W Power 2024

Can Larry Ellison Recreate Paradise?

Can Larry Ellison model the future on the Hawaiian Island of Lana’i?

Published: Feb 1, 2014 06:48:40 AM IST
Updated: Jan 28, 2014 11:05:08 PM IST
Can Larry Ellison Recreate Paradise?
Image: Getty Images

When Oracle CEO Larry Ellison bought 98 percent of the Hawaiian island of Lana’i in June 2012 (for between $300 million and $500 million), shock waves rippled through the sleepy, picturesque backwater. The island’s 3,100 residents were long inured to the semi-feudal ownership structure—since the 1860s there had been a succession of lords of the manor, including pineapple king James Dole and, in 1985, billionaire David Murdock. But Ellison came in with even deeper pockets and bigger plans, guaranteed to change the face of the island, a place that proudly has no traffic lights, very few paved roads in 141 square miles and, as one resident describes it, “not just a slow pace—no pace at all.”

What a visitor will see now on Lana’i, 8 miles off the coast of Maui, is an old Hawaii that exists today only in patches on the larger islands. Locals still gather in the small, unassuming cafes such as Blue Ginger that ring Dole Park in the main town, Lana’i City, to gossip or “talk story” in the mornings. The scenery is so lush that golfers often take breaks to soak in the views. The powdery beaches, bordering waters dotted with sea turtles, are often completely deserted.

That will undoubtedly change if the projects now in discussion go forward. Ellison has researchers working on a desalination plant intended to increase the pumping capacity of fresh water to 10 million gallons a day from its present 2.5 million, and there are ongoing renovations at the two Four Seasons-managed hotels, the Resort Lana’i at Manele Bay and The Lodge at Koele, with a third luxury hotel under consideration.

Also on the to-do list: Expand compact, 1930s-era Lana’i City with its brightly coloured, plantation-style cottages and develop a university campus. Following Ellison’s purchase of Lana’i’s main air carrier, Island Air, a new runway and airport facilities are in the works to allow the first direct flights from the mainland. Oh, yes—and plans call for developing industrial areas, expanding solar power facilities, introducing electric cars and ultimately doubling the population to around 6,000.

Residents regard the planned rollouts warily. Many worry about preserving the character of the island. Says one resident, “A friend recently told me that whenever she goes to the sacred places her family showed her, she wonders how she will feel when there are signs pointing them out. The branding people have already been here asking how they should ‘sell’ the island. That’s a very uncomfortable feeling for us.”

Can Larry Ellison Recreate Paradise?
Image: Getty Images

Still, the islanders knew something had to change. In the last few years of the Murdock regime the island’s economy was crumbling. In the early 1990s he had moved the pineapple plantations overseas and shifted the economic focus to tourism, opening the beachfront Manele Bay and the English hunting-style The Lodge at Koele in the cooler, higher elevations of the island. A modest third hotel, the 11-room Hotel Lana’i, had been built for Dole managers in 1923. But all of the properties were floundering and with them the livelihood of the island.

“In the beginning Murdock had incredible vision,” says Mary Charles, who leases the Hotel Lana’i. “But in 2008 the world blew up; he was losing tonnes of money [reportedly $20 million to $30 million a year], and he lost interest. The population was dwindling, businesses were closing, maintenance in the hotels and the community was deferred. Many of us were ready to throw in the towel.” Murdock, who declined to be interviewed for this article, had a plan to generate income for the island: A windmill farm that could sell power to the main island of Oahu. The resistance from many in the community was thunderous, evident in the “No Windmills on Lana’i” signs still lingering in some front yards. But the resistance wasn’t unanimous, and the clash tore apart the once close-knit community.

“We had the signs, protesters—it got very ugly,” explains Alberta de Jetley, publisher of the monthly newspaper Lana’i Today. “The argument was no longer rational. People couldn’t get their minds around the fact that the power was going to Oahu but that we would still have benefited.”

With that economic path blocked, Murdock decided to sell. Rumours swirled about possible buyers. Bill Gates, who had rented all of Lana’i’s hotel rooms and booked all of its airline seats for his wedding in 1994, was often mentioned. So were groups of Chinese and Russian developers. Given the jitters over the prospect of foreign developers, the announcement of Ellison as buyer was met with euphoria. “Larry Ellison was a godsend,” says de Jetley. “He has enough money to take us to another level and help us become sustainable.”

Can Larry Ellison Recreate Paradise?
Image: Ron Dahlquist / Getty Images
The Swimming pool at Manele Bay

The island’s introduction to Ellison has had some rocky moments, however. The first news of his plans came from a CNBC interview. “He was quoted as saying that he would use the island as a laboratory,” explains Robin Kaye of the community advocacy group Friends of Lana’i. “Many people were offended by that. We live here. We’re not animals in a study. I understand what he meant. But still… There was some sensitivity.”

What Ellison meant, apparently, was that he wanted to create a world-class model of sustainability on the island. “He saw Lana’i as an opportunity to engage in conversations that are happening around the world—food security, sustainable energy—rather than sit on the sidelines and create a fund,” explains Kurt Matsumoto, a Lana’i native who managed the hotels here for Murdock and was brought in as COO for Ellison’s management company, called Pulama (meaning ‘cherish’) Lana’i, a canny message to locals that he hopes to enhance the island and not destroy it.

“But I think his main motivation is the opportunity to come in and make a difference,” says Matsumoto. (Ellison declined to comment for this article, but in the past he has described his attachment to Lana’i, dating back to his 20s: He flew a Cessna over Lana’i’s pineapple fields, admiring the area’s beauty, and even then expressed a desire to buy the island.)

After the purchase Ellison immediately made goodwill gestures: Reopening and improving the community pool that Murdock had closed to save money, introducing youth recreational and educational programmes, refurbishing buildings in town and expanding one of the few grocery stores, Richard’s Market.

Renovation work also began immediately on the hotels. Murdock’s Chinese furniture and antiques in the Resort Lana’i at Manele Bay’s public areas were jettisoned in favour of a sleeker, more cosmopolitan style with neutral colours and more open architecture, giving on to views of the bay and its spinner dolphins and whales. The restaurants were also upgraded, as Ellison lured a branch of Nobu to the island, which opened in December 2012 in time for his Christmas visit.

Those renovations at Manele Bay were the focus of a recent community meeting, one of the regular gatherings with company representatives instigated by Pulama Lana’i’s Matsumoto. In this one, with chairs grouped in a circle and the affable Lynn McCrory, Matsumoto’s senior vice president of government affairs, leading the discussion, hugging community members and imploring them to eat or take home the prodigious supply of baked goods, the questions from the 40 attendees ranged from where the construction workers would be living to which new retailers would come into Manele Bay (among the names being bandied about were Burberry and Jimmy Choo).

Most residents I talked with heartily approve of the meetings and the selection of Matsumoto to head the Ellison effort. “Kurt knows how to communicate, how the local people solve problems,” says Butch Gima, president of community advocacy group Lana’ians for Sensible Growth. “It was refreshing to know that a multinational corporation had the foresight to choose someone local.”

But not everyone is mollified by the back-and-forth. Joelle Aoki, executive director of the Coalition for a Drug Free Lana’i, says that she’s grateful for the positive changes. “But every time I come out of those meetings, I feel anxious,” she says. “I’m very concerned about the ability of the Lana’i community to keep their way of life. Then what if midway through he decides to sell it?”

Kurt Matsumoto insists that Ellison’s interest is long term, that the population growth would be an organic, gradual progression, explaining that just because they have access to significant funding doesn’t mean they would or could make all of these projects instantly appear.

So it will be years before it’s clear whether Lana’i will become the Pacific Eden that Ellison envisions. What is clear is that the community will be watching every step. “I would say that the mood right now is cautious optimism,” states Robin Kaye. “And that is 180 degrees from where it was. Previously it was despair.”

(This story appears in the 07 February, 2014 issue of Forbes India. To visit our Archives, click here.)

Post Your Comment
Required, will not be published
All comments are moderated