Billionaire Buys Hawaiian Island of Lanai

(MCT)—Rich guys have been tied to stories about tropical islands long before Thurston Howell III was trapped on “Gilligan’s Island.”

Movie stars from Marlon Brando to Mel Gibson have owned their own islands — the perfect way to escape the paparazzi.

But Larry Ellison supersized the whole idea last month when it was announced that the CEO of Silicon Valley-based Oracle had purchased the Hawaiian island of Lanai. This is no little hideaway with a sliver of sand and a hammock in front of a cottage. While the smallest of the main Hawaiian islands, it’s still 141 square miles, with more than 50 miles of coastline. It’s also home to 3,200 people.

The price of the island was not revealed, but the assessed value of all the land was put at $635.4 million by The Associated Press. Ellison has a personal fortune of $36 billion, making him the sixth richest man in the world, according to Forbes magazine. The Lanai price tag isn’t quite chump change for Ellison, but not a big stretch either.

Ellison gets 98 percent of the island — pretty much everything except for some property up in Lanai City where residents live. His take includes two Four Seasons luxury hotels and two championship golf courses. He also inherits the headaches over how to plot the island’s future, which have caused the rise and fall of the fortunes of many a rich man.

Missionaries originally came to Hawaii to harvest souls for God, but their children and children’s children often ended up harvesting something more tangible and profitable. Henry Baldwin, the grandson of a missionary, bought Lanai for just over a half-million dollars in 1917. In a move that today would get him a star turn on “Flip This House,” he fixed up the water supply and sold it in 1922 to James Dole for twice the price. Dole turned Lanai into a gigantic farm that at one point produced 75 percent of the world’s pineapples.

In the 1980s, David Murdock bought Lanai when its operations were on the brink of bankruptcy. He moved the agricultural work to cheaper spots in the Far East. On Lanai, the pineapples gave way to a new harvest: tourists. Two high-end resorts were built, one smack up against Hulopoe Beach, one of the most beautiful and pristine in the state. That resort, Manele Bay, is where Bill Gates was married. The other was a mountain lodge up in the pine trees that Dole had planted at the top of the dome-shaped island. It’s one of the few hotels in the state with fireplaces and guests in sweaters.

The two hotels were Rockresorts, then Ritz-Carltons before becoming Four Seasons today. There were plans for high-end homes for fellow rich folk who wanted to get away. Moving around the island has always been controlled — visitors are driven around in shuttle buses to a limited set of stops, unless they want to pay $150 a day to rent a dirty, battered jeep.

Lanai never really took off as a tourist destination, though it fared better than neighboring Molokai, where the only high-end resort, Molokai Ranch, is a shuttered ghost. Lanai gets about 100,000 visitors a year — a tiny fraction of the 7.3 million who visit the Hawaiian islands annually. The Associated Press also reported Lanai tourism was down 6 percent in the first four months of this year, while overall visits to the island have been rebounding from a few tough years during the bottom of the recession.

The Honolulu Star-Advertiser reported that Murdock was losing $20 million to $30 million each year and decided it was time to cash out. Ellison had the cash.

Silicon Valley’s titans have long had a love affair with Hawaii. Michael Dell owns a chunk of the Big Island, including a sister Four Seasons resort to the ones on Lanai.

Ellison has been mum on his plans for the island, but his promises to upgrade sewer and water facilities to the tune of more than $10 million was enough to convince the state public utilities commission to give its blessing to the deal.

Going back to Henry Baldwin almost 100 years ago, Lanai has had its future shaped by men from far away. We’ll be watching to see what happens on Lanai. When Ellison lets Lanai know, we’ll let you know.