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Small private hotels: No future in Hilo, Hawaii

Small private hotels have no future on the Island of Hawaii.

Small private hotels have no future on the Island of Hawaii. No luxury hotels on the Hilo side of the Island of Hawaii, but all of the 1500 hotel rooms on the Big Islands of Hawaii enjoy 86% occupancy, while the remaining 10500 hotel rooms, including many luxury hotels on the Kona side of the Island only make it to 60% to 65%.

The Honolulu Advertiser today in an article predicts a new era in tourism may now be emerging for the entire island. The reason are mostly new flights, specifically a recent international flight on Hawaiian Airlines from Tokyo flying non stop to Kona.



The trick will be to update regulations to allow for sensible hotel development without running roughshod over quiet Hilo’s unique historical character, says the Honolulu Advertiser in an article today.

The Big Island Visitors Bureau and others are pushing for more “quality” hotel rooms in Hilo.

The paper explains:” A long-standing drooping in quality is tied to the state’s handling of land-leases. The state Department of Land and Natural Resources owns 97 percent of the land under Banyan Drive’s resorts. The lease agreements, which max out at 65 years, were established in the aftermath of the 1960 tsunami that destroyed much of downtown Hilo. When a lease expires, the state puts it up for bid. The trouble with that practice is it fails to offer a leaseholder in good standing an option for extending the lease. Moreover, it hinders a leaseholder’s ability to secure improvement capital for hotel upkeep.

Such trouble prompts the question: What bank will loan a small operator money for improvements if it’s unclear that the lease will continue to be in their possession after 65 years are up? Hawaii island Mayor Harry Kim is putting that query before state officials, contending that changes are needed for the sake of promoting a thriving economy. The state agency counters that it is constrained by state law.



Lease-related snags were cited as a contributing factor in the decision to shutter Uncle Billy’s, which was opened by William J. Kimi Jr., otherwise known as Uncle Billy, in the mid-1960s. Before the scheduled Feb. 1 closure, however, the developer who owns Honolulu’s koi-famed Pagoda Hotel, picked up the property and rebranded it as Pagoda with management under Castle Resorts &Hotels, which also manages the nearby Hilo Hawaiian Hotel.”

State agency staff members now want to see the 2-acre property go to public auction for a month-to-month revocable permit. The idea is to hold off on issuing a long-term lease until a recently formed Banyan Drive Hawaii Redevelopment Agency overseen by Hawaii County develops a long-term plan for the area.

The Department of Land and natural resources (DLNR) the community’s wishes weigh heavily in its decision-making and the agency is open to some give-and-take options on matters it can tweak.

Hawaii Tourism Authority estimates at least 1.55 million visitors arrived in 2016 — nearly matching 2007’s record figure of 1.6 million.

There’s some enthusiasm in the community for makeovers like the recent transformation of Naniloa Volcanoes Hotel from a rundown Banyan Drive property into the more upscale Grand Naniloa Hotel — a DoubleTree by Hilton. The hotel increased in size to 388 rooms from about 150 rooms.

Ross Birch, executive director of the Big Island Visitors Bureau sees a trend true for the entire State of Hawaii when saying the hospitality industry is at the point where the mom-and-pop hotel is a business model of no more.

Hilo’s hotel lineup is in need of appealing modernization that pays some tribute to the past, and expansion needed to accommodate future visitors demand.