.

GUIDED BY HAWAI‘I’S CULTURE, VALUES AND ENVIRONMENT We bring a global perspective to our work, while respecting local culture and environment. Our diversity, deep connection to history, and desire to create a better future for the people of Hawai’i inspire us.

PROSPAC HOLDINGS GROUP, LLC. 1440 Kapi‘olani Blvd. #1406 Honolulu, HI 96814 (808) 955-7018 | info@prospacholdings.com

H AWA I I B U S I N ES S

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Shipping, Air and Transportation The Lifeline to Hawai‘i

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S H I P P I N G / A I R / T R A N S P O RTAT I O N

The trucks lined up are carrying donated popup tiny homes being loaded to Matson ship Lurline in Long Beach for delivery to Maui.

B

etween September 2022 and September 2023, Hawai‘i saw a steep increase in imports to $288 million from $166 million, a 67.1% increase, according to The Observatory of Economic Complexity. Exports decreased over the same time period, by $25.1 million (-58.8%) to $17.6 million.

Young Brothers reports a slight increase in tonnage in 2023 compared to pre-pandemic levels in 2019. In addition to 12 weekly sailings, they introduced a new service line in April 2023 with their Kaholo barge, which has a carrying capacity of 500 cars and makes weekly port calls to Nāwiliwili, Kahului, and Hilo.

“We’re also growing our fleet by constructing two new barges that will enhance connectivity and reliability of service for our customers starting in late 2024,” says Nalani Say, Director of Terminal Operations, Young

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Brothers, LLC. “Containers — dry or refrigerated — represent the main commodity we move on our barges annually, though cars continue to account for a significant portion of our business. We expect the volume of vehicles shipped to remain steady in 2024 and hopefully grow as our Kaholo service continues to open opportunities for kama‘āina.”

Matson has also invested in new ships and terminal improvements to support its Hawai‘i service. Last year, it committed $1 billion to building three new ships that will serve the islands starting in 2026.

HARBOR DEVELOPMENTS

Although an early 2024 completion date was originally anticipated, the new $555 million Kapalama Container Terminal at Honolulu Harbor is now expected to open in 2025.

“When fi nished, Kapalama Container Terminal will provide a roadmap for transition of Hawai‘i’s commercial port infrastructure to clean energy, serving as the state’s most efficient op-

erating terminal,” says George Pasha, IV, President and CEO, Pasha Hawaii.

The improvements will also open terminal space at Pier 41, paving the way for Young Brothers to redesign their terminal space and optimize cargo flow, according to Say. On Hawai‘i Island, the Port of Kawaihae is also slated for an expansion. Last year, the U.S. Department of Transportation Maritime Administration granted $23.46 million for improvements. The grant will cover 70% of the $33.9 million project, with HDOT funding the balance with revenues from harbor user fees. The construction contract is estimated to be awarded in 2025, and the project is expected to be completed within two years.

“The grant will undoubtedly have a positive impact on a key entry point for grocers, retailers and tourism-related businesses who rely on fast and reliable transportation,” says Pasha.

“We deeply appreciate Senator Brian Schatz spearheading this critical work to improve the Port of Kawaihae, says Say. “We understand that funds will support repaving the port, providing an

PH OTO : COU RTES Y OF M ATSON

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MAUI WILDFIRES’ IMPACT

Just as shipping operations and revenue began to stabilize to prepandemic levels in 2023, “The wildfires had an immediate effect on the items that needed to be shipped with urgency to Maui, mirroring what occurred during the initial start of the pandemic in Hawai‘i,” Pasha says. “We experienced high volume in essential goods and saw a decrease in shipments related to the visitor industry such as rental cars and supplies

for hotels and restaurants.”

Immediately following the fires, shipping companies worked closely with federal, state and county agencies, and nonprofits to prioritize disaster relief shipments.

“In all, we moved more than 125 containers designated for Maui relief and donated more than $90,000 in gratis shipments,” says Say. “We maximized cargo space on every barge that departed to Maui and continue to do so as we field and fulfill relief shipment requests daily.”

Pasha Hawaii implemented its Emergency Response Plan, prioritizing available vessel and neighbor island barge capacity for emergency rations, perishable and non-perishable food and beverage items, and medical supplies.

“Our team worked around the clock,

fulfilling customer requests to ship in essential goods, and we worked closely with government agencies and other humanitarian organizations to deliver much needed supplies to Maui,” Pasha says. Now, “The unusually high volume of essential goods on our container ships has normalized as Maui’s needs transition from relief to recovery.”

Those needs are focusing on rebuilding, housing, and temporary classrooms.

Matson has also worked closely with emergency response agencies in the delivery of equipment and supplies to Maui. Those shipments have included large generators, 40-foot containers of bottled water for FEMA, and refrigerated containers containing perishable food and ice sent by the Hawaii Food Industry Association (HFIA).

Continues on page 40

to serve the rural communities and when translated, means the sudden rain smaller harbors of Moloka‘i and Lāna‘i. shower that quickly passes. Meanwhile, Each barge offers more deck space and the Kalohi Channel that links Lāna‘i YOUNG cargo capacity to meet rising demand, and Moloka‘i inspired the name for the ballastable technology to match chang- second barge, and the word lohi is short BROTHERS ing tidal conditions and more ramps— for ‘alohi, meaning sparkle or shine. both of which allow for more effi cient To learn more about Young During a keel-laying ceremony held in loading and unloading of cargo.

Brothers, visit youngbrothershawaii. winter 2023 in Louisiana, Young BrothTeam members chose Nāulu for a com, email info@htbyb.com or call ers leaders signed their names on a gray sea breeze and rain in Kawaihae, which, (808) 543-9311. slab of steel, which will become the first piece of its newest barge, Nāulu.

This special ceremony marked the official start of the construction of Nāulu, which joins Kalohi as part of Young Brothers’ $25 million investment in growing its fleet to better serve its customers across the island chain. Both new barges will embark on their maiden voyages starting in winter 2024.

“These barges represent our commitment to improving reliability, connectivity and service to our island communities,” says Jay Ana, president of Young Brothers.

Nāulu, measuring 350 feet long, will be homeported in Kawaihae, while From left to right: Young Brothers leaders Chris Martin, Megan Rycraft, Lauren Imada and Nalani Say attend the keel laying ceremony for the company’s newest barge under construction, the Nāulu.

Kalohi is 286 feet long and designed

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PHPH OTO OTO : COU : COU RTES RTES Y YOFOFYOU YOU NGNGBROTH BROTH ERER S S

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enhanced surface for our machines to operate on, and better lighting for safer operations.”

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FROM POINT A TO POINT YOU

When Pasha Hawaii moves to the new Kapālama Container Terminal, Matson will expand into the area that Pasha will vacate.

Matson also transported a diesel generator to provide extra support for refrigerated containers in its Kahului Terminal, and 30 chassis trailers to support anticipated additional cargo volumes on Maui.

“So far, Matson has contributed close to $1 million in cargo transportation and logistics services to response efforts and we are committed to supporting Maui’s recovery for the long term,” says Len Isotoff, Senior Vice President, Pacific at Matson Navigation Company.

Isotoff says another big focus will be continued work toward achieving Matson’s climate goals of reducing fleet greenhouse gas emissions by 40% by 2030, and reaching net zero emissions by 2050.

“A key step in our strategy for reaching these goals is to adopt use of liquefied natural gas (LNG) as a lower carbon ‘bridge’ fuel while new alternative fuels and technologies are being developed.”

The company also expects to complete the LNG installation of a second Aloha Class ship to run on LNG, the re-engining of another vessel to run on LNG, and design work for three new LNG-ready Aloha Class ships that will go into service in 2026 and 2027.

gas, setting the bar in environmental sustainability for future ship building. Both MV George III and MV Janet PASHA Marie were designed to surpass the International Maritime Organization (IMO) 2030 emission standards for Pasha Hawaii is a third-generation, ocean vessels and continue to operfamily-owned company dedicated to ate at a higher standard and capacity serving Hawai‘i with a full range of services and resources to support the than expected.

In addition to investing in its transportation of cargo between the infrastructure, Pasha Hawaii also emHawaiian Islands and the Mainland.

Pasha Hawaii operates a fleet of con- ploys more than 400 locally based tainer ships and roll-on/roll-off vessels residents and supports the community through its Hui Hulilima (Helping calling on multiple port terminals in Hands) employee community action Hawai‘i and California.

Since launching its first cargo ves- team program, and in-kind and cash sel, MV Jean Anne, in Hawai‘i in 2005, donations made to Hawai‘i’s nonPasha Hawaii has continued to make profits throughout the year. major investments in its infrastruc“Our family established Pasha ture. Most recently, the company Hawaii to make a difference in the introduced Hawai‘i’s first ‘Ohana Class lives of those who call Hawai‘i home, container ships to operate on natural by ensuring Hawai‘i’s businesses

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have what they need to provide for their customers, while remaining good stewards of Hawai‘i’s natural resources,” said George Pasha, IV, president and CEO, Pasha Hawaii.

PH OTO : A ARON YOSHI NO ; P HOTO : COU RTESY OF PASHA

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SPECIAL PROMOTIONAL SECTION

R AIL LINE

NEW HOUSING ALONG THE

Now that the first 10 miles of Skyline is running, we update you on new housing along the entire route and what’s being planned.

The concept and selling point is called transit-oriented development, or TOD.

by Chavonnie Ramos PHOTOGR APHY BY A ARON YOSHINO

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already underway along the Skyline route is Ho‘opili, on 1,550 acres in West O‘ahu makai of H-1 and Farrington Highway and just east of UH West O‘ahu. A total of 11,750 homes are planned – both single- and multifamily units – about a third more homes than in all of Waipahu, which sits east of the new housing project.

Developer D.R. Horton says 2,700 families have already moved into finished homes in Ho‘opili, and the rail line is one of the big draws.

“We have noticed an increase in interested homebuyers exploring new lifestyle opportunities that transit-oriented development provides,” says Tracy Tonaki, division president for D.R. Horton Hawai‘i.

The development has its own Skyline station called Honouliuli and nearby Keone‘ae station at UH West O‘ahu has a

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transit hub where riders can catch buses to Mākaha, Wai‘anae, Kapolei, Makakilo, ‘Ewa Beach, Waipahu, Wahiawā, Pearl City, ‘Aiea, Kalihi and Downtown Honolulu. Ho‘opili’s newest condominium project, Nahele, is one block from the Honouliuli station, which has a parkand-ride facility.

Transit-oriented developments give “people a different option – a different lifestyle – by having everything conveniently located nearby,” says Tim Streitz, acting TOD administrator for the City and County of Honolulu’s Department of Planning and Permitting. And it allows people to have “the freedom to choose how to get around,” whether that be walking, biking, driving or public transit.

“We don’t expect that it (TOD) will completely eliminate cars, but it is intended to provide more transportation options so that you don’t have to be com-

pletely reliant upon cars,” Streitz says.

Along with single-family homes, Tonaki says, the long-term plan for Ho‘opili includes high-density mixeduse spaces with ground-floor commercial outlets like restaurants, retail shops and offices paired with residential units above. There are plans to build five schools in the area.

REVI TA L I Z I NG TH E C OMMUNI TY Six miles east of Ho‘opili is Pouhala, a combined rail and bus station also known as the Waipahu Transit Center, which is next to 3.8 acres of land owned

by Kamehameha Schools. KS is partnering with Highridge Costa, a mainland-based developer that specializes in affordable housing, to create a project there called Keawalau at Waipahu.

The overall plan is for 537 units of affordable housing, to be built in three phases along Kahuailani Street, Waipahu Depot Street and Hikimoe Street. An 18-story tower and a 19-story tower for families will be on the makai end of the property, and a seven-story building slightly mauka will serve kūpuna. The units will be rented to working residents with rents set to be affordable to households making 60% or less of the area median income, according to Highridge Costa.

“This is an intergenerational affordable housing development that serves kūpuna, serves the young people and serves families as well,” says Moe Mohanna, president of Highridge Costa Development Co. The project features shopping, dining and working opportunities for new residents, and is just steps away from the bus and Skyline hub. While most of the development will be housing, Mohanna says, Keawalau will also have 50,000 square feet of space for shops, services and restaurants.

In the meantime, there will be disruption. Times Supermarkets announced last year that its Waipahu store will close

and be demolished when construction of Keawalau starts. Don Quijote, which has the same owner as Times, also announced plans to eventually close its Waipahu store, which is next to the West Loch Skyline station.

Kamehameha Schools says it reached out to all commercial tenants in the area, including Times Supermarkets, and encouraged them to come back and rent in the new space. KS also hopes to preserve most of the local businesses and mom and pop shops, Mohanna says.

The project is expected to create 300 to 400 local jobs, including temporary construction jobs and permanent ones. Mohanna says the project will add about $290 million to the economy, including construction costs and

impact fees that will go toward improving local schools and infrastructure.

Highridge Costa and KS spent two years doing “extensive community outreach” for the project, and faced pushback early on, Mohanna says. But when in-person public meetings resumed after the height of the pandemic, the turnout was large, he says, with an “overwhelming amount of support from the community that said, ‘We need this housing.’

“That was very rewarding for us because that’s our goal – we want to do what’s good for the community in the long run,” says Mohanna.

“Activating a space is a catalyst to change an area, and that’s what this combination of mixed-use residential, as well as commercial, is doing.”

There is no timeline yet for construction. The Honolulu City Council approved Keawalau at Waipahu in January 2023 and the project received all its entitlements, but Mohanna says Highridge Costa must reapply for funding this year to help cover the costs of the project.

OTH ER WESTSI DE A ND C ENTRA L O‘A H U P ROJECTS UH West O‘ahu has multiple TODrelated projects planned and in feasibility stages. One project involves the development of about 180 acres of university district land. According to the state Office of Planning and Sustainable Development, the vision for this project is to create a “vibrant, sustainable mixed-use commu-

Multifamily housing being built next to the Honouliuli Skyline station is part of the Ho‘opili development, which is projected to include 11,750 homes at full buildout.

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A Skyline train arrives at the Keone‘ae station. Seen across the street is The Element, an apartment complex offering affordable rentals that opened in late 2020. Also close by is the campus of UH West O‘ahu.

IT’S GOING TO BE REALLY EYE-OPENING TO THE PUBLIC TO FINALLY SEE WHAT TOD IS REALLY ABOUT.” TIM STREITZ ACTING TOD ADMINISTRATOR, HONOLULU DEPARTMENT OF PLANNING AND PERMITTING

nity that will be integrated and complement the UHWO campus.”

The university was also awarded $250,000 in state funding to study TOD near its campus. The grant lets the UHWO study the revenue generating potential for its non-campus lands in East Kapolei. There is approximately 200 acres of land located to the east and south of campus.

The state departments of Hawaiian Home Lands and Land and Natural Resources also plan to create more housing and mixed-use developments near the first two Skyline stations, Kualaka‘i and Keone‘ae.

And then there’s the Aloha Stadium Entertainment District project near the Hālawa Skyline station, which will transform the now-closed stadium and its surrounding area into a multipurpose community that includes homes, commercial and recreational space, an entertainment hub and enhanced transit facilities. The project has stalled multiple times in recent years, but the current timeline has a new stadium opening in time for the 2028 UH football season, according to stadium officials.

The Honolulu Planning Commission has recommended the rezoning of 227

acres in the area and the state Legislature has currently allocated about $420 million for the project.

Last year, construction began on a new low-income rental housing tower near the Hālawa Skyline station. The high-rise is expected to be done by summer 2025 with 302 rental units priced so as to be affordable for households earning 60% or less of the area median income, according to the developer, Halawa View Housing Partners LP. P ROJ ECTS P L A NNED FOR H ONOLULU’S C ORE Streitz, the city’s acting TOD administrator, says multiple projects are planned for Chinatown, Downtown, Kaka‘ako and the Ala Moana area, and high-rise condominiums called The Park on Ke‘eaumoku and The Sky Ala Moana are under construction now.

Once rail reaches town, Streitz says, more people will see the benefits of public transit and TOD. “It’s going to be really eye-opening to the public to finally see what TOD is really about when you get to actually get off and explore, having that sense of freedom of not having to drive everywhere,” he says.

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PH OTO BY A A R O N YO S H I N O

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Soaring Hurricane Insurance Rates Leave Hundreds of Hawai‘i Condo Buildings Under-Insured One local insurance agent estimates that the owners associations for as many as 390 buildings have renewed their policies with less than 100% replacement coverage

BY JA NIS MAGIN MEIERDIERCKS

H

AWAI‘I HASN’T TAKEN A DIRECT HIT from a major hur-

ricane since Iniki devastated Kaua‘i and damaged homes along O‘ahu’s Leeward Coast 31 years ago. Nonetheless, mortgage lenders require Hawai‘i homeowners to carry hurricane insurance that can cost two to three times the annual premiums for a conventional homeowner policy.

A condominium building or complex carries a master hurricane policy that covers 100% of the cost to replace the property – millions of dollars in many cases. Now premiums for those policies have risen so high that hundreds of owners associations are reducing coverage to less than 100%.

That’s creating headaches for everyone associated with Hawai‘i condos, from lenders to insurance agents to buyers and sellers of condos.

“Right now, hurricane insurance is very expensive, and these condos can’t afford to pay for it,” says Sue Savio, president of Insurance Associates in Honolulu, whose clients include many of the condo associations on O‘ahu. “So there are a slew of condos, mainly high-rises, mainly O‘ahu, but other islands too, that don’t have

100% hurricane coverage.”

Savio estimates that owners and condo associations at 375 to 390 buildings, including new high-rise towers in Kaka‘ako, have opted to renew their hurricane insurance policies with less than 100% replacement coverage. There are four standard insurance companies that write property and hurricane policies for condos, according to Hawai‘i’s rules, and one, State Farm, continues to do renewals but hasn’t issued a new policy in the Islands since Iniki in 1992. The other three are First Insurance Co. of Hawai‘i, Allianz and Dongbu Insurance.

Rates for hurricane insurance and regular homeowner policies in Hawai‘i have been driven up by disasters around the U.S. and the world.

The market for reinsurance, which is the insurance that property and casualty insurance companies pay to share their risk, is global, so storms and other catastrophes that strike anywhere in the world impact what homeowners and condo associations must pay for coverage in Hawai‘i.

Some condo associations are forced to go to the secondary market if they are dropped by the standard insurers for having too many claims, or if their buildings have put off renovations or deferred maintenance on big-ticket

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items such as aging pipes. Savio notes that more than 700 condo buildings on O‘ahu were built before 1990, so there are a lot of old pipes.

Insurers on the secondary market are not bound by state rules or rates, so their prices can be more expensive than from standard carriers.

Savio cites the example of one highrise in Waikīkī: The condo association had been paying an annual premium of $235,000 for property and hurricane insurance and had already been dropped by two of the standard insurance companies when the third declined to renew.

The reason: The building’s aging plumbing hadn’t been replaced.

“They had to go to the secondary market and it was $1.2 million,” she says.

“That’s $1 million of maintenance fees down the tubes because they didn’t fix their pipes.”

HARDER TO GET CONDO MORTGAGES

The consequences of under-insured condo buildings filter down to the individual owners. People who want to buy units in buildings with less than 100% replacement coverage may have difficulty finding lenders willing to give them mortgages – in such cases, most local banks won’t lend them money – or they may have to pay higher rates.

That’s because Fannie Mae and Freddie Mac, which purchase mortgages from banks and other lenders, require that multifamily properties have windstorm coverage (which includes hurricanes) for “100% of insurable value.”

Hawai‘i state law, specifically Hawai‘i Revised Statutes Chapter 514B governing condominiums, has a similar rule. It requires property insurance “in a total amount of not less than the full insurable replacement cost of the insured property” but prefaces that with “unless otherwise provided in the declaration or bylaws.”

Banks and other lenders in Hawai‘i started noticing that a few condos had less than 100% coverage about a year ago, says Linda Nakamura, a legislative chair for the Hawai‘i Mortgage Bankers Association. And over the summer,

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when lenders began seeing more and more under-insured condos, Nakamura and Victor Brock, also a legislative chair at the HMBA, began sounding the alarm with their members and state officials.

They have also met with state Insurance Commissioner Gordon Ito to talk about what could be done, such as looking at changes to HRS 514B, or attracting more insurers to do business in Hawai‘i.

They also looked at opening up the Hawai‘i Hurricane Relief Fund, which has reserves of $189.7 million.

“It’s kind of snowballing right now,” says Brock. “It’s in the discovery phase for some lenders that the situation is going on.”

While local lenders have become aware of the situation, most mainland lenders are still writing mortgages for those condos, even those that have local offices in Hawai‘i. Brock points out that while the mainland lenders may have local loan officers, the underwriting may be done on the mainland by people less attuned to hurricane insurance.

UNIQUE TO HAWAI‘I?

Hawai‘i may be the only state where widespread under-insurance of condo complexes is happening.

“We have asked around and could not find other states with this issue,” Nakamura says. “We’ve also reached out to Fannie Mae and Freddie Mac to ask them because they must know if different states are not selling to them because of this, but they could not tell us.”

She notes that Florida has had several major hurricanes in recent years, including Hurricane Ian, which caused more than $50 billion in damage in 2022, and Hurricane Idalia, which caused up to $5 billion in damage in August 2023.

Meanwhile some Hawai‘i lenders may require higher down payments or higher credit scores from condo owners, says Jay Miller, a loan officer at Hawai‘i Mortgage Group.

“We have had some success running loans through our mainland partners, but I don’t know how long it’s going to continue,” he says.

Some buyers are also purchasing

“IF THEY CAN’T GET FINANCING BECAUSE THE BUILDING DOESN’T HAVE SUFFICIENT HURRICANE COVERAGE … IT’S GOING TO BE A BAD SITUATION.” —Victor Brock, Legislative Chair, Hawai‘i Mortgage Bankers Association

supplemental hurricane policies as gap coverage to make up for the shortage, says Realtor Jonathan Ford, principal broker of Honolulu Property Finds, better known by its website, HiCondos.com.

“I don’t think it’s on people’s minds,” says Ford, who hasn’t yet had any clients turned down for loans because of hurricane insurance. “I think it’s going to be an unhappy surprise when it does happen.”

Condo owners in buildings with insufficient coverage may find it hard to sell their units or get home equity loans.

“They’re not going to be able to get a home equity loan if they need to fix anything, if they’ve got a major item in their unit that needs to be fixed,” Nakamura says.

Brock anticipates a major impact on first-time homebuyers, since condos comprise such a high percentage of Hawai‘i’s housing stock, especially on O‘ahu.

“If you think about affordable housing in Hawai‘i, in the majority of the state, the most affordable housing is a condo. It’s going to create complications for folks with low to moderate income,” he says.

“If they can’t get financing because the building doesn’t have sufficient hurricane coverage and no lender is willing to make

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RENDERING: FRANKRAMSPOTT / E+ VIA GETTY IMAGES

a loan, or if their lending options are limited, it’s going to be a bad situation.”

It’s one more thing that’s going to make it harder to buy or sell a condo in Hawai‘i, say the experts I spoke with.

The 2021 collapse of the Surfside condo building in Miami is also having a ripple effect on condo lending.

This year Fannie Mae and Freddie Mac made permanent the rules for condo lending that were created in the wake of that disaster and ceased buying loans for buildings or projects that have put off major repairs – such as replacing old pipes. The new rules also prohibit the sale of a loan on a condo building that has unfunded repairs totaling more than $10,000 per unit.

Major litigation cases can also make a condo ineligible for lending under Fannie Mae rules, as well as if a building is considered a hotel-condo, or if it has too much commercial space. While condo associations are responsible for purchasing the master property and

I N S U R A N C E

hurricane insurance policies for their buildings, individual condo owners are also required to buy what’s known as H06 policies. Such homeowner insurance policies cover everything inside the walls of a unit, from kitchen cabinets and appliances to furniture, clothing and other personal possessions, and typically cost a few hundred dollars per year.

But those are getting harder to get, too. Savio says one company is not renewing policies, while another will only insure condo units if the building’s pipes are 15 years or younger.

And that’s only if a customer hasn’t made too many claims.

“Nobody is writing policies now for anyone who has two claims – nobody,” says Savio.

CLIMATE CHANGE CREATES CHALLENGES

Recent storms like Hurricane Lane in 2018 have brought wind and flooding to parts of the state, but there has been

Hurricane Dora is shown moving west near Hawai‘i on Aug. 7, 2023, a day before strong winds influenced by Dora drove the fast-moving fires that leveled Lahaina and killed at least 100 people.

nothing like the $2.3 billion in damage caused by Iniki in 1992.

But climate change is bringing more weather-related catastrophes. The National Centers for Environmental Information says that in 2023, as of Dec. 8, the U.S. had been affected by “25 confirmed weather/climate disaster events with losses exceeding $1 billion each.” That record total of events – which includes inflation adjustments for previous years – exceeds the previous annual record of 22 events; the annual average over the past five years is 18, a higher average than in previous decades.

The Aug. 8 wildfires on Maui are considered weather-related because of Hurricane Dora, which was passing south of the Islands. Strong winds influenced by Dora drove the fast-moving fires that leveled Lahaina and killed at least 100 people.

“We’ve always been rated for hurricanes; we’ve never been rated for wildfires,” says Savio, who noted that O‘ahu had its own major wildfires this year in Mililani and Wai‘anae. “What’s happening now is West O‘ahu and some areas are going to be rated with wildfire exposure. Parts of all islands are going to be rated for wildfires.”

Brock noted that Acapulco, like Hawai‘i, was unaccustomed to destructive hurricanes making landfall before Hurricane Otis slammed into the Mexican beach resort city on Oct. 25, killing 50 people. It’s estimated the storm caused up to $4.5 billion in damage.

“That was a tropical storm that went to Category 5 hurricane in less than 12 hours,” he says. “With climate change, I think that the insurance companies are saying we can’t base our losses on history because things are changing with climate change and look what happened in Acapulco.”

All of it adds up to turmoil in what Savio calls “condo land.”

“There’s a lot of unrest and turmoil, not only for the owners (but) for the management companies, for the boards, for the property managers, for the insurance agents and, of course, for the insurance companies,” she says. “There’s a lot of turmoil.”

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WORKPLACE DESIGN FOR WELL-BEING Congratulations to the 2023 IIDA Design Award Winners. As an award-winning designer, you understand the profound impact that workplace design has on occupational stress. A well-crafted work environment doesn’t just enhance employee engagement and job satisfaction- it elevates overall performance.

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TA B L E O F CONTENTS 53

T H I S Y E A R W E C E L E B R AT E D O U R 3 R D B I E N N I A L I N T E R N AT IO N A L I N T E R IO R D E S IG N A S S O C I AT IO N ( I I DA) H AWA I I PAC I F IC C H A P T E R ’ S H O ‘ O H U L I AWA R D S

From Our President

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Meet the Jurors Ho‘ohuli Awards Committee

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About Ho‘ohuli Awards and IIDA Hawai‘i Pacific Chapter

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The Ho‘ohuli Award

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Against All Odds Award Impact Award

59

Live Award Maker Award

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Play Award Shop Award

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People’s Choice Award

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at the Prince Waikiki on Saturday, October 21, 2023. The awards’ mission is to promote the value of Hawai‘i designers and perpetuate the interior design profession. This prestigious competition aims to recognize and celebrate the outstanding achievements of talented individuals and firms within the Hawai‘i design community who have demonstrated innovation, creativity, and a commitment to pushing the boundaries of excellence in interior design. Winning a Ho‘ohuli Award is a mark of exceptional commercial design, vetted by seasoned and trusted leaders in the national interior design community.

Our profession is built upon a “Our profession is built foundation of creativity, vision, upon a foundation of and the ability to transform spaces creativity, vision, and into captivating environments that not only meet functional needs but the ability to transform also inspire and elevate the human spaces into captivating experience. The Ho‘ohuli Awards serve environments that not as a platform to honor those who have exemplified these qualities and have only meet functional contributed significantly to the growth needs but also inspire and advancement of our industry. and elevate the human Participating in this competition not experience.” only provides an opportunity for public recognition but also fosters a sense of camaraderie among fellow designers. It is a chance to share ideas, celebrate successes, and inspire one another to continue pushing the boundaries of what is possible in our ever-evolving industry.

Member of the Year Award Legacy Award Honorable Mention Awards

This year’s competition was an inspiring showcase of the best and brightest in local interior design. We invite you to read on and learn more about each awardwinning project and recipient.

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On behalf of the board of directors and our chapter members, thank you to our 2023 Ho‘ohuli Award sponsors. We are so honored and fortunate to have your partnership and support. Thanks also to our hard-working Ho‘ohuli committee members and all the firms and designers who submitted these thoughtful projects for consideration. And congratulations to all the exceptional award winners!

Mahalo to Our Sponsors

Mahalo,

2023 Ho‘ohuli Awards is published

by Hawaii Business Magazine, in partnership with IIDA Hawai‘i Pacific Chapter, February 2024 by aio Media Group, 1088 Bishop St., Suite LL2, Honolulu, HI 96813.

Raynette Tasha Aggabao, IIDA, NCIDQ IIDA Hawai‘i Pacific Chapter President

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MEET THE JURORS

MODER ATOR:

Cheryl S. Durst HON. FIIDA, LEED AP, International Interior Design Association An exceptional communicator, innovator, and visionary leader, Cheryl S. Durst is the Executive Vice President and CEO of the International Interior Design Association. Representing 15,000 members across 58 countries, Cheryl is committed to achieving broad recognition for the value of design and its significant role in society.

At IIDA, Cheryl has set an agenda that leads the industry in creating community, advancing advocacy, and continuing decades of work toward equity. She is a member of the International WELL Building Institute Governance Council; a Trustee for Chicago’s Museum of Contemporary Art and the NYSID; and the first-ever recipient of the Interior Design Hall of Fame Leadership Award. She is the first African American woman to be inducted into the industry’s Hall of Fame.

A lifelong knowledge enthusiast and voracious reader, Cheryl never walks away from meeting someone without gleaning a bit of their story — a talent she currently employs on her

2023 HO‘OHULI AWARDS

monthly podcast, The Skill Set, which focuses on the intangible skills that make us good at what we do.

JUROR:

Verda Alexander Co-founder, Studio O+A As the co-founder of Studio O+A, the San Francisco design firm responsible for groundbreaking offices at Facebook, Microsoft, Slack, McDonalds and many others, Verda Alexander has spent 30 years in the design industry redefining workplace and looking ahead to the future of work itself. Verda’s work focuses on expanding the conversation around design, social justice, climate activism and art. Combining a multi-disciplinary career with a passionate commitment to improving lives through design, her typical contribution to a project is to question received wisdom, test basic assumptions and look beyond conventional solutions to a more creative path. Verda’s experimental projects for O+A, range from pop-up installations on the future of the office to a mobile design lab partnering with communities across California. She recently completed an open source toolkit called “The Eco Playbook,” to challenge designers at her firm and across the industry to put

planet and people first in the design process. Verda writes and speaks regularly on the ethics and aesthetics of design as the new editor at large for Metropolis Magazine.

Verda also co-hosts “Break Some Dishes,” a podcast that engages innovators from industry and design in conversations about meeting the challenges of climate change.

JUROR:

Peter Harrison IIDA, LEED AP ID+C Peter is a recognized emerging leader in the built environment. He brings a fresh, collaborative spirit, and gregarious enthusiasm to his role as a project designer, sustainability strategist, and strong mentor to the next generation of designers.

Foundational to his perspective, Peter has enjoyed a breadth of experiences: from collaborating on two of America’s Best Airports, Portland and San Francisco, contributing to a member-driven masterplan for a sports facility, to designing dynamic and inclusive workplaces for clients including Intel, Apple, and Brooks Sports. Throughout his project experiences, he strives to bring a strong sense of self-authenticity and encourages empathy and vulnerability as neces-

sary assets to stakeholder and team engagement.

On projects, his work has included healthy material research and sustainability, storytelling through graphic communication, and technical construction documentation.

Instilled from living in the Pacific Northwest, Peter has a passion for sustainability and has gained professional credentials including LEED AP ID+C, Fitwel Ambassador, and Living Future accreditation.

He is also actively involved in the International Interior Design Association and the U.S. Green Building Council.

JUROR:

Nita Posada IIDA, LEED AP BD+C, Skylab Architecture Nita’s career has been broadly focused, including programming, planning, management, and design for academic, workplace, hospitality, healthcare, civic, and athletics projects. As Director of Interior Design for Skylab, Nita has had the pleasure of extending her work internationally to clients in South America and Europe. She has a Bachelor of Interior Architecture from the University of Oregon and is heavily involved in her community. Nita is a Past President of the Oregon Chapter of IIDA.

HO‘OHULI AWARDS COMMIT TEE CHAIR:

Raynette Aggabao Alana Yasui Bill Bohan Cyd Shizuru

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Erika Zelasko Greg Endo Helene Oclinaria Holly Boling Ruiz Kaily Domit Kamlyn Ikeda

Kera Yong Keri Powlison Kim Quezada Kimi Logan Laverne Kawakami Lyndsay Brady

Malia Maldonado Merrie Chung Michael Yasui Monique Palisbo Musuai Pauulu Pam Peay

Sabrina Jones Trixie Jenks Violet Inouye

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ABOUT HO‘OHULI AWARDS AND IIDA HAWAI‘I PACIFIC CHAPTER

PHOTOS: OLIVIER KONING

The 2023 Ho‘ohuli Awards, hosted by the International Interior Design Association (IIDA) Hawai‘i Pacific Chapter, honors outstanding commercial interior design in Hawai‘i. Ho‘ohuli is Hawaiian for “change,” which captures how interior design transforms spaces, creating fresh experiences for occupants.

The biennial event celebrated its winners at an exquisite gala on October 21, 2023, moderated by Cheryl S. Durst, Vice President & CEO of IIDA; emceed by Unyong Nakata, Founder and Principal of Nakata Advisory, LLC, and featured an esteemed panel of industry experts from outside Hawai‘i.

Since 2016, the IIDA Hawai‘i Pacific Chapter has been a professional resource to commercial designers in the local design community. As a Chapter within a global professional organization, we strive to enhance Interior Design’s value by promoting design excellence. Our mission is to elevate our profession and create positive impacts on businesses and the people behind them.

Explore more at iida-hi.org and join us on Instagram at @iidahawaiipacific.

Above, IIDA Hawai‘i Pacific Chapter committee members and jurors on the gala stage; left: 2023 Ho’ohuli Award trophies.

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WINNERS

T H E H O ‘ O H U L I AW A R D

WAY F I N D E R WA I K I K I FIRM

The Vanguard Theory

CLIENT

Dovetail + Co

LOCATION

Waikīkī, O‘ahu

PHOTOS: READ MCKENDREE, MARIKO REED AND JENN ELLENBURG

JURORS’ HIGHEST AWARD – ONE PROJECT IN ANY CATEGORY CHOSEN BY THE JURY THAT EXEMPLIFIES THE BEST OVERALL DESIGN OF ALL ENTRIES.

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2023 HO‘OHULI AWARDS

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O C AT E D I N T H E H E A R T O F A V I B R A N T WA I K I K I N E IG H B O R H O O D, the 228-room Wayfinder Waikiki consists of a

main tower built in 1970 and a three-story annex from the 1950s. The ID team was challenged with converting two very different properties into one cohesive destination, creating a design narrative that was clearly Hawaiian.

Prior to the renovation, the hotel lobby was compartmentalized, featuring dark unusable spaces. By opening up the floor plan, natural light now floods the space. Boarded up walls were replaced by sliding wood shutters, which welcome trade winds into the building, and blur the line between the exterior landscape and the interior areas. Vibrant colors were strategically placed in the public areas to attract the guest’s line of sight to the restaurant, bar, and retail areas.

S PEC IAL PRO M OTI O NAL S ECTI O N 2023 HO‘OHULI AWARDS

WINNERS

The headboards in the guestrooms feature fabrics that were inspired by the Aloha shirt, which dates back to the 1930s and was created by a Japanese shirt-maker; kapa cloth made by Native Hawaiians from natural fibers; and the plaid striped pattern called palaka, which was worn by Portuguese cowboys and is still popular today.

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WINNERS

2023 HO‘OHULI AWARDS

T H E A G A I N S T A L L O D D S AW A R D

PAC I F I C 19 FIRM

The Vanguard Theory

CLIENT

Nine Brains

LOCATION

Kailua-Kona, Hawai‘i Island

PHOTO: MARK KUSHIMI

The client needed a design that reflects the hotel’s adventurous guests.

Originally, the renovation budget was $13,500/key for 122 rooms with a 20-month lead-time. However, that took a sharp turn as the previous hotel owner removed all the existing furniture upon departure and the hotel needed to start operations in six months.

Pacific 19 is geared towards a younger traveler looking for an independent brand, local connection, and a value-oriented price. The room furniture is utilitarian, flexible, and outfitted with amazing merchandise to help guests create the ultimate adventure.

A PROJECT THAT EXEMPLIFIES AWARD-WINNING DESIGN DESPITE A LIMITED BUDGET, SCHEDULE, OR OTHER EXTRAORDINARY CHALLENGES OR CONSTRAINTS

T H E I M P A C T AW A R D

GIRL SCOUTS OF H AWA I ‘ I S T E M C E N T E R FO R E XC E L L E N C E FIRM

G70 Design

CLIENT

Girl Scouts of Hawai‘i

LOCATION

Hale‘iwa, O‘ahu

PHOTO: LINNY MORRIS

The vision for the STEM Center is to provide a 21st century experiential learning facility for 4,800 local Girl Scouts, students, and community members. The Center treads lightly on the footprint of the camp and speaks to the Girl Scouts of Hawai‘i’s mission. Energy-efficient lighting and ceiling fans keep the naturally ventilated rooms comfortable.

The STEM Center features sustainable and educational elements, such as natural ventilation, rainwater catchment, day light controls, an astronomy viewing deck, test plot gardens, and landscaping with native plants.

ONE PROJECT IN ANY CATEGORY CHOSEN BY THE JURY, EMPHASIZING CREATING A POSITIVE IMPACT ON THE COMMUNIT Y.

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WINNERS

2023 HO‘OHULI AWARDS

T H E L I V E AW A R D

U L A N A S A L E S GA L L E R Y FIRM

InForm Design

CLIENT

The Howard Hughes Corporation

LOCATION

Kaka‘ako, O‘ahu

PHOTO: MARK KUSHIMI

Located in a 1962 mid-century building designed by famed architect Vladimir Ossipoff, the Ulana Sales Gallery pays homage to the existing architecture by incorporating mid-century nods through decorative lighting selections, finishes and the inclusion of mid-century modern furniture. These include a custom-designed solid walnut slatted couch and a custom monkeypod reception desk.

The client wanted to transform the existing ground floor space into a sales gallery that captured the tower’s brand, utilizing the existing footprint and architectural elements.

A HOME WHERE MULTIPLE SEPARATE RESIDENTIAL UNITS ARE CONTAINED WITHIN ONE BUILDING OR COMPLEX WITH SHARED COMMON SPACES.

T H E M A K E R AW A R D

M U L I WA I FIRM

WCIT Architecture

CLIENT

First Hawaiian Bank

LOCATION

Waikīkī, O‘ahu

PHOTO: OLIVIER KONING

One of First Hawaiian Bank’s goals with each branch is to celebrate and provide an experience that is unique to the area and community in which it is located.

For the Waikīkī branch, it is important that customers are given an opportunity to learn and be inspired by a story of Waikīkī’s past.

Muliwai is a custom art installation that captures the energy of the mixing of waters where a stream meets the sea, resulting in a rich and abundant shoreline.

THE DESIGN & FABRICATION OF A LOCALLY MADE CUSTOM INTERIORS ELEMENT.

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WINNERS

2023 HO‘OHULI AWARDS

T H E P L A Y AW A R D

WAY F I N D E R WA I K I K I FIRM

The Vanguard Theory

CLIENT

Dovetail + Co

LOCATION

Waikīkī, O‘ahu

PHOTO: READ MCKENDREE

It was important to create a sense of place so guests knew they were nowhere else but Hawai‘i. The inclusion of lush tropical foliage and sustainable acacia wood on the ceiling and walls creates a welcoming reception area with a cultural narrative.

Guestroom furniture, wallcoverings, and most fabrics were made in collaboration with local artists. The bedside pendants are wrapped in lei – intertwined strands of pikake and pakalana flower buds, both symbols of love and celebration.

FACILITIES THAT PROVIDE A SERVICE, ENTERTAINMENT, OR HOSPITALITY VENUE FOR TRAVEL, REST, RELAXATION, AND REJUVENATION.

T H E S H O P AW A R D

LO CA L M OT I O N OUTRIGGER R E E F WA I K I K I FIRM

Wander X Wonder

CLIENT

Local Motion Hawaii

LOCATION

Waikīkī, O‘ahu

PHOTO: BRANDYN LIU

The design emphasizes the classic surf legacy of the brand while introducing the brand’s renewed lifestyle image.

Shipping containers house the checkout counter and glass display case. The exterior of the containers features typography and graphics that express the history, origins, and locations of Local Motion stores.

The design utilizes the visibility from the existing 28-foot wide sliding glass entrance to conceptionally divide the interior space in land and sea on each end of the entrance.

CUSTOMER SPACES FOR SELLING PRODUCTS AND GOODS.

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WINNERS

2023 HO‘OHULI AWARDS

T H E P E O P L E ’ S C H O I C E AW A R D

S T R A U B M E D I CA L CENTER - EAR, NOSE & T H R OAT ( E N T ) C L I N I C FIRM

Stantec

Straub Medical Center / Hawai‘i Pacific Health CLIENT

LOCATION

Kaka‘ako, O‘ahu

PHOTO: LEW HARRINGTON, HARRINGTON PHOTOGRAPHY, INC.

Located in downtown Honolulu, with unobstructed views of Honolulu Harbor, the design of this clinic highlights the importance of wai (water) to the community. Kaka‘ako was once comprised of fishing villages and salt ponds, and this deep connection to wai is reflected in the circulation, finishes, graphics, and curated artwork.

The custom sculpted facade of the reception desk is engraved with gentle curves which are reflected above in the curvilinear ceiling feature. On the floors, an undulating, wave-like pattern creates flow throughout the space.

ONE PROJECT IN ANY CATEGORY CHOSEN BY THE GENERAL PUBLIC THROUGH ONLINE VOTING.

Congratulations

to all the 2023 Ho‘ohuli Award Recipients creating ope or uture generations...

Girl Scouts of Hawai‘i STEM Center for Excellence | Hale‘iwa, O‘ahu AWAIIII BBUUSSIINNES ESSS HHAWA

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WINNERS

2023 HO‘OHULI AWARDS

T H E M E M B E R O F T H E Y E A R AW A R D

T H E L E G A C Y AW A R D

MONIQUE PALISBO ASSOC. IIDA, LEED GREEN ASSOCIATE, WELL AP

SHERYL SEAMAN IIDA, AIA, LEED AP TITLE

Interior Designer

Vice Chairman

TITLE

FIRM

Next Design LLC

G70

FIRM

PHOTO: COURTESY OF G70

PHOTO: OLIVIER KONING

Monique has been an active member of the IIDA Hawai‘i Pacific Chapter since she was a student at Chaminade University of Honolulu. She has consistently participated in IIDA activities, events, and committees and joined the IIDA’s Board of Directors as the VP of Advocacy. She is the current President Elect.

Sheryl has served as president and chief operating officer of her firm and has served on the boards of professional and civic organizations in her 50 years of practice. She enthusiastically mentors student interns and young designers to enter international design competitions to instill design exploration, inclusivity, and social empathy in professional practice.

“The nominee exemplifies a well-rounded member who’s not only heavily involved in IIDA but also well invested in the community” – J U ROR ’ S C O M M E N T

“The sheer length of time and impact this candidate has had on the industry is inspiring. They exemplify what I think we all hope to be in our career and the impact we would like to leave.”

– J U ROR ’ S C O M M E N T

RECOGNIZES AN ACTIVE IIDA PROFESSIONAL, ASSOCIATE, OR INDUSTRY MEMBER WITHIN THE IIDA HAWAI‘I PACIFIC CHAPTER THAT EXEMPLIFIES OUTSTANDING VOLUNTEER SERVICE THROUGH COMMITMENT, PASSION, PROFESSIONALISM, ADVOCACY, MENTORSHIP, AND LEADERSHIP.

RECOGNIZES AND HONORS A PERSON, COMPANY, OR ORGANIZATION WHOSE CONTRIBUTIONS HAVE ADVANCED THE INTERIOR DESIGN PROFESSION AND ENRICHED INTERIOR DESIGN IN HAWAI‘I, EXEMPLIFYING TRAITS WITH VALUES INCLUDING ADVOCACY, MENTORSHIP, DESIGN INNOVATION, AND SUSTAINABLE LEADERSHIP.

HONOR ABLE MENTION AWARDS

2023 HO‘OHULI AWARDS

T H E D I N E AW A R D HONOR A BLE MENTION

T H E L I V E AW A R D HONOR A BLE MENTION

T H E P L A Y AW A R D HONOR A BLE MENTION

SENIA

RITZ-CARLTON PENTHOUSE RESIDENCES, WAIKIKI BEACH

HOTEL WAILEA SUITES, MAUI, HAWAII

FIRM

WRNS Studio

CLIENT

Anthony Rush & Katherine Nomura

LOCATION

Downtown, O‘ahu

PHOTO: OLIVIER KONING

FIRM

Guerin Glass Architects

CLIENT

Irongate

LOCATION

Waikīkī, O‘ahu

PHOTO: FERNANDO MARROQUIN

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FIRM

Philpotts Interiors

CLIENT

Hotel Wailea

LOCATION

Wailea, Maui

PHOTO: MARION PHILPOTTS-MILLER & JENNIFER BARRON

S PEC IAL PRO M OTI O NAL S ECTI O N

MAHALO TO OUR SPONSORS

2023 HO‘OHULI AWARDS

JURY DINNER SPONSOR

TA BLE SP ONSOR S

CENTERPIECE SPONSORS

COCK TA IL HOUR SP ONSOR S

WINE SPONSORS

FIRST TOAST SPONSOR

IMPACT AWARD SPONSOR

PEOPLE’S CHOICE SPONSOR

AWARD SPONSOR

GRAND HO‘OHULI SPONSOR

COFFEE & TEA SPONSOR

LIVE MUSIC SPONSOR

DESSERT SPONSOR

LEVEL I SPONSOR L X HAUSYS AMERICA P K AUFMANN S H AW CO N T R AC T DURKAN

SWEET SEND OFF SPONSOR

LEVEL II SPONSOR S P I N N E Y B EC K / F I L Z F E LT DA N AO L I V I N G C A R N EG I E FA B R I C S DA LT I L E

S TAGE DECOR SP ONSOR S

ZURIER ASTRO LIGHTING NOHO HOME KO R O S E A L

PHOTO BOOTH SPONSOR

LEVEL III SPONSOR PA C I F I C CO N T R A C T MZA

PRINT PARTNER

CEI Hawaii modern workplace environments

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2023

On November 8 at YWCA Laniākea Elizabeth Fuller Hall, Hawaii Business Magazine, in partnership with INPAC Wealth Solutions and Business Consulting Resources, hosted the Family Business Forum. During the event, leaders and experts from different generations discussed managing family dynamics, innovation, leadership and succession planning. Mahalo to our attendees, panelists and sponsors for making it a great success.

MAHALO TO OUR SPONSORS

PRESENTING SPONSORS:

SUPPORTING SPONSOR:

VENUE SPONSOR:

“I wanted to drop a big Mahalo for having me as one of the panelists at the 2023 Family Business Forum. Sharing insights on something as personal and close to home as family businesses was a real pleasure. Being in a family business can come with its own set of unique challenges, but it was insightful and rewarding to hear success stories from the other panelists as well as the audience. I commend your commitment to creating a space for genuine conversations and shared experiences in the world of family businesses while keeping things so well organized. It’s the efforts of people like you who make a real difference. Mahalo once again for the fantastic opportunity. We look forward to staying connected and continuing the conversation with family businesses at our upcoming Lunch and Learns in the new year. On behalf of the INPAC Ohana, we’d like to wish you success and good health in 2024!”

— T R OY WADA, AI F, PR I N C I PAL ADVI S O R , I N PAC W EALT H S O LU T I O N S

“During the 2023 Family Business Forum, we thoroughly explored the exhilarating yet sometimes daunting path to attaining legacy status for family-owned businesses. Drawing insights from esteemed families such as the Kosasas of ABC Stores and the Luke family of Hawaii National Bank, who have successfully navigated this journey for over 50 years, we gleaned invaluable lessons. The key takeaways underscored the importance of early planning, open communication – particularly addressing challenging aspects – and cultivating a grand vision capable of transcending generations. It was an enlightening experience!”

— J EAN S AN TO S , PR ES I D EN T, B U S I N ES S CO N S U LT I N G R ES O U R C ES

“As a third-generation family business in Hawaii, we feel strongly about helping local businesses thrive so they can serve our communities for generations to come. Events like the Family Business Forum provide valuable resources and connections for family-run businesses, and we were honored to be among this year’s participants.”

— BRYAN LUKE, PRESIDENT & CHIEF EXECUTIVE OFFICER, HAWAII NATIONAL BANK

PA R T I N G

Eco-Friendly Surfboards Made From Invasive Trees

BY C HAVON N IE R A M OS

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B I Z I A S U R F I N WA H I AWĀ offers surfboards made entirely of albizia, an invasive tree that’s common in Hawai‘i.

When co-owner Joey Valenti was going to school at UH Mānoa, he studied the efficacy of building with albizia. His thesis project was building a house entirely made of albizia wood that was displayed near the corner of Metcalf Street and University Avenue from 2018 to 2021.

Valenti says Bizia Surf sources unwanted albizia wood from removal projects and partners with other organizations to restore native ecosystems.

P H OTO G R A P H ER : A A R ON YO S H I N O

Chris Miyashiro, below, is a board shaper who specializes in creating alaia, one type of traditional Hawaiian surfboards, including those made with albizia instead of native woods.

Alaia can be made faster than surfboards made with foam, fiberglass and epoxy because they are solid – not hollow – and fairly flat, so “there’s not a lot of rocker in them,” Valenti says, referring to the bananalike curve of the board from nose to tail.

His goal is to put these albizia surfboards on the market, giving people a unique option for a more environmentally friendly board. biziasurf.com

SPECIAL PROMOTIONAL SECTION

Faith and Unity After the Maui Fires LONGTIME L AHAINA RESIDENT NICOL AS ELIZ ALDE BRINGS STRENGTH TO HIS E X PA N S I V E C O M M U N I T Y.

Nicolas Elizalde and his wife, Maribel, outside Roots Reborn Lahaina’s office in Wailuku. Photo by Kristy Taylor

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Much like that comment, he shakes setbacks off—like when he was denied a better job as a security guard despite from Tepic, the capital of acing every test, because he lacked Nayarit state in western Mexico on a Social Security number—and he the banks of the Río Mololoa, “a very keeps improving, reliant on faith and beautiful, poor village where we have hard work to see him through life’s really great rodeos and know how to difficulties. He says he came to Lahaina party,” he says with a smile, in Spanish, at the invitation of his little brother to through an interpreter. seek opportunities and to prosper. He His silver medallion reads worked and saved and brought his wife “Metralla,” a reference to automatic over. Worked and saved fi rearms, specifically the sound they make: “We’re Mexican, some more and brought a Then two more sons. “tat-tat-tat,” he imitates. we’re Latino; we son.

His daughter remains in But it’s not what most don’t fall easily.” Mexico; he hasn’t seen her people think: Metralla is  NICOL AS ELIZALDE in 10 years. his nickname because he’s “Her not being here is had to overcome a stutter, fundamental to our struggle beginning phrases with and efforts to get ahead,” he says. “tat-tat-tat,” in his native Spanish.

Grateful to build a better life on English poses different problems.

Maui, Elizalde aspires to do more for His stutter disappears and he speaks his community outside of his cleaning clearly and fluently. The challenge and maintenance work. “What we can comes when others speak too fast. contribute is unity. To support each “One time I asked this guy, ‘Can you other to build ourselves up.” speak slowly please?’” Elizalde recalls in ‘Ourselves’ is expansive in Elizalde’s sonorous, stutter-free English. “He said, telling. It includes his small group of about ‘Yes. You … aaaaare … stuuuuu … pid.’”

ICOLAS ELIZALDE CAME TO L A H A I N A 15 Y E A R S A G O

60 Latino immigrants who look out for each other, “my Hawaiian neighbors, my Filipino neighbors, people in Lahaina from all over, immigrants and non-immigrants alike: it’s the same story.

We’ve all gone through the exact same thing, so it’s better for us to be united.

The only difference really is in the services, where some of us can receive them, and some of us cannot.”

Working to correct that inequity is Roots Reborn Lahaina, an immigrant aid hub co-founded after the fires

by Maui resident Veronica Mendoza Jachowski to fill gaps and improve access to disaster relief resources. “But first and foremost,” she says, “you have to build trust and create community.”

Her organization, a Maui Strong Fund grantee, helped Elizalde after he lost his house, car, and $26,000 in cash—his life savings—to the August 2023 fires. Elizalde mentions that Roots Reborn helped his family with “financial assistance, where to replace my birth certificate, driver’s license, get medicine, find doctors, get shoes,” as well as support flying his father back to Mexico. But what he finds “magnificent” and mentions repeatedly is the “invaluable” emotional support he received, a safe space to navigate unimaginable difficulties.

Recounting how he ran back into his burning house to help his father, grandson, and wife escape the flames, Elizalde is resolute. “What we lost is material, but we are filled with blessings,” he says.

“My family is stronger because of what’s happened. We’re Mexican, we’re Latino; we don’t fall easily. With faith and God in front of us, we have an extraordinary kind of strength.”

T O R E A D M O R E S T O R I E S A B O U T T H E I M PAC T O F T H E M AU I S T R O N G F U N D O F T H E H AWA I ‘ I C O M M U N I T Y F O U N DAT I O N , V I S I T H A W A I I C O M M U N I T Y F O U N D A T I O N . O R G

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