New owners say they
can't keep it open during a
year-long renovation,
furloughing 165 people

By Harold Morse
Star-Bulletin

The Keauhou Beach Hotel will shut tonight, abruptly leaving its 165 employees out of work for at least a year as the Big Island property is renovated by its new owner.

"The employees, all 165 employees, are terminated as of midnight," said Charlene Goo, general manager of the Kailua-Kona hotel. "They were shocked and very sad," she said last night.

A front desk clerk at the hotel this morning said guests of the hotel were being relocated to other Big Island hotels. The clerk, who asked not to be identified, said the process was going well but that some guests were upset with the disruption.

The hotel's ownership will transfer to Scottsdale, Ariz.-based Southwest Value Partners tomorrow. The current owner, Japan-based Azabu USA Corp., in March said it was giving up its stake in the 310-room hotel after it failed to reach a lease renegotiation deal with landowner Bishop Estate. The estate, in turn, sold the lease interest to Southwest for an undisclosed price.

"We were led to believe that Bishop Estate would keep the hotel operating," Goo said. "It wasn't until (yesterday) morning that we found out it would be closing."

Goo, who has worked for the hotel a little more than eight years, said the employees would receive severance pay.

A news release said Southwest Value Partners will begin a $15 million renovation of the hotel.

Southwest project coordinator Barry Baker said renovation of the 30-year-old hotel likely will take about a year and that Southwest would be unable to operate the hotel during the renovation.

Employees will be considered for rehire when the hotel eventually reopens, Baker said.

All guest rooms and public areas will be completely refurbished, and the facility will be a three-star hotel managed by Aston Hotels & Resorts when work is finished, the release said.

"This is the first major investment in revitalizing the Keauhou resort area," Southwest said. Southwest Value Partners has real estate investments in the southwestern and western United States, including the Maui Islander, and in Canada.