Net worth $17.6b $4.6b
The Beach Tree, one of seven restaurants at the resort
Once upon a time, thousands of years ago, a surging mass of magma beneath the Pacific Ocean burst through the earth’s crust and began burping out a stream of lava, first underwater, then above, to form land. As the tectonic plate shifted, the eruption created a string of four islands—all of which are pretty nice, but the largest, known today as Hawaii’s Big Island, is as close to paradise as any human might deserve. On the beaches, the temperature hardly ever roams above the mid-80sf or below 70. It’s the tropics, yet it’s seldom muggy. And rain, when it comes, is like an afterthought—the gentlest of reminders of how achingly wonderful the island is the rest of the time. But even in paradise,
$33.7b some spots are better than others. The island’s northwest shore is a gold coast made remote and exclusive by a border of long, flat fields of volcanic rock. Laurance Rockefeller opened the Mauna Kea Beach Hotel there in 1965. Then came the Hapuna, the Mauna Lani, the Orchid, and the Waikoloa. In his final years, Steve Jobs often hid out in Kona Village, a rustic, low-fi, Bali Ha’i- style hideaway best reached by
$5.6b private plane. Nearby is Kukio, a quiet homeowners’ community where KKR’S Paul Hazen, Sutter Hill Ventures’ David Anderson, and Silver Lake Partners’ David Roux became neighbors. And last to be built, nestled between Kukio and Kona Village, came the place that in many ways would outclass them all.
Hualalai, developed in 1996 by Japan’s Kajima Corp., is a pristine, manicured 865 acres on which are tucked a $1,000a-night (for starters) Four Seasons hotel and a residential community of more than 300 homes and condominiums. The homeowners are served by their own private Hualalai Resort Club, and can also make use of the hotel’s phenomenal amenities. All in all, Hualalai has the scale to sustain two championshipcaliber golf courses, seven bustling restaurants, five main swimming pools, and a snorkeling-friendly lagoon frequented by a spotted eagle ray and 4,000 other fish. The spa has an apothecary with compoundable herbal remedies and supplements made on- site. Along the links, golfers stop at “comfort stations” stocked with complimentary candy bars and bourbon. Poolside attendants offer chilled towels, sunglass cleaning, and Evian spritz service.
Michael Dell liked Hualalai so much that in 2006 he bought the whole thing—hotel, resort, everything except the private homes. When his partner,
He didn’t know it at the time, but he was encountering a new policy enacted by Hualalai Resorts, Dell’s management company on the ground. It has three prongs: First is the complex schedule of steep resort access fees based on the time of year and the relationship of the guest to the homeowner (sons and daughters are OK; nieces and nephews, friends, and renters have to pay). Next there’s a status hierarchy for making dinner reservations at any of the restaurants. Finally there’s the rule governing the use of the chaises longues by the pools, which the Firesteins encountered at its most cognitively dissonant moment, on a deserted pool deck in the rain.
The word “no” was getting an awful lot of use. And it was said to people who weren’t accustomed to hearing it. “People who have invested millions of dollars being homeowners— basically our needs are not as important as the hotel guests,” says Mike Greenfeld, owner of a Hollywood postproduction company and a Hualalai homeowner for almost a decade. In October he tried to reserve spots for some friends at a luau in December, a peak period. (“Frankly, if you’ve been to one, you’ve been to them all,” he says, but “they wanted to go.”) It was the earliest recommended time to reserve, but he was told the luau was full. “That was bull----,” Greenfeld says. “They were just holding space for hotel guests.” He called and complained, the hotel relented, and when his group got to the luau, there was plenty of room. It was clear what had happened: The friends weren’t immediate family, so they were in a lower caste.
Tension over the policy boiled over in August, when three executives from Hualalai Resorts convened a special meeting of the Hualalai Homeowners Association to announce the resort was increasing the peak-period unaccompanied guest fee to $250 and expanding the periods to several months of the year. The steep fee, they said, was meant to make it harder for people to rent out their homes—something they argued was happening more and more frequently and clogging up the hotel’s amenities. “A family of four is staring down the gun barrel of $1,000 a day before you ever pay for anything else, like rent,” says Taber Anderson, a longtime homeowner. With a surcharge like that, why would anyone rent a place at all?
The goal, the executives said, was to protect what they called Hualalai’s “experience of exclusivity,” according to those who attended. No one in the room disputed that exclusivity deserved to be protected. But no one in management seemed to care that some homeowners, those who rent their places for several months out of the year, could lose tens or even hundreds of thousands of dollars in annual rental income— or that everyone’s resale values might plummet once prospective buyers learn about the extra charge for anyone who rents. Days after the meeting, Sandra Holstead, a homeowner since 2004, told a Hualalai executive she might be able to find at least a few people willing to pay the $250 fee. “Maybe the fees would have to be higher then,” she says the executive replied.
This could end in only one place: court. In October, Christopher Zyda, a Hualalai homeowner, filed a lawsuit, which he hopes to make a class-action suit, against the Hualalai owners, including Dell’s family office, MSD Capital, and the Four Seasons. He and a group of about 75 Hualalai homeowners who openly support the suit say they’ve been bait-andswitched—they were promised they could use their homes and the hotel’s amenities freely and without any guest fees, then the rules changed.
The resort has essentially responded that the homeowners might want to check the fine print of their homeowner agreements. Management can raise guest fees. It can set up a metaphorical velvet rope, cutting off access. It can alienate the homeowners who use their places for cash flow. And if it means certain homeowners have to sell their places to wealthier buyers who aren’t put off by those fees, so be it.
“This may sound like a battle of the 1 percent vs. the .001 percent over a bunch of beach chairs,” says Zyda, who decries the resort’s
“I’m a rule-follower type of person,” Zyda says, shouting over the buzz of his groundskeeper’s weed whacker. We’re sitting in the backyard of his five-bedroom spread at Hualalai, sipping water and looking out on the ninth green of the resort’s Jack Nicklaus golf course. “I don’t try to make trouble.”
A 54-year- old financial adviser, Zyda discovered Hualalai 16 years ago while on vacation from his former job as treasurer of Amazon. com. He loved it so much that he used some of his stock options to buy a development lot. Like others who support his lawsuit, he remembers being told by his real estate agent that one of the great things about buying at Hualalai was the money he could make renting out his home when he wasn’t there, with no restrictions or fees. Since then, Zyda has changed career tracks and moved, and he and his husband, Michael Wieland, finished building their home only in early 2015. By then, he says, many of the things that had made being a homeowner at Hualalai so special were well on their way to being rolled back, all in the name of crowd control.
He shows me the latest two- page schedule of guest fee rules, featuring an exhaustively detailed table designating different types of guests (club members, immediate family, extended family, escorted guests, accompanied guests, unaccompanied guests) and different times of year (“peak,” “peak of peak”). “It’s like a complicated, ever-changing video game,” he says. “I can’t keep up with the rule changes and what I’m allowed and not allowed to do. None of this craziness existed when I purchased in 2000.”
The dispute is, naturally, about money. But it’s about so much else, too. It’s about power, or the loss of it. It’s about feeling jilted. Many of the homeowners supported the resort from the beginning, putting down roots on what had been lava fields. Now that the hotel guests matter more, the homeowners are forced to watch as their ex parades new companions in front of them.
More than anything, perhaps, it’s about humiliation. These are wealthy people unaccustomed to being put in their place by someone even wealthier.
But you oa know, it was just a business decision that was important for the sustainability of the resort going forward.” Bi If there’s any common ground, it’s that everyone believes Hualalai is special— ho too special to be destroyed. Zyda says he’s open to resolving the case without more bad blood. He pauses to do a little mental math. “We’d have to value the loss of market value, because we can’t rent the house anymore,” he says. He has trouble settling on an answer. “If they want Michael and me to not rent,” he finally says, “I’ll entertain the offer. As long as we’re adequately compensated.” He wants to get back the aloha spirit. But it won’t come cheap. <BW>