HILO, Hawai'i — Just weeks after terminating about 120 unionized employees, the new owner of the former Hawai'i Naniloa Resort in Hilo yesterday agreed to an election next month to give his newly hired workers an opportunity to unionize.

Richard Baker Jr., Hawai'i division director of the ILWU Local 142, has accused new Naniloa owner Hawai'i Outdoor Tours Inc. of trying to eject the ILWU from the hotel by refusing to rehire most of the hotel workers after the company bought the hotel on Feb. 1.

But Kenneth Fujiyama, chairman and chief executive of Hawaii Outdoor Tours, told the House Finance Committee yesterday that labor costs at the hotel were too high, consuming almost 40 percent of the Naniloa's $6 million a year in revenue.

Fujiyama also said he was unimpressed with the behavior of the former Naniloa employees during his visits to the landmark Hilo hotel and during inspections of the property by his associates before the sale.

"We got the same kind of feeling. We got no recognition," he said. "I mean, we're in the service industry. People in the service industry have got to love to serve people. They have to have that enthusiasm. They have to want to be there. But I didn't get that kind of feeling."

Fujiyama also said he cannot understand how the hotel restaurant was allowed to stay open because the facility was "filthy." He said most of the workers who lost their jobs were in the food service area.

Fujiyama rehired only about 20 of the 136 unionized employees at the hotel, and has since renamed the hotel the Naniloa Volcanoes Resort. He plans to renovate it and market it as the premium hotel in Hilo geared to high-end visitors.

House lawmakers yesterday heard testimony from former Naniloa employees who were not rehired, including some who worked at the hotel for more than 40 years.

"I'm 59 years old now, and it's going to be very hard to find new employment," said Caroline Patao, who started work at the hotel in 1964 after graduating from high school.

"I really thought the new owner would hire me because of my experience. I really thought I had much to offer him, but maybe he didn't see it that way," she said. "Maybe I'm just too experienced, or too old."

Emilia Hassard, 26, is a single mother who worked in the hotel for four years. She said she grew up in foster homes, had her first child as a teenager, and said her Naniloa job allowed her to get off welfare.

Hassard said she had been considering buying an apartment, but had to give up on that plan when she lost her Naniloa job. Now, she is planning to move with her daughter into a smaller rental.

Fujiyama said the Naniloa now has about 80 employees, and said he expects staffing will reach 200. An election to allow the hotel employees to decide whether to unionize will be held March 22, he said.

Fujiyama said he projects revenue for the renovated and re-staffed Naniloa will eventually approach $20 million a year, and said the additional money flowing into Hilo will benefit the whole community.

"Let's look at the big picture for all of Hilo, so Hilo can prosper as an upscale destination area," he said.

To assume the new 65-year lease for state land under the Naniloa and the Banyan Drive golf course, Hawai'i Outdoor Tours agreed to pay $6.1 million to the previous hotel owner, and to make at least $5 million in improvements to the Naniloa over the next five years.

Big Island lawmakers questioned land board chairman Peter Young yesterday about the handling of the state auction where Fujiyama emerged as high bidder for the lease on the land under the hotel and golf course.

Young said his department is "troubled" by the firings, but said his department does not oversee the management of the hotel or its hiring practices.

The ILWU has sued the state and Fujiyama over what it calls "irregular" bidding, alleging that the state allowed Fujiyama more time extensions to close the deal than was allowed under the original bidding requirements.

The bid documents required that Fujiyama produce the $6.1 million to pay off the former Naniloa owner by Jan. 28, but he did not actually deposit the full amount into escrow until Feb. 1, according to Gary Okuda, lawyer for the ILWU.

A lawyer for Fujiyama said the union lawsuit has no merit, but declined to discuss specifics until the case is heard in Hilo Circuit Court.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.