Walk south from the Palani Road corner on a weeknight this fall and the old village stretch shows three stages of the same idea. Across from Kailua Pier, the five low buildings of Kona Seaside Shops look the way they have since the 1970s, a few with lease signs still in the windows. Farther along, the former Uncle Billy's Kona Bay Hotel is still waiting for its first guests as a Hampton Inn. Between them, the dining room at Kona Inn Restaurant is lit and serving prime rib.
All three are reinvestments in the same few blocks of Historic Kailua Village, and all three made news in 2026. The order you will see them finished in runs opposite to their price tags. The project that only needed new owners and fresh paint opened in June. The $5 million shopping center redo has a permit and still has several approvals to go. The hotel, with a $35 million construction loan, is booking rooms for the summer of 2027. On this corner, the amount of county review a project has to clear sets the pace.
The Dining Room That Only Needed New Owners
In March 2026, the owners of three established Kona restaurants, Jackie Rey's, Harbor House and Umekes Fish Market Bar & Grill, formed the Hawaiʻi Island Restaurant Group. Its first purchase was a pair of Aliʻi Drive institutions, Kona Inn Restaurant and Kona Canoe Club, which sit in the Kona Inn Shopping Village. Both had been on the market for about two years, most recently listed at $1.5 million. The group says its restaurants together employ 300 people.
Both places come with history. Kona Inn Restaurant is what remains of the original Kona Inn, which opened in 1928 as the Big Island's first luxury hotel. Kona Canoe Club was once a sports bar owned by Dodgers pitcher Don Drysdale.
None of the work required new walls. According to Big Island Now's preview of the relaunch, the new owners put money into the kitchen, the dining room and the bar. They brought in more comfortable tables and chairs and replaced the wall sconces. Nightly prime rib is back, along with a new beef Wellington, more vegetarian dishes, a new wine list and new cocktails and mocktails. The crab cakes, calamari, mud pie and traditional mai tai are unchanged. The grand reopening was June 18, 2026, with about 100 guests, and the new menu went public the same day.
The group's goals go beyond one restaurant. Nakoa Pabre, the Umekes owner who serves as the group's executive chairman, grew up in Kona. He described growing up looking forward to trips downtown for events on the lawn in front of Kona Inn Restaurant and for the Fun Factory arcade. "We're coming up with creative ways to bring life back to the whole shopping center," he told Big Island Now in April.
The Shopping Center With a Permit and a Parking Compromise
Kona Seaside Shops at 75-5663 Palani Road works the same corner from the other direction. The 33,411-square-foot parcel sits about 100 feet northeast of the Aliʻi Drive intersection. Its first three buildings went up in 1971 and two more followed in 1975, and none has had a major renovation since. In the Hawaii Tribune-Herald's description, the center sits between Quinn's Almost by the Sea and the Kona Square retail center, with Pacific 19 and the King Kamehameha Kona Beach Hotel next door. The Edmund C. Olson Trust No. 2 bought it in July 2021 for $4.3 million.
On June 18, 2026, the Leeward Planning Commission voted 5–0 to grant the Trust a Special Management Area Use Permit for an estimated $5 million renovation. Here is what the permit allows:
- Demolition of three of the five buildings, all of which were already vacant at the time of the vote.
- Renovation of the two-story, 6,385-square-foot anchor building, which houses Big Kahuna Beach Grill upstairs and Kaʻū Coffee Roasters Café downstairs, plus a 606-square-foot addition.
- A 1,512-square-foot addition for a new restaurant on the 3,057-square-foot retail building where Pacific Vibrations operates.
- Two open-sided 200-square-foot kiosks for retail or food vendors, a 675-square-foot outdoor seating area, new landscaping, and a rebuilt courtyard and parking area that meet Americans with Disabilities Act standards.
Planning documents include renderings of an Aliʻi Restaurant alongside Big Kahuna and Kaʻū Coffee. These are design concepts, and no new lease has been announced.
Parking set the pace on this project. The Commission first heard the application in December 2025 and deferred it. The Planning Department had refused a variance and required 46 parking spaces and two loading stalls, based on the county minimum of one stall per 300 square feet of commercial space. Under the eventual compromise, the parking count covers only the new square footage, which in effect grandfathers the existing buildings. The planning director also found the existing loading zone sufficient. The approved plan has 27 vehicle spaces, 16 existing and 11 new, and 20 bicycle stalls that stand in for four of the vehicle spaces.
Commissioners were clearly relieved. "Kona used to be pumping back then in the heydays," Commission Chair Dean Au said, according to Big Island Video News. He added that the corner "needs a big uplift and it'll be a bright light for the community and for the visitors."
The permit is only one stage. John C. Cross, the Trust's senior land manager, told Big Island Now that the plans go next to the Kailua Village Design Committee, which approves designs and color schemes downtown. After that, the Trust will apply for building permits and choose a contractor. No construction start date has been announced. He also said the Trust has no plan to push out current tenants: "We're going to try our best to make allowances."
The shops are open in the meantime. Big Kahuna Beach Grill was closed for extensive repairs after back-to-back Kona low storms in March damaged its roof and ceilings and flooded the interior. Its website now offers online ordering and reservations and lists hours of 8 a.m. to 10 p.m. daily. A quick call before a pier-view breakfast still makes sense. Kaʻū Coffee Roasters Café, Homegrown Cone and Sparked with Aloha round out the tenant list from the June reporting. The café connects to the Trust's coffee operation in Kaʻū, where Kaʻū Coffee Mill grows, mills, roasts and serves its own beans.
The Hotel That Has Cleared the Most Reviews and Still Isn't Open
The former Kona Bay Hotel, known locally as Uncle Billy's, shows what a long review process looks like. The 123-room property opened in 1963, was acquired by the Kimi family in the 1970s, and closed in 2020. San Diego-based Shapery Enterprises bought it for $21 million in January 2022 to reopen it as a Hampton Inn by Hilton.
According to Big Island Now's January 2026 report, construction did not start until 2023 because the project was waiting on county building permits. Each time crews found rotting wood or fixtures that needed replacing, a supplemental plan had to be submitted and approved. County spokesperson Tom Callis confirmed that six codes apply to the renovation:
2018 International Building Code, 2018 International Existing Building Code, 2018 International Energy Conservation Code, 2020 National Electrical Code, 2021 Uniform Plumbing Code and Hawaii County Code.
The budget rose from an estimated $25 million in 2022 to a $35 million construction loan that includes furniture. In January, the owner was aiming for late spring 2026. As of this month, Hilton's Kailua-Kona directory lists the hotel as "Coming Soon" and says, "We're accepting reservations for June 16, 2027 and beyond."
Where Each Project Stands This Fall
Put side by side, the three projects line up in reverse order of their budgets.
| Project | Who's behind it | Investment reported | Status as of October 2026 |
|---|---|---|---|
| Kona Inn Restaurant and Kona Canoe Club | Hawaiʻi Island Restaurant Group | Pair listed at $1.5 million before the sale | Kona Inn reopened June 18, 2026 with a revised menu |
| Kona Seaside Shops | Edmund C. Olson Trust No. 2 | About $5 million renovation | SMA permit approved June 18, 2026; design committee, building permits and contractor next |
| Hampton Inn Kailua-Kona Bay | Shapery Enterprises | $35 million construction loan | Hilton taking reservations from June 16, 2027 |
Kona Inn could reopen quickly because new tables, sconces and a new menu need no shoreline permit. Kona Seaside Shops is close to the water and is replacing buildings, so it had to win an SMA permit and settle the parking count before design review could even begin. The hotel is rebuilding 123 rooms under six codes, and every surprise behind the walls sends a new plan back to the county. That is why the most expensive project on the corner is also the one with the longest wait.
Seeing the Corner on Foot
The easiest time to see all three projects in one walk is when cars are off Aliʻi Drive. The Kōkua Kailua Village Stroll closes the road to traffic from Kailua Pier through Historic Kailua Village to Hualālai Road, from 1 to 6 p.m., with more than 100 artisan and crafter booths, food and live entertainment. The next two dates are Sunday, November 15, and Sunday, December 13. The December stroll is billed as Kailua Kalikimaka.
Start at the pier end. Kona Seaside Shops is across the street, the Kona Inn lawn is a short walk south, and Pabre's memories of that lawn are what his group is trying to bring back.
If you are following these changes on Aliʻi Drive because you own nearby or are thinking about a place within walking distance of the pier, Kristina Vaughn-Hazard keeps a close eye on this stretch of the village and would be happy to talk through what it means for your plans. Schedule a personalized Kona consultation.
