Hawaiian Hotels & Resorts: Pacific Paradise

Hospitality

Written by John Zorabedian

Tuesday, 01 April 2008

Hawaiian Hotels & Resorts: Pacific Paradise - American Executive - RedCoat Publishing

The Hogan family made its fortune pursuing the good life in Hawaii.

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How’s this for a commute—Gary Hogan wakes up on Oahu island, hops in his private plane, and flies 90 nautical miles over sparkling tropical waters to Maui, where he oversees the redevelopment of his family’s ocean front property, the Royal Lahaina Resort.

Gary Hogan, President

Hogan’s job as the president of Hawaiian Hotels & Resorts (HHR) requires him to make frequent trips between Oahu, Maui, and the big island of Hawaii, where he runs another hotel. The company, founded in 1959 by his parents, Ed and Lynn Hogan, has shrunk considerably since the family decided to sell its travel business, Pleasant Holidays, in 1998. But the Hogans still have grand plans for creating luxury resorts on the islands.

Last year, the company finished phase one of its master plan for upgrading the Royal Lahaina, a $35 million makeover for the 333-room resort, which Hogan said will upgrade the three-star hotel with five-star accommodations. By early next year, the Hogans hope to break ground on a $350 million condominium development on the 27-acre property.

HHR received the approval of the island community to build 126 villa condominiums, which represents only 40% of the allowable density to create an open and luxurious community and resort. Hogan said the family wants to do what feels right for the property. “Rather than being driven strictly by returns, we thought about what we really wanted to build on this site,” Hogan said. “We didn’t want something that’s offensive to the community or the great land it sits on.”

Hogan said some people on the island think he must be “nuts” for passing up on the huge returns a larger development would surely garner in this island paradise—a place where, because they aren’t making any more ocean-front properties like this (unless you count volcanic growth to the islands over many, many years), property values continue to appreciate.

But Hogan appreciates how fortunate his family has been, and he couldn’t fathom the idea of overbuilding the property with a series of concrete fortresses. The condominium development, instead, will consist of 126 two- to five-story villas around the Royal Lahaina, blending in with the property’s neighboring 36-hole championship golf course, pools, and world-renowned beaches.

Paradise found
Ed and Lynn Hogan opened their travel agency 50 years ago in Point Pleasant, NJ. In 1957, at a time when Hawaii was not even a part of the union (it became the 50th state in August 1959), Ed Hogan got an opportunity to work in Hawaii for Henry J. Kaiser, the shipbuilding tycoon who built one of the first major hotels on the islands.

Seeing the bounty and opportunity of the place, Ed Hogan returned to NJ in 1958 to start Pleasant Travel Service. In 1961, Ed and Lynn Hogan moved their family to start Pleasant Holidays in Southern California. By the time the family sold the travel company to AAA of Southern California in 1998, it was amassing $500 million in annual revenues and ushering about 450,000 passengers to the islands yearly.

Gary Hogan, who became president of the Hawaii division for Pleasant Holidays in 1993, stayed on for three years as president of the travel company after it was sold but decided to leave the company to manage the family’s real estate holdings. At one time, the family owned seven hotels—six in Hawaii and one in California.

But as the real estate market reached dizzying heights over the last decade, with offers flying fast from hotel chains to buy up their properties, the Hogans received several they couldn’t refuse. “Our hotels were profitable, which made them more attractive and in turn attracted real estate investors,” Hogan said.

Now the family is investing its returns in a condominium development called Villas at Royal Lahaina. They have also spread their wealth around through the Hogan Family Foundation, which has made charitable contributions totaling $55 million over the years, Hogan said.

After selling off most of the properties to the hotel chains, Hogan said, the family is now free to focus on their vision for creating luxury resorts. Being a smaller operation has its benefits. “We’re a hotel chain of two, so we have to constantly compete against the branded hotel chains,” Hogan said. “I have a different philosophy of bigger isn’t better. I’d rather be small and have a crew that can think on their own, have good ideas, and beat everyone else to the punch.”

Across the islands, the tourism industry in general has slowed somewhat due to the elevated costs of flying, and Japanese tourism has fallen off a bit. But HHR is not seeing those effects, having this year developed a relationship with Japanese tour companies, a result of Japanese Airlines starting direct flights to the Kona airport on the big island of Hawaii.

“For our hotels, we’ve seen nothing but growth,” Hogan said. “We’ve reinvested in the product and did some good marketing and advertising to keep awareness out there of what we’re doing.”

Hogan’s passion for flying has also led to the development of another side business, Pleasant Aircraft Leasing. The company owns two new Gulfstream jets (a Gulfstream 200 and a Gulfstream 400) and this summer will add a Gulfstream for chartering flights. “We want to integrate those into supporting the development project, and owners could fly to and from their villa at Royal Lahaina,” Hogan said.

By Gulfstream, it’s only 20 minutes from the main island to Maui.

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