The fire at Hanalei Bay Resort erupted in the early evening on July 1, 2011. Flames licked the roof, sending billows of gray smoke into the balmy Hawaiian air. It took 18 firefighters two hours to bring the blaze under control. By then, the common areas had already sustained substantial damage, forcing management to close the charred restaurant, bar, front desk, convenience store, and fitness center indefinitely.

The closures represented a major setback to the resort’s board members, who had worked tirelessly to restore the Princeville property since separating from their developer two years before. The resort was the jewel of Kauai when it opened in 1978. But three decades of developer mismanagement had left it with climbing delinquencies, depleted reserves, and 15 years of deferred renovations. Now the resort had to contend with a multimillion dollar insurance claim and major reconstruction project on top of everything else.

“It really was a perfect storm,” says Deborah Fraga-Decker, who has served on the board of the Vacation Owners Association (VOA) since 2009 and became its president in May 2012. “We were left with absolutely no reserves when we became self-governed in 2010, and we were operating in the red. The fire was another major obstacle.”

Faced with an increasingly dire financial situation and the loss of its common areas, the VOA partnered with its existing management company to start a rental program. The board hoped that such a move would generate much needed revenue to offset delinquencies until the association could build up its reserves. However, the management company faced one challenge after another, and the rental program eventually fell by the wayside.img_hbr lobby construction

It wasn’t until November 2012 that the situation took a turn for the better. That month, the VOA held a joint meeting with the resort’s whole-unit owners association (known as the Association of Apartment Owners, or AOAO) to discuss common concerns and long-term plans.

Over the next few weeks, a fresh vision for Hanalei Bay Resort emerged. Both associations dreamed of reopening the areas damaged in the fire, establishing proper reserve funding, and reviving the resort’s reputation as one of the most desirable properties in Princeville. They also wanted to boost associate morale, which suffered after the fire.

In February 2013, Hanalei Bay Resort contracted with Grand Pacific Resorts, a California-based timeshare management company with more than three decades of experience. The VOA and AOAO looked to Grand Pacific Resorts for financial advice, and the VOA began renting and reselling its delinquent use weeks.

By the end of 2013, the VOA increased rental revenue from virtually nothing to more than $450,000. “We exceeded our budget in the first quarter for the entire year,” explains Jim Braman, General Manager of the VOA. In addition, Hanalei Bay Resort processed 85 resales, generating an additional $96,000 in assessment income in 2013.

According to Ms. Fraga-Decker, “We’re now in the black. We’ve been able to fund a very healthy reserve that should keep us well-positioned for years to come.” As a result, both the AOAO and VOA have been able to address their other goals.

img_hbr lobby seatingIn 2014, more than three years after the fire, Hanalei Bay Resort proudly opened its new lobby and lounge, which was awarded the Silver ARDY for Common Area Refurbishment by the American Resort Development Association (ARDA) in 2015. The resort has also finished its long-awaited renovations with help from Grand Pacific Resorts, which saved the associations more than $600,000 in construction costs. It once again boasts the finest tennis facility on Hawaii, complete with two professional instructors from Peter Burwash International.

AOAO President Michael Rembis attributes the resort’s renaissance to the strong partnership between the AOAO and VOA. “What’s been really successful for us is collaboration. That’s the secret to us being able to move forward for the benefit of the resort as a whole.”

All of the improvements are boosting associate morale and guest satisfaction scores. Guest Services Manager Lillian Watari has worked at Hanalei Bay Resort for 30 years and compared the lobby reopening to Christmas. “Now we’re finally getting our new beginning,” she says. “This is the best the resort has looked in decades, and it’s so good to see the sparkle in everyone’s eyes again.”

Upcoming plans include the addition of a swim-up bar to the resort’s award-winning pool and the reopening of its restaurant and main bar. Nigel Lobo, Chief Operating Officer of Grand Pacific Resorts adds, “We feel privileged to manage such a beautiful resort, and we look forward to taking the service and amenities to even greater heights as we partner with its board, owners, and associates.”

The future is bright for Hanalei Bay Resort. The VOA recently opened a new onsite resale office, which has already generated a great deal of interest. Thanks to the strong leadership and thoughtful collaboration of the AOAO and VOA, the resort’s new and long-time owners now have a beautiful piece of paradise to call home.


This article originally published in September/October 2015 TimeSharing Today