Final phase of demolition underway at site of former Uncle Billy’s Hilo Bay Hotel on Banyan Drive

The second — and final phase — of demolition of former Uncle Billy’s Hilo Bay Hotel on Banyan Drive in Hilo started this week, marking a significant step toward revitalizing the Waiākea Peninsula.

Estimated completion date is January 2026. The site of the former iconic hotel will be prepared for future use by the time the project is finished.

Demolition began during the fall of 2024 with the hotel’s wooden loby and restaurant structure first to come down on the 4-acre parcel, over which Hawai‘i Department of Land and Natural Resources has jurisdiction.

“Hard” demolition started shortly after on the main building and other structures of the once thriving and popular hotel that was a fixture on Banyan Drive for more than 50 years.

Phase one of the project involved demolition and removal of all aboveground structures. It was completed in December 2024. This second phase will focus on comprehensive site preparation at ground level and below.

That includes removal of soil impacted by pesticides, extraction of underground utilities, surface grading of the entire site and placing of fresh topsoil and grass.

Hawai’i Department of Land and Natural Resources Land Division awarded Isemoto Contracting of Hilo with the general contract for the $4.7 million final phase of the demolition project.

The hotel that once stood on the property originally opened in the 1960s by William J. Kimi Jr., also known as Uncle Billy.

His family owned and operated it until February 2016, when it was sold to Honolulu-based developer Peter Savio and managed by Castle Resorts. It was renamed Pagoda Hilo Bay Hotel, but closed for good in June 2017 after inspectors found potential health and safety violations.

It became anything but accommodating after its permanent closure and condemnation 8 years ago.

The former hotel was dilapidated to the point where most of its 148 rooms were exposed to the elements and debris was strewn throughout the buildings.

It also was a source of trouble and danger before the demolition project began. There were reports of squatters living among the poor and unsafe conditions, numerous fires, security issues and other illegal activity happening inside.

Now that demolition is in its final phase, the future of the site remains up in the air.

One things is for certain, however: the former Uncle Billy’s Hilo Bay Hotel property will be part of the broader Waiākea Peninsula revitalization effort being conducted by Hawaiʻi Community Development Authority.

The goal is to redevelop and enhance the Banyan Drive area while preserving the natural beauty and cultural significance of the region.