Once iconic Uncle Billy’s Hilo Bay Hotel to be demolished next year

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A condemned four-story building, which used to be the iconic Uncle Billy’s Hilo Bay Hotel on touristy Banyan Drive, is one step closer to being demolished.

The Hawai’i State Department of Land and Natural Resources plans to release $1 million in special funds to finance the plans and designs for the demolition of the old hotel, which is slated to take place sometime next year.

Uncle Billy’s Hilo Bay Hotel once was a fixture on Banyon Drive but after closing in 2017 it became a haven for squatters and was gutted during a March 2022 fire.

In March, the state said it would cost about $13.5 million to knock down the dilapidated 146-room structure; and it would be requesting the funding through the State Legislature.

“The Uncle Billy’s property is a significant liability for the state as it currently poses a health and safety risk to the Hilo community,” state Sen. Lorraine Inouye said. “Many homeless and drug users and dealers loiter on the property while DLNR has had to pay more than $9,000 a month for security services.”


DLNR also had to pay a contractor to board up windows and doors on the first floor of the structure, which it says has helped reduce trespassing, squatting and other unauthorized use of the land.

The former Uncle Billy’s hotel and several other Banyan Drive properties are under the jurisdiction of the state DLNR Land Division and have been for more than 50 years. The hotel closed abruptly on June 19, 2017. For years it has been a magnet for squatters and crime. On March 4, the building was gutted after a fire caused $2 million in damages.

Since the fire, Hawai’i police confirm they have responded to a few calls for trespass on the property.


“The fact that the structure will be removed will change the climate of the area,” Hawai’i Police Department spokesperson Denise Laitinen said. “Here we have a run-down, dilapidated building in the middle of Hilo’s tourist hub. Removal is going to improve the area.”

On March 4, 2022, firefighters survey the damage inside the building that used to be Uncle Billy’s Hilo Bay Hotel. Photo Courtesy: DLNR

Uncle Billy’s closure marked the end of an era in which mom-and-pop hotels dominated the tourism scene in Hilo. The hotel, which had been in existence for almost 50 years, was named after William J. Kimi Jr., known as Uncle Billy.

In the 1960s, Uncle Billy entered into a lease agreement with DLNR to transform four parcels on Banyan Drive into a family-owned-and-operated hotel. Those parcels had been decimated by the 1960 tsunami. News reports say Uncle Billy did much of the construction himself.

Uncle Billy’s Hilo Bay hotel was a popular place on Banyan Drive for nearly 50 years before abruptly closing in 2017. Photo Courtesy: dnata Travel

Now, DLNR plans to use its own special funds from a capital improvement projects’ appropriation approved by the State Legislature this past session to get the demolition process started. The state agency plans to procure a consultant to scope the planning and permitting requirements for the demolition of the hotel and to conduct an environmental assessment, if required.

A request for proposals will then be published and a contractor selected from among the qualified applicants to demolish the structures on the property.

DLNR says it will request the State Legislature to change the method of funding for the demolition work from DLNR special funds to general obligation bonds in the upcoming legislative session.

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