Donn Takahashi

Maui Prince Hotel closing

Prince Resorts Hawaii said Monday it plans to terminate its management contract and close the Maui Prince Hotel and the Makena North golf course next month.

The resort’s 380 full- and part-time employees were notified Monday that the Makena Resort hotel and golf course would close on Sept. 16, according to a statement from Prince Resorts Hawaii.

Lenders, represented by trustee Wells Fargo, filed a foreclosure lawsuit on Aug. 24 against the hotel’s owners saying they had defaulted on a mortgage of $192.5 million.

Maui developer Everett Dowling and Morgan Stanley had purchased the hotel and the 1,800-acre Makena Resort two years ago for $575 million from the financially troubled Seibu Group of Japan. Dowling did not immediately return a call from PBN seeking comment.

The lenders were “unable to meet the funding terms and conditions” the hotel operator required to keep the 310-room hotel and golf course open, Prince Resorts Hawaii President Donn Takahashi said in a prepared statement.

The hotel operator, Maui Prince Hotel LLC, has been in discussions with the lenders to fund the hotel’s payroll and accounts payable, which previously were the responsibility of the owners, he said.

“Maui Prince Hotel LLC cannot continue to operate the hotel without adequate assurance that funds will be made available to pay for payroll and operating expenses for the hotel and golf course,” Takahashi said. “As of our deadline, Friday, Aug. 28, we did not receive funding from the owner or the lenders to pay for past-due account payables, and as of our deadline today, Aug. 31, we had not received a favorable indication from the owner or the lenders that they are willing to guarantee the required funding going forward.”

Wells Fargo is taking immediate steps to keep the hotel open, the lender’s attorney said.

“Tomorrow, we will ask the 2nd Circuit Court on Maui to appoint a receiver to take over operation of the resort,” attorney Barry Sullivan said in a statement. “If approved, the receiver and its team will transition to a new management company to be approved to operate the Maui Prince Hotel and Makena Resort. We look forward to a smooth transfer with Prince Hotels.”

Prince Resorts Hawaii told employees that they would received up to 60 days’ severance under state law. The state Department of Labor and Industrial Relations said it was working with Maui Prince management and with the International Longshore and Warehouse Union on assisting the displaced workers.

Many of the employees have been with the hotel for more than five years, and some have been there since it first opened in 1986, Takahashi said.

“This is a heartbreaking scenario,” he said. “The Maui Prince Hotel is a well-run operation with a great heritage, excellent potential, and wonderful employees that has fallen prey to the economic downturn.”

Donn Takahashi

Lenders foreclose on Makena Hotel

A foreclosure complaint was filed this week against Makena Hotel LLC, the owner of the Maui Prince Hotel, but resort operators yesterday told employees and guests they plan to continue normal operations.

“We were informed by the lenders this afternoon that a foreclosure complaint was filed against Makena Hotel LLC, the owner of the Maui Prince Hotel, yesterday morning,” said Donn Takahashi, president, Prince Resorts Hawaii. Prince Resorts operates the Maui Prince Hotel and the Makena North golf course.

Many Hawai’i hotels have been suffering financially as a result of more than a year of declines in visitor arrivals.

Takahashi said the legal action in Maui courts is the beginning of a lengthy process to restructure and reorganize the ownership of the Resort, which Makena Hotel LLC acquired in 2007.

“Our primary concern is our employees and our guests,” Takahashi said. “We plan to have immediate discussions with the lenders to understand their plans for the resort moving forward.”

He said the company has about 380 employees, including full-time, part-time, and casual workers.

Takahashi added, “the foreclosure action is a legal process that we have no control over and we are hopeful that it will not interfere with how we are currently operating the hotel and golf course.”

He said the resort will continue to accept reservations “until the owner or the lenders advise us otherwise.”

In 2007, the Japan-based Seibu Group sold the Makena Resort and the upscale Maui Prince Hotel for $575 million to Honua LLC, an entity ultimately owned by Morgan Stanley Real Estate Fund and Dowling Company Inc. of Maui.

The 1,800-acre property includes the 310-room Prince, one 18-hole golf courses, another in development and 1,300 acres of undeveloped land.

In June 2007, title to the Maui Prince Hotel was conveyed to Makena Hotel LLC, as Honua LLC’s designee, which then retained Maui Prince Hotel LLC to manage the hotel through March 31, 2008, while the new owners were finalizing plans for the resort.

Source: HNA