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Family owners preserve Kualoa Ranch heritage through diversification

The descendants of the first doctor to move to the Sandwich Islands
still own the family ranch at Kualoa and have significantly diversified its
resources over the past 15 years to preserve the unique heritage and scenic
beauty of the property.

Millions of tourists are familiar with the breathtaking backdrop of
the "long ridge" or kualoa of the Koolau Mountains on the property and the
uniquely shaped offshore islet popularly called Chinaman's Hat. Many more
millions around the world have seen the far reaches and vistas of the ranch in
movies such as Jurassic Park, Godzilla and more recently, Wind
Talkers
.

"Kaaawa Valley is one of the most filmed places in Hawaii," said
John Morgan, president of Kualoa Ranch, which he described as a "magical place.
It has a great history and legacy to it."

Morgan explained to BYU-Hawaii School of Business students on
November 12 that his great-great-grandfather, Dr. Gerrit P. Judd, who came to
Hawaii in 1828 with the third company of Christian missionaries, purchased the
620-acre ahupuaa land division of Kualoa from King Kamehameha III in 1850. A
decade later he added the adjoining ahupuaa of Kaaawa on the Laie side and
Hakipuu on the Kaneohe side.

Dr. Judd's son, Charles, started the first sugar mill on Oahu in
1863, the remnants of which still stand alongside Kamehameha Highway. Irregular
rain and water resources, however, forced the family to turn to cattle ranching
within a decade.

The U.S. government seized the property for its strategic defensive
position during World War II and built an airstrip and several large gun bunkers
there. After, Morgan explained, the family reintroduced ranching and sold some
of the non-continuous property. The State also took more property for a large
park. More recently, the Judd descendants have tried to diversify to keep the
remnant of the land productive and intact.

They use the Hakipuu section, for example, for aquaculture based
partially on the viability of the 800-year-old Hawaiian fish pond on the bay.
They also have started diversified agriculture there.

But in addition to the movie location business, Morgan said the
family has focused on the visitor industry. "The activity business that we have
today, that employs all the people, has only been in existence since 1985." He
acknowledged that the agriculture and other activities would probably not
sustain the closely held family business. "There's also something called
inheritance tax, so you have to have a good economic basis to carry on."

"We looked around at things we could do, and we latched onto
activities, primarily for Japanese tourists. They were an important customer
base," Morgan continued. Activities included jet skis, all-terrain vehicles,
horseback riding, a gun range, and even helicopter tours. "It was very
successful for us for the next six or seven years, but things started to cool
down after the Gulf War."

"As time went on we realized we needed to do something to improve
our service. We wanted to be a destination on this side of the island," Morgan
said, explaining they are currently building a visitor's center that will
include a kitchen and gift shop.

"One of the things we would like to do is shift more to
eco-activities, but in business you always need to know which horse you want to
get on before you get off the one you're riding," Morgan said. He added they
plan to eventually phase out of the jet skis, but don't think the ATVs are "that
bad" for the environment. "It depends on how many people get into accidents. The
whole liability insurance issue is a big deal. We recognize we are the stewards
of a valuable resource."

"At Kualoa, we think we have what people dream is in Hawaii," Morgan
continued, adding they also host as many as 20,000 local school kids a year, and
they work with a community advisory board on future development.

For example, they are thinking of a youth camp and a wellness
center, "but we know that anything we do will require extensive permitting,"
Morgan said. "We're not the Campbell Estate. We're relatively small, and most of
our assets are tied up in the real estate we have."

Asked about the ranch's movie business, Morgan said it is "very good
source of income." For example, Wind Talkers paid over a quarter-million
dollars in location fees; but there's also a budgeting challenge: "We don't know
what to put down," he said, explaining the ranch never knows when they'll land
another movie, although they have an excellent reputation with location
managers.

"We think of ourselves as a small company, and look at the
Polynesian Cultural Center as an A-1 class organization. In any business
relationship, you have to add value," Morgan said. "For example, maybe we can
help attract repeat visitors. We've got to put something else on the table, so
tourists can get something they otherwise wouldn't have gotten."

"We think we're going to make it, because we have a lot going for
us. We have products we think the market will want to buy."