Aging Kona Inn Shopping Village struggling to sell despite property’s century history as tourist mecca

Nearly 100 years ago, the opening of Kona Inn along the coastline marked the beginning of commercial tourism for the once sleepy fishing village of Kailua-Kona.

In 1928, the Inter-Island Steamship Navigation Company built the inn for a wealthy, leisured class who travelled to the Big Island by steamer. The first guests to the establishment traveled from Hilo to Kona in a touring vehicle, Packard, according to Kona Historical Society records.

A few years after the inn stopped hosting guests in 1976, the property was converted into the Kona Inn Shopping Village. Over the decades, the property has remained a top tourist draw, especially due to the Kona Inn’s original restaurant still serving up drinks and food, with patrons able to see the same gorgeous view of Kailua Bay.

But the future of the aging property is murky.

Since 2021, the Kona Inn Shopping Village has been for sale. It is now listed on the JLL Brokerage website. The property is described as an “extremely rare opportunity” to acquire approximately six acres of fee simple interest directly on Kailua Bay.

The shopping village fronts 750 feet of ocean and spans 88,780 square feet along Ali‘i Drive. The brokerage has the property listed for sale at “best offer.” According to the County of Hawai‘i Real Property Tax Office, the commercial property is assessed at $11.67 million.

The shopping village was built in 1949 and its age shows. Walking through the open-air complex there is chipped concrete and toward the south end there is a weathered creaky boardwalk.

Several empty retail spaces have “for lease” signs. Honolua Surf Co., a staple in the shopping village for at least two decades, is closing for good with a bright red and yellow sign advertising everything is 70% off.

The entire downtown also has been struggling with fewer tourists and locals patronizing the area due in part to the skyrocketing cost of parking. New Hawaiʻi County Mayor Kimo Alameda announced a plan to address the parking issues during a public event on Saturday.

But despite the problems, the charm and beauty of the place, with the center piece the iconic Kona Inn Restaurant, is undeniable. From the quaint dining and shopping to the access to Kailua Bay, it is a place where there are colorful sunsets, good food and a great place for buying jewelry, trinkets, clothes and art.

The brokerage company stated purchasing the property is a “once in a generation opportunity to shape the identity and future of Kailua-Kona.”

The property is owned by the Kimi family. Several attempts were made to reach members of the family but no calls were returned.

The Kona Inn Shopping Village, along with the Kona Bay Hotel, also known as Uncle Billy’s, went up for sale in 2021. Sandy Shapery, a San Diego developer who now lives on the Big Island, expressed interest in both properties at that time but ended up buying only the Kona Bay Hotel in 2022 for $21 million.

Shapery, 80, said he initially had both Kimi family-owned properties under contract with the plan to buy them at the same time. However, there were title challenges with the Kona Inn from previous owners.

Shapery explained the seller keeps the land contract until the loan is paid off. While the loan was paid off by the buyer, Shapery said no one got the deed.

The Kona Bay Hotel is a replace and renovate project. The cost of the renovation went from an estimated $25 million in 2022 to a current price tag of $30 million.

When Shapery was able to officially purchase Uncle Billy’s, he got a real glimpse of the age of the 60-year-old structure as everything from plumbing to electric to drywall had to be replaced.

While over budget, Shapery said the renovated Kona Bay Hotel should open in August.

“My goal is to make it a fun place to be in Kailua-Kona,” Shapery said. “We’re trying to recapture historic Hawai‘i.”

While Shapery said he does have a standing offer with the Kimi family for Kona Inn Shopping Village, he said it doesn’t make economic sense for him to invest in it.

“When you look at the property knowing it’s a significant historic property, you can’t really tear it down,” Shapery said. “It should be remodeled and brought back to its original condition with some upgrades.”

Shapery said each space in the shopping village would need a new foundation, reframing, new air conditioning and new roof.

Material and labor costs would cost more to repair and renovate than it would to tear down and rebuild.

While the property is technically on the market, tenants and prospective buyers like Shapery say the Kimi family doesn’t know what direction they plan to go in with regards to the Kona Shopping Village.

While there is uncertainty surrounding the historical site’s future, those visiting or working in the space now struggle to visit or keep doors open. The property and others began to charge as much as $15 an hour for parking, which has resulted in less people coming to Ali‘i Drive.

“The landlords have shot themselves in the foot for charging high parking,” Shapery said. “During the weekday, the parking lot is empty and priced out the locals.”

Kim Richert, owner of Kai Ea, became a tenant in the shopping village in 2022 after eight years of operating her business from the parking lot at the Kamehameha Shopping Center. She opened her doors right after the parking prices went up.

Richert’s space at the village used to be a closet. There was no electric or air. But she fell in love with the arched window that brightens the space with natural light.

She also has struggled with damage to her store. One month after opening, her ceiling leaked in seven places, resulting in water falling on her glass counter, display case and area where she creates her jewelry.

Despite the property’s flaws, 72-year-old Jerome Kanuha thinks whoever buys it should invest money into the property to keep its past alive.

He was raised in the heart of Kona across from Hulihe‘e Palace, which is just south of the Kona Inn. His dad worked as a bartender and security at the inn, which sprawled from Hualalai Road to the south end of the palace.

“I used to come here every afternoon, every evening,” Kanuha said. “This was our playground.”

Kanuha said the whole property used to be hotel rooms. But the owners before the Kimi family converted the hotel rooms sprawled along the boardwalk into commercial rental spaces. The rest of the Kona Inn remained intact on the south end of the shopping center until it closed in 1976.

Kanuha said the shopping village is part of Kona: “Hopefully, the new owners or somebody will realize how important this place is. History is here. This is the hub of Kona.”

Ross Wilson, executive director of the Kailua Village Business Improvement District, agrees: “I would love to see Kona Inn restored to its former glory and transformed back to being one the iconic visual and social centerpieces of Historic Kailua Village.”