(BIVN) – A top executive for Hilo’s Grand Naniloa Resort, a DoubleTree by Hilton, revealed to state officials Friday that an unnamed corporation is renting out the entire hotel in the coming weeks, and the deal is a “gift” to the East Hawaiʻi hospitality industry, as it struggles to recover from the COVID shutdown.
Honoring a nondisclosure agreement with the visiting company, Ed Bushor – the CEO of Tower Development – would not divulge the name of the company, nor the nature of its business on Hawaiʻi island. However, he did tell the Board of Land and Natural Resources that the sudden influx of cash will enable the Grand Naniloa to pay up on delinquent rents that had placed its business in jeopardy.
The BLNR discussed the hotel’s situation during its virtual meeting held on May 28th. The board considered taking action – including possible lease termination – for the Naniloa’s failure to keep its lease rental payments current, and for failure to post the required performance bond. From the Department of Land and Natural Resources’ submittal:
Land Division acknowledges that Lessee has invested substantial amounts of money into the Grand Naniloa Hotel since acquiring the lease in bankruptcy and the property has been significantly upgraded and improved under its management. In default situations like this, however, Land Division’s standard procedure is to submit the matter to the Board with a recommendation for lease termination. In the event the Board does not approve the workout proposal above that includes the withdrawal of the golf course, Land Division is including an alternate recommendation below that the Board cancel the lease. Although staff appreciates the economic difficulties facing WHR LLC and other State lessees due to the COVID-19 pandemic, the only rent relief the Department has been able to offer other lessees is the two-month deferral presented to the Board at its meeting of April 9, 2020 under agenda Item D-8. Because Land Division does not have discretion to depart from the departmental policy on this matter, an alternative recommendation for termination is included below.
“We just signed a contract that, starting June 6th,” Bushor told the BLNR during the meeting. “We are a hundred percent full in the hotel with a corporate entity that has selected our hotel as the hotel that they are going to create a bubble for their whole company. They have committed $6 million dollars in rent over the next three months, which will allow us to get caught up on everything and allow us to get a bond. And this just happened. I have the contract, and be happy to produce it to the board. It’s a binding contract. They’ve already put a million dollar deposit down on the contract and they’re already moving in right now. The first 60 rooms have been taken by the corporation.”
“I’m bound by a confidentiality agreement in the contract, because it’s … what they’re trying to create is a bubble, where people don’t come and try to see them,” Bushor explained. “So, I’m going to refrain from using the name because I’ve signed a confidentiality agreement. Obviously, the board, if I submit this to the board, read the provision that I’ve agreed and WHR has agreed to keep it confidential, because we’re not allowed to put it in the media and all that.”
“This is a windfall for Hilo,” Bushor said. “We’re bringing every employee back, effective June 1. We’re going to have flush cash to pay everything by next Friday, based on the deposits and this new contract, and so I couldn’t make this representation, you know, 30 days ago or 40 days ago, because we didn’t have this. But I’m smiling right now because I can comply with all my obligations under the lease and it’s not for me but it’s for the community that this… God just dropped some present upon all of us and DLNR. I just want to say thanks for the patience because without that patience i would never got to this point to be able to cure.”
The BLNR decided to allow the Grand Naniloa to pay up on the over $600,000 in delinquent payments, and gave the company until the end of June to secure the required $1.1 million bond. The land board cut the resort a break on interest for two months, and will discuss the matter of the Naniloa golf course – offered up for possible withdrawal from the lease – at a future time.