Business Monday: Renovation delays continue at former Uncle Billy’s hotel in Kailua-Kona

Just over a year ago, Sandy Shapery had hopes that the former Kona Bay Hotel, also known as Uncle Billy’s, would be accepting reservations at the newly remodeled Ali‘i Drive property in historic Kailua Village by summer 2025.

But on Saturday, a chainlink fence remained wrapped around the 2.06-acre property as the renovation project to turn the hotel into a Hampton Inn by Hilton has been hit with challenges ranging from conflicting building code interpretations, supply chain struggles and staffing issues.

In December 2024, Shapery, owner of the property, said construction on the hotel had been a long haul. That sentiment remained the same last week, with his new timeline for opening the hotel in late spring.

The cost of the renovation with the same floor plan has skyrocketed from an estimated $25 million in 2022 to a construction loan that has now reached $35 million, which includes new furniture.

“Right now, I’m trying to climb a mountain one rock at a time,” Shapery said.

One of the biggest issues that set the project back, Shapery said, was the debate about building codes with the Hawai‘i County Building Department.

“It goes on and on and on,” Shapery said Saturday as he walked through the main pavilion of the hotel. “It’s been a challenging three years.”

The 123-room hotel was built in 1963. It was acquired by the Kimi family in the 1970s, but closed in 2020 during the COVID-19 pandemic.

Shapery’s San Diego-based real estate development company, Shapery Enterprises, bought the property for $21 million in January 2022. Shapery is the largest partner in the ownership, which includes 12th & A Hotel Partners.

Construction didn’t start until 2023 as crews waited for building permits to be approved by Hawai‘i County.

Supplemental plans have been required to be submitted, reviewed and approved by the building department every time crews discovered rotting wood and fixtures that needed replacing.

Shapery thought renovation of the hotel would have been done two years ago. With Hawai‘i County regulations requiring approved updated plans, no matter how small the change, it has set the work back, he said.

Hawai‘i County spokesperson Tom Callis confirmed the hotel project has six different building codes applicable to its renovation. They include 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.

No one from the building department was available for further comment on Friday.

Despite approved plans by the building department, Shapery said the building inspector has the final say.

“If they find something that was missed by the building department, that is an unsafe condition that they don’t agree with, they’ll change it,” Shapery said.

Since the project is a renovation, not new construction, Shapery said the building has to comply with Hawai‘i Existing Building Codes.

The building department required that a second elevator be installed, which falls under new construction. That elevator must comply with new construction building codes.

Shapery has completed approximately 40 historic restoration projects through his company. Because of the ongoing issues, Shapery said the renovation of Kona Bay Hotel has been the most challenging project he’s been a part of.

Despite these ongoing struggles, Shapery maintains his excitement for the project and can’t wait for it to open to tourists and residents.

In December 2024, the rooms throughout the 4-story semi-circle structure were framed and awaiting new walls. Now, the walls are in, wallpaper is up in the bathroom where the sink and vanity with be placed. Crews on Saturday were working on installing sinks into countertops.

Framing of the restaurant Trader Vics, kitchen and future fitness area are framed. Kitchen equipment is boxed up and covered in plastic in the pavilion.

Shapery has a lot of personal touches to the property, including designing the room number signs.

Shapery designed the 340 tiki torches that will span across the property. While the original torches burned kerosene or gas, he decided to design an electric torch to keep the iconic feel but be environmentally friendly.

“They say you get 10 feet away, you can’t tell they’re not real flames, and yet they’re environmentally friendly,” he said. “They cost pennies a day to operate.”

Pointing to the circular pool on the outside deck on Saturday, Shapery said he wanted to create the feeling of being on a pier.

“We did benches all the way around to try and make the swimming pool feel like an extension of the bar, where you can sit there in the water, stay cool, have your drink up on the edge,” he said.

In the lobby and front desk area is a swinging bench made of teak root and a 5,800-pound granite ball with the continents etched into it.

The globe will be part of a water feature that kids will be able to turn, Shapery said.

There also are elements from the old hotel, with 11 of the original lights to be hung around the bar.

“It’s going to be just a place to come and hang out and see and enjoy,” Shapery said.

He wants the hotel to retain its 1960s Hawai‘i vibe, but also be accessible, which is why he partnered with Hampton Inn by Hilton.

“We wanted the Hampton brand for the affordability,” Shapery said. “We wanted to bring something that’s going to rejuvenate downtown Kona and bring life back to the area.”

Hawai‘i County Mayor Kimo Alameda said he is looking forward to the completion of the hotel renovation and is excited about anything that improves the community.

“Any abandoned building, it’s a scar in the community,” Alameda said. “Of course I want to see it to completion.”

Alameda said he’s trying to figure out how to reverse regulations that cause delays in construction projects, adding most of the regulations are in the name of safety and liability.

“Hilo and Kona are the tourist attractions,” Alameda said. “If we make them nice for the locals, it will be nice for the tourists.”