Thursday, September 30, 2004

The newly renovated Sheraton Keauhou Bay Resort & Spa on the Big Island reopens tomorrow at the old Kona Surf Hotel site.

Shuttered Kona hotel
will reopen tomorrow

After a four-year closure and $70 million in renovations, the former Kona Surf Hotel on the Big Island's south shore will reopen tomorrow as the Sheraton Keauhou Bay Resort & Spa.

The hotel, which was built in 1971, had fallen into disrepair and was reporting annual losses of $3 million a year before it closed in 2000.

The hotel's previous owner, Japan-based Otaka Inc., acquired the hotel in 1986 from Kona Pacific Associates for more than $20 million. But faced with mounting losses, Otaka closed the resort in June 2000 and laid off more than 200 workers.

It was later purchased by Koa Hotel LLC, which along with Starwood Hotels & Resorts Worldwide Inc., plans to position the Sheraton Keauhou Bay Resort & Spa as a luxury property with a focus on Hawaiian culture and the history of Keauhou.

The reopening of the resort as part of a national hotel chain marks the beginning of an economic and cultural revitalization in the Keauhou region, which as the birthplace of King Kamehameha III was once the playground for Hawaiian royalty, said John Michael White, president of the Hawaii Land Co.

"This hotel is going to immediately join the ranks of the great hotels of Hawaii," White said.

Located on the southern shore of Keauhou Bay, the hotel has 22 oceanfront acres east of Kailua-Kona. The land under the beachfront resort is owned by a for-profit subsidiary of the Kamehameha Schools.

Development at the Keauhou Resort, which originally consisted of plans to build five hotels, including one that would operate under a Sheraton flag, was derailed by regulations and Hawaii's tourism recession, White said.

Three hotels, the Kona Surf, Kona Lagoon and Ohana Keauhou Beach, were built, and all three have been closed at various times. But the Kona Surf and the Kona Lagoon, which is slated to be demolished, were permanently closed after their Japanese buyers began struggling with debt following the Asian financial crisis, he said.

"Twenty-five years ago Sheraton almost built its own hotel in Keauhou, but it didn't work out because Hawaii was in a tourism recession and the community had some resistance to it," White said. "Now, they've put their flag on this property and the entire resort is going to benefit from this grand lady being brought to life."

The resort renovation is one of the most significant hotel projects in the area for more than a decade, said Revell Newton, director of sales and marketing for Starwood.

"Keauhou means 'new beginning,' a fitting description for the Sheraton Keauhou Bay Resort & Spa, which is the first major branded hotel to come to the Big Island in a long while," Newton said.

About 150 employees have been hired for the hotel's soft opening, but Starwood expects to have more than 400 workers in time for the grand opening during the first quarter of next year, he said.

The new hotel will have 530 rooms and suites, a full-service spa and fitness center, two restaurants, catering and convention services and a fantasy pool with a 200-foot lava tube water slide.

Renovations also included restructuring the hotel's entrance, with an open view to the ocean; a new lobby; and refurbishment of the 1.5-acre outdoor luau gardens, Newton said.

Some spa services will be available at the hotel's opening in October, with the full-service Hoola Spa scheduled to open next year, he said.

While normal rack rates at the property will run $320 a night, Starwood is offering a kamaaina rate of $139 until the end of the year.

The opening of the Sheraton resort in Keauhou Bay is also likely to bring tourists, who had begun to favor the more developed Kohala Coast resorts, back to Kona, said Frank Haas, marketing director for the Hawaii Tourism Authority.

"This will give some of them the impetus to come back and go exploring again," Haas said, adding that the historic Kona Coast holds lots of appeal for active travelers.

Starwood Hotels & Resorts


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