Inside an $11 Million Maui Makeover
In February, the Kapalua Resort’s iconic Plantation Course – the one that hosts the PGA TOUR’s winner’s-only event each January – will shut down for nine months to undergo a tee-to-green renovation that’s expected to cost more than $11 million. During that time, the Maui resort will likely miss out on almost 30,000 rounds, approximately $8 million in playing fees and even more in retail and food & beverage revenue.
Conversations about an overhaul at the 27-year-old property started internally about five or six years ago. Troon Golf, which operates the Plantation and Bay courses for Kapalua, then came up with a strategic proposal about two to two-and-a-half years ago for the facility’s owner, billionaire Tadashi Yanai, who is the second-richest man in Japan.
“We were a little shy to present it, because how do we present a $10 million-plus closing of a golf course and then address the clubhouse main building as well,” said Kapalua Golf General Manager Alex Nakajima. “But I said to Mr. Yanai that we have the Bay course to deal with and the Plantation Course eventually needs to be touched before the 30-year mark hits. That got the ball going; it took multiple attempts to warm him up and then we finally said, ‘Here’s a dollar amount.’
“We are the steward, the asset-manager of the property, basically, and we’re making recommendations along the way, but the decision is up to the owner.”
The price tag for the renovation will likely come in between $11 million and $12 million, Nakajima says from his office, which overlooks the first tee at the Plantation Course and out toward the Pacific Ocean and the neighboring island of Molokai.
“Mr. Yanai is really looking long-term to protect the Kapalua community, the West Maui commitments and future development in the area,” Nakajima adds. “He wants to be in the driver’s seat to make sure things are well-done and orchestrated. On the ROI side, he’s not looking to exit like a short-term investment banker. There’s a long-term return here. You’ve got to take the revenue loss, but it’s going to be worth it.”
In creating the renovation plan in conjunction with the original design team of Bill Coore and Ben Crenshaw, who will oversee the project, Troon also solicited significant input from the PGA TOUR.
All 18 holes will be refined and upgraded — from tee boxes and fairways to greens, bunkers and approaches in an effort to restore the course to how it originally looked and played back when it opened in 1992. The changes are intended to make the course more challenging for the world’s best players who visit for the Sentry Tournament of Champions while enhancing the playability for resort guests at one of Troon’s flagship public facilities the other 51 weeks of the year. There will be new turf throughout (Celebration Bermuda), new drainage will be installed and the clubhouse will get a face-lift.
The associated costs for the renovation run higher in Hawaii than they would be elsewhere, as materials, gas and even labor is pricier than on the mainland U.S.
“What we’re doing here is basically running a double crew,” says Troon Golf Chairman and CEO Dana Garmany. “So, this golf course closure will be at most nine months and not 12, 13 or 14, as it could have been. We’re going to get the golf course back open, and we’re going to pay more to get it done that way, but with the ROI, it pays for itself to get the golf course open quicker, even if you’re paying a little more to squeeze that period down.”
The shorter renovation timeframe also means the Plantation Course will be ready when this year’s PGA TOUR winners return to Maui in 2020 for the Tournament of Champions. That event, while it keeps resort guests off the course for a week each January, is a major draw not only for the island’s tourism efforts but has a significant impact on the visibility of the Kapalua Resort and its golf courses.
“If we were to lose this event, we would probably lose the Sony Hawaiian Open (on Oahu) at some point because we can’t draw the top players for one week out of the year,” Nakajima said. “So, it’s a significant snowball effect for all the islands. Our owner asked, ‘What is the price tag to give up the golf course for 10 days in a big holiday and is it worth it?’ It costs $800,000 to $1 million to orchestrate the tournament but it produces $2 million to $2.5 million in return in greens fees and merchandise sales. I think it’s still worth it.”
There’s also the long-term return, particularly for a prominent resort course in the stable of the world’s biggest golf management company.
“There aren’t a lot of new facilities being built, but there is strong competition among existing ones for the market,” Coore said of the U.S. golf landscape. “They have to continue to invest in their product to stay at the forefront of their business and stay relevant and attractive.”
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