The company plans to spend
$600 million to build and market
a time-share project

By Russ Lynch
Star-Bulletin

The owners of the Ko Olina Resort & Marina have sold a 28-acre piece of undeveloped oceanfront land at the West Oahu resort, including one of its four man-made lagoons, for $30 million to a Marriott business.

Marriott Vacation Club International plans to spend $300 million to build 750 time-share villas there and another $300 million to market them, said Jeffrey R. Stone, managing partner of Ko Olina Company LLC, the Hawaii-registered partnership of island and mainland investors that owns the resort.

The partnership has already invested $250 million in the resort in the last 12 months, including $40 million for the marina now nearly complete, Stone said.

Marriott's plans to spend $600 million will bring the total investment to about $1 billion for the resort, while plans for other parts of the property could add up to another $1 billion, he said.

Ko Olina was originally planned as a "second Waikiki" with up to eight high-rise luxury hotels, of which only the recently renamed JW Marriott Ihilani Resort & Spa was built.

Stone said his company's research shows that the five-star luxury approach won't work and what is needed is an emphasis on family activities that will attract Hawaii residents and repeat visitors. He said Orlando, Fla.-based Marriott Vacation Club International will build a village-like complex with lots of open space and expects to make 38,000 sales of time-share ownership.

One early result from the five-year time-share development and sales project will be thousands of visitors to the site as Marriott brings its international marketing power to bear and pays for potential time-share investors to come and take a look, Stone said.

The initial benefactor of this sales effort will be the Ihilani, Stone said, predicting that occupancy this year at the hotel will rise to 75 percent from the current 50 percent level, and it should keep rising.

The flow of potential time-share buyers -- whose airfares, accommodations, meals and other activities will paid for by Marriott Vacation Club -- will also boost Waikiki hotels and restaurants and tourism in general, Stone said.

Meanwhile the construction work will provide new jobs, he added.

The project is the first Oahu venture for Marriott Vacation Club, a wholly owned subsidiary of Bethesda, Md.-based Marriott International Inc.

Marriott was attracted partly by the 43-acre, floating concrete marina, which is expected to have a formal opening in March. It will feature public parking, restrooms and picnic facilities, a clubhouse-restaurant complex, and other shoreline improvements, Stone said yesterday.

The other attractions are the Ihilani, where Marriott International took over the management in November, and the Ko Olina Golf Club, now managed by another Marriott unit, Marriott Golf, its first Hawaii venture.

The hotel and the golf course were purchased in October by a partnership of Cornerstone Real Estate Advisers Inc., a unit of Massachusetts Mutual Life Insurance Co., with Ko Olina Company as a minority partner. Ko Olina Company's partners include Ohio-based National Housing Corp.

The Star-Bulletin revealed some of the partnership's plans in early September and Stone discussed the plans at a Sept. 7 public meeting of the City Council zoning committee. But his interview yesterday with the Star-Bulletin marks the first airing of the project's details.

Stone said state, city and legislative support were crucial in getting Ko Olina moving, after Herbert Horita's original plans for the 1,000-acre property got bogged down in financial difficulties and Horita lost the support of Japanese financial backers when the Japanese economic bubble of the 1980s burst.

It was not until last year, he said, that the City Council approved time share for the property and now the project has backing of the city and state.

Future Ko Olina developments include a residential "golf village" development alongside the golf course, to be built by a national home builder that Stone would not identify, and an oceanfront housing project.

Ko Olina Company bought 344 acres at Ko Olina in 1998, with an option for another 372 acres. That was exercised last year and through the Cornerstone partnership, the company also is a part owner of the hotel and the golf course.