Deutsche Bank and Kennedy Wilson, the lenders in control of the Kona Village Resort’s insurance payout, are refusing to pass that cash along to the resort, CEO Pat Fitzgerald said Monday.
The move forced Fitzgerald and the Kona Village Investors to notify the resort’s remaining two dozen employees their last work day would be Sept. 17. The notice was issued Sept. 3.
“I can’t understand why they’re not (releasing the funds),” Fitzgerald said. “Either way, they’re going to have to replace the infrastructure.”
The resort, which opened in 1965, sustained significant damage, into the tens of millions, in the March 2011 tsunami. The resort closed following the disaster, leaving more than 200 employees without work. A fund established that year raised hundreds of thousands of dollars for those employees, distributed in the form of gas and gift cards.
Fitzgerald said he is meeting with each of the remaining employees to discuss the layoff, and said management will be helping those employees try to secure new employment.
He said he could not speculate on any potential legal remedies the investment group could pursue against the lenders, who controlled the insurance payments. The investment group has been covering employee salaries, property taxes, design and engineering fees and some other costs for two and a half years while waiting for the repairs to be completed.
The lenders “constantly asked for more information,” Fitzgerald said. “They’ve told us they’re not willing to release those funds.”
The contractor working on the project has left, he added. He said he isn’t sure what comes next for the resort, which sits on land with a Kamehameha Schools Bishop Estates lease with more than 30 years remaining.
Fitzgerald said he issued the layoff notice “with great regret.” He remains as the CEO and president of the neighboring resort, the Four Seasons Resort Hualalai.
In 2011, Fitzgerald said the earliest he could foresee the iconic hotel, known for limiting the use of electronic devices and not having televisions inside Polynesian-theme hale, reopening was 2013. He expected to have to make some changes to bring the property up to current safety standards, such as more fire suppression measures with increased water pressure to better cover the property, and changes to how electrical and other lines are buried, he said.
News of the layoffs hit the Internet last week, when California travel agent Kathy Lerner emailed a short note to clients informing them of the impending layoffs.
“It is with a heavy heart and tears in my eyes that I have to tell you effective September 17th Kona Village is closing permanently,” she wrote.
Someone passed that message on to Bill Partmann, who founded the Save Kona Village Facebook page, dedicated to the hotel and providing a forum for former guests to reminisce and share pictures.
Partmann said Monday he heard reports of the closure from several sources. He and other Kona Village fans speculated on the variety of reasons for the abrupt announcement. They also lamented the news by the dozens, calling it “heartbreaking and gut-wrenching.”
Partmann said via Facebook late Monday questions remained about the resort.
“Will they sell, hold the property or try to build something else?” he asked. “The property is too valuable not to do something with it.”
Reporter Tom Callis contributed to this story.