Layoffs called part of a trend

Labor unions say the impending layoff of 385 workers at the Makena Golf & Beach Club on Maui, which is being transformed into a high-end condominium, is just the latest example of a disturbing redevelopment trend that has resulted in significant job losses over the past decade.

Resort owner ATC Makena Holdings announced Wednesday that it would begin redevelopment of Makena Golf & Beach Club in July. Donna Domingo, president of International Longshore and Warehouse Union Local 142, said workers knew changes were afoot after ATC bought the property out of foreclosure in 2010. However, she said employees only recently become aware of the new owner’s plan to pare down the hotel into approximately 48 luxury condominiums.

Maui County officials and the developer highlighted the coming $240 million investment and downplayed the layoffs, which are coming at a time when they said hospitality is on the upswing and there are other new properties opening. There will be 75 employees retained during construction to provide for operations at the Makena golf course, restaurant, landscaping and security, according to Discovery Land Co., which is overseeing the development for ATC. The company anticipates about 400 new construction jobs will be created and that hundreds of additional jobs eventually will be created at the club and in the local community as a result of economic stimulus.

“Our employees trust us and look up to us, and we want to do right by them,” Makena Resort owner Charles Sweeney, chairman of Trinity Investments, said in a written statement. “We fully intend to hire as many back again as we can eventually. Some may find other jobs by then, but anyone who wants to come back when we reopen will be welcomed with open arms.”

Other opportunities

Teena Rasmussen, director of the Maui Mayor’s Office of Economic Development, said in a written statement that displaced workers also could turn to the approximately 1,278 hotel rooms and timeshare units that will be opening on Maui over the next 24 months.

“They will all need employees,” she said. “In addition to that, almost every resort on the island currently has job openings. It is our opinion that these Makena Resort employees will be highly sought after.”

But Domingo said the county and the resort developer are making assumptions about the breadth and quality of jobs that will be available to laid-off hotel workers.

“We were hoping that the company would have stuck to its original plans,” Domingo said. “A few years ago when they went out to get their original permit, they promised the Maui County Planning Commission that they were going to build a new hotel and take care of their workers. It was a smaller size, but they said they would transfer employees to work there and some would stay on to work on massive renovations. It made people think that they really cared about their employees.”

Domingo said the bubble burst Wednesday when the company chose to inform the union of its shutdown plans just prior to a companywide luncheon celebrating the hotel’s 30th anniversary.

“It was unexpected,” she said. “Two weeks ago the hotel told employees that they had a lot of bookings for the rest of 2016 that would go into 2017. Employees were celebrating that success at an anniversary luncheon. Everyone was shocked when they said the presentation came with some bad news.”

Domingo said ATC and the ILWU soon will begin bargaining to discuss the fate of the 350 union workers who are under contract at the hotel. In the coming weeks, Domingo said, the ILWU will be meeting with the company to negotiate matters like severance, medical and reinstatement plans.

Mayor Alan Arakawa said that while most of the resources of the Sugar Operators Work Assistance Task Force are geared to help agricultural workers, there might be some resources that also could help former resort employees. George Szigeti, president and CEO of the Hawaii Tourism Authority, also has pledged assistance to Makena employees.

“HTA is committed to supporting programs that help the 385 employees being laid off to find new jobs,” Szigeti said in a statement. “Our contractors, the Hawaii Visitors and Convention Bureau and Maui Visitors and Convention Bureau, are already leading efforts on the tourism industry’s behalf to develop a strategy that finds new job opportunities. We encourage other businesses on Maui and throughout the state to support initiatives being created for the sake of these Makena Resort employees and their families.”

Conversions cost jobs

Domingo said workers will need all the support that they can get. Despite county and developer reassurances, Domingo said historically that hotel-to-condo conversions have resulted in job losses on Maui and elsewhere. Workers lost jobs after the Kapalua Bay Hotel was torn down and converted into the Montage Kapalua Bay, which offers luxury residential-style accommodations.

“We had 270 workers,” Domingo said. “Now they’ve probably got 75 to 100 workers.”

Domingo said the conversion of the Maui Marriott into a timeshare also cuts the workforce in half.

Similar issues have long existed on Oahu, where Unite Here Local 5 represents the vast majority of hotel workers. Unite Here Local 5 spokeswoman Paola Rodelas pointed to the Ilikai, where the workforce went to 40 from 500, as a classic example of the staggering impact of conversion.

“Typically, we don’t see those jobs recouped,” Rodelas said. “It’s really concerning to me that the county in particular is downplaying what’s happening in Maui, especially in light of the 660 or so layoffs at the sugar plantation. I can’t imagine that it would be too easy for hotel workers to find new hospitality jobs.”

Unite Here Local 5 research analyst Ben Sadoski said that in the decade that ended in 2014, Hawaii lost 15 percent of its traditional hotel rooms. The union estimates that some 3,250 hotel jobs were lost to condominium, timeshare and retail conversions between 2006 and 2011.

“This issue, and more recently the issue of conversions that lead to condominium units being offered as vacation rentals by individual owners on places like Airbnb and VRBO, is a top jobs concern for us,” Sadoski said. “Sometimes developers argue that conversions are the only ways to finance a project, but there are ways to help guarantee even after conversion that there would be good jobs. So far, the developers that we’ve talked to have not been willing to do that.”

In 2014 Unite Here Local 5 backed a Honolulu City Council bill that would have required hotel and resort owners to obtain a special permit before converting their properties into condominiums. The bill, which passed first reading but was deferred in committee, also would have required landowners and developers to inform employees of pending conversions.

Rodelas said more recently that Unite Here Local 5 has focused on amending contract language to offer workers more protection from conversions.

“At Turtle Bay the company can’t covert hotel rooms into condo units without talking to employees,” Rodelas said. “It’s the first time that we’ve gotten that language into a contract. We are really optimistic about that and hope to secure similar language in other contracts.”