Sunday, May 18th, 2008
Reprinted with permission by Howard Dicus. The photo inserted by Dispatch Staff.
Mr. Dicus is a seasoned expert in Hawaii business matters.
He was a reporter for the Pacific Business News for several years before joining KGMB Channel 9, where he can be seen on the "Sunrise" morning TV show airing Monday-Friday, 4:30 am-8 am.
Mr Dicus also has a weekly business show on PBS called "Everybody's Business", which can be seen on PBS Fridays at 7:30 pm.
A TALE OF TWO SHUTDOWNS
By Howard Dicus
Outrigger is closing a Waikiki hotel, probably for more than a year, to thoroughly renovate it. No one is being laid off.
Molokai Ranch is shutting down and laying off 120 people after seeing it might not win immediate approval to build hundreds of homes on the southwest corner of Molokai, around La’au Point.
What’s the difference between the two companies? The answer turns out not to be financial health, because there is way more wealth behind Molokai Ranch than behind Outrigger.
The difference is that Outrigger is based in Hawaii while the ultimate owner of Molokai Ranch lives in Malaysia.
I’m not saying (the Ranch owner) is some kind of evil guy, only that it’s human nature to care about what happens in your backyard and less about stuff that happens several time zones away from you.
Molokai Ranch is owned by Molokai Properties Limited, and it in turn is owned by GuocoLeisure, an international investment company based in Singapore.
GuocoLeisure’s parent company Guoco Group is traded on the Hong Kong Stock Exchange, but its ultimate holding company is Hong Leong Co. of Malaysia.
The top five executives of GuocoLeisure make $500,000 a year or more. Deputy Chairman Philip Burdon is a former New Zealand minister of commerce.
Billionaire Quek Leng Chan, Chairman GuocoLeisure.
The man at the top of this empire is Quek Leng Chan, whose net worth, according to Forbes magazine, is $2.9 billion.
Guoco Leisure describes itself as “an active investor with strategic shareholdings and active investment management aimed at extracting and maximizing shareholder value.”
It owns or operates 39 hotels in Britain, owns a resort on Fiji, and has a stake in some oil and gas holdings in Australia.
In 2007 the company made a profit of $13 million, down from $57 million in 2006. It said in its annual report that the Molokai operation would remain cash positive through 2007 through the sale of “non-strategic subdivided land” and the sale of a large agricultural parcel to Monsanto.
The parent of the parent, Hong Leong Group, is one of the largest conglomerates in Malaysia, into construction materials, furniture and newsprint. It owns one of the world’s largest semiconductor subcontract assembly operators. It is the Malaysian maker of Yamaha motorcycles.
My take on the tycoon, based on his own publicity, is that he might easily have bought Molokai Ranch and turned it over to the residents of Molokai as a charitable act if it had occurred to him or been presented to him that way. Instead it was presented as a development investment so he and the rest of the company have been focused on “extracting value.”
There was anguish over the La’au Point proposal even before the opposition to it cost (the community) 120 jobs. Opponents knew all the people who work for the Ranch — everybody knows everybody on Molokai, which has a population of only 7,000. They knew the company wasn’t happy with subsidizing its hotel, golf and ranching operations with land sales.
I’m not sure opponents thought the owners would close everything, even though they threatened to more than once, perhaps believing that no business could be so petulant.
It could. It not only announced full closure (of Ranch operations), it made a point of saying it would padlock the gates, which means it will be limiting access to La’au Point. I’ve walked out to La’au Point and the only reasonable way to get there begins with a drive over roads on Molokai Ranch property.
Outrigger, by contrast, has worked hard through the entire Beach Walk renovation to save as many jobs as possible, and has some very loyal employees as a result.
In fairness, Molokai Ranch employees were loyal, too, working gently but persuasively in the community to argue that 200 homes at La’au Point, coupled with the permanent set-aside of a very large amount of land, would be a better outcome than anything else that might happen.
They failed to persuade the community only because the compromise seemed based on a sense of the inevitability of development and the unavoidable change to way-of-life, and residents just weren’t ready to accept that.
If Quek Leng Chan lived on a beautiful island like Molokai, he might not find it easy to take, either.