The Proposed Hampton Inn Kona Bay Hotel Kailua-Kona
(Formerly Known as Uncle Billy's Kona Bay Hotel)
Built in 1963 as a 122-room hotel, located in the center of the Kailua-Kona tourist district, the property was acquired shortly after completion by Uncle Billy Kimi, a local contractor known for his parsimonious approach to property maintenance. By the time Covid came around only about 70 of the 122 rooms were considered occupiable, so it was shut down when the Hawaiian Islands imposed strict requirements for tourism in March 2020. The hotel was in need of a complete renovation including repair or replacement of many components including the electrical system, plumbing, mechanical, air conditioning, elevatoring and necessary structural repairs along with some asbestos remediation.
Mr. Shapery acquired the property on December 30, 2021, through his entity, 12th & A Hotel Partners, which paid the cash sum of $21,000,000. Because the property is located in an Opportunity Zone Mr. Shapery created an Opportunity Zone investment vehicle as a member of the 12th & A Hotel Partners LP, to maximize the economic benefit from the purchase. This investment was shared with some of Mr. Shapery's friends/investors/partners although he is the largest investor and the managing partner. Pursuant to the Opportunity Zone regulations this property will be held for at least 10 years to obtain the maximum tax benefit.
The anticipated renovation costs including design, engineering, contractor's fees, financing costs and FF&E is budgeted at $34M for a total project cost of approximately $55M. The remodel work is expected to begin early in 2023 and be completed by the end pf the first quarter of 2024.
As the result of Mr. Shapery's experience in developing the W Hotel in San Diego, it became obvious that guests are looking for more than a nice hotel room. The guest experience in the W hotel was oriented toward creating a hangout and socialization experience in a celebratory atmosphere.
When one thinks of Hawaii their thoughts go to tiki torches, lush landscaping, Hula dancers, lava and warm weather. To recreate the sought-after old Hawaiian experience Mr Shapery designed authentic looking copper tiki torches but instead of burning kerosene they have been designed to operate off low voltage LED lighting that mimics a burning torch light. See the drawing adjacent to the Pavilion Floor Plan below.
A study of the downtown Kona tourist, market to determine the most beneficial approach to positioning the hotel indicates that unlike the high-end expensive resorts north of Kailua Kona, the market for a downtown property in the middle of the local tourist shopping and restaurant row would be a mid-priced limited service hotel.
The project has been approved by Hilton to become a Hampton Inn franchised property, the number one most successful franchise for limited-service hotel type properties. Hampton Inn provides a free breakfast to its guests, but also allows us to operate a bar/restaurant in addition to the free breakfast.
Because the property is located in the center of the 8-block oceanfront tourist area and the physical layout with the swimming pool and large outdoor deck facing Ali'i Dr., the bar/restaurant portion of the property is ideally suited to draw in heavy tourist traffic.