Lanai historically has lacked economic diversity, as might be expected of Hawaii’s smallest publicly accessible island. For decades pineapple was its sole industry, a situation that officially came to an end when Castle &Cooke Inc. sold virtually the entire island to computer-tech billionaire Larry Ellison in 2012.
The enormous transition unfolding on what had been dubbed the “Pineapple Island” holds out promise of wider opportunities for its residents, many of whom have called Lanai home for generations.
But if the small businesses are to survive that transition, it will take a collective effort by residents to adapt and for the management to keep an eye on the balance required for a healthy community to thrive.
Even before the Oracle Corp. chief executive officer bought the island, the economy had converted to another single-source economic base: high-end tourism, with the expansion of two luxury hotels, Manele Bay and Koele Lodge.
And now, Ellison’s management company, Pulama Lanai, is in the midst of an extended shutdown of the resorts, now under the Four Seasons banner, for a $75 million renovation that began in June.
The target clientele is even more upscale, with anticipatory stories already appearing in Travel &Leisure and other publications reaching a high-end readership.
The Four Seasons Resort Lanai, formerly the Manele Bay Hotel, is scheduled to reopen in February. But whenever both resorts open, nightly room rates will range from $950 to $21,200.
Ideally this should have been a staggered process. Having virtually the entire tourism market dry up since the hotels shut down is not an optimal course, even if it seems operationally to be the more efficient means of completing the work.
And exactly how this will affect the roughly 3,000 people who live on the island year-round is unclear.
As reported by Honolulu Star-Advertiser writer Andrew Gomes, nearly 700 employees of the resorts are still on the payroll, in temporary jobs.
That’s helpful to sustain those families, but the ones in supportive businesses — the retailers, the restaurants, the gift shops — can’t depend on the local customer base alone. Visitor spending is down more than 70 percent overall. No business can stand that strain for long.
In his three-part series, “Lanai Reboots,” Gomes chronicled the stories of business owners such as Stephen Ferguson of Canoes Lanai Restaurant, who reported seeing a 60 percent decline in sales.
“I don’t think they realized how fragile the economy is,” he said, a reason- able conclusion to draw under the circumstances.
Some of the merchants are working to adapt their business models, seeking out new niches, which is a crucial survival tactic.
And Pulama Lanai is trying to soften the blow. As landlords for many of the commercial properties on the island, the company has given out rent reductions.
But even when the tourists start arriving in greater numbers again, entrepreneurs will need to be nimble and make further adaptations to market to a new customer class.
The long-term strategy for Lanai does lie in making its economy less fragile, as Ferguson described it. To do so will require moving ahead with the next stages of development, including the green-energy projects Ellison has described, as well as plans for an educational research institution.
These plans need to come off the pages of a strategic plan and into town meetings. The residents of Lanai need to know with greater clarity what their future holds.
That future could be a rosy one, if Ellison’s vision of a sustainable, low-density, elite luxury destination is realized.
The goal for the new owner must be to ensure the full buildout will serve everyone well, and not only the wealthy guests who come to kick back in paradise.
