In 2026, two nearby developments brought renewed activity to Ali'i Drive: Kona Inn Restaurant reopened under new operators, while plans moved forward for Kona Seaside Shops. The changes followed different timelines, offering two ways to look at what is changing downtown.
As Big Island Now reported, about a hundred people gathered on the lawn behind Kona Inn Restaurant on June 18 for a Hawaiian blessing, a fire dancer, and the debut of a new menu. Jerome Kanuha sat at a table that evening the way he has since he was four years old, watching the sunset the way his father did when he worked there as a bartender and security guard. For Kanuha, and for a lot of people who grew up in Kailua-Kona, that restaurant was never just a place to eat. It was where everybody's parents worked.
A Restaurant Group That Already Knew the Building
The new owner of Kona Inn Restaurant and its neighbor, Kona Canoe Club, is the Island Restaurant Group, formed earlier in 2026 by three restaurants that were already fixtures of the Kona dining scene: Jackie Rey's, Harbor House, and Umeke's Fish Market Bar & Grill. As Big Island Now reported, Nakoa Pabre, Umeke's owner and the group's executive chairman, grew up in Kona and has his own history with the Inn. His father was a busboy there. He met his wife there.
That local background adds context to the change in ownership.
Two Years on the Market, Then a Sale to Local Operators
Kona Inn Restaurant and Kona Canoe Club sat unsold for two years before this deal closed. The leases and contents were listed for $3 million in 2024. By March 2025, the asking price had been reduced to $1.5 million, and Island Restaurant Group bought them as a package in April 2026.
Vice president of operations Michael Hofstedt II, who came to the group after a decade working the North Kona and South Kohala coast, put about $200,000 into renovations before the June reopening. New seating, updated lighting, and the belt-driven fan system that has spun over the dining room for decades all stayed, because Hofstedt's team decided the fan system was part of the restaurant's identity, not a fixture to replace. As Big Island Now reported, longtime general manager Leila Kanuha, who has run the floor at Kona Inn for 19 years, said the goal was simple: “elevate it, but embrace what is already here.” The kitchen brought in Kaikili Roldan, previously at Four Seasons Resort Hualalai, who remembers visiting Kona Inn as a kid before the strip faded and now gets to help bring it back.
The Building Itself Is Still for Sale
Here is the detail that changes how you should read all of this. The Island Restaurant Group bought the leases and the contents of the two restaurants. They did not buy the real estate underneath them. The larger property, known as the Kona Inn Shopping Village, is still owned by the Kimi family and is still on the market, with an assessed value above $12 million.
So the dining room you sat in this summer has new energy, new ownership of the operation, and a restored menu. The restaurant operation has changed, while the real estate remains on the market.
Down the Street, a Renovation Plan Moves Forward
Walk a few minutes north on Ali'i Drive to Palani Road and you will find the Kona Seaside Shops, home to Big Kahuna Beach Grill, Ka'ū Coffee Roasters Café, the surf shop Pacific Vibrations, the ice cream shop Homegrown Cone, and the jewelry store Sparked with Aloha. The center's first three buildings went up in 1971, two more in 1975, and in 55 years, nobody had done a major renovation. Three of the five buildings sit vacant with lease signs in the windows.
At Kona Seaside Shops, the current proposal focuses on the property and its shared spaces. The Edmund C. Olson Trust bought the property in 2021 and filed a Special Management Area Use Permit application in December 2025 to demolish three of the aging buildings and renovate the rest. The plan keeps the two-story building anchoring Big Kahuna Beach Grill and Ka'ū Coffee Roasters Café, adds space to the retail building where Pacific Vibrations currently sits to make room for a new restaurant, and reworks the courtyard and parking to meet accessibility standards. In June 2026, Big Island Now reported that Leeward Planning Commission Chair Dean Au supported the project and said Kailua-Kona Village needed a “significant uplift.”
That is the mirror image of the Kona Inn story. At Kona Inn, the operators changed while the real estate held still. At Seaside Shops, a permit application proposes renovations to the property.
Two Timelines, One Year
The timeline shows how the two developments proceeded in the same year, despite following separate paths.
- April 2026: Island Restaurant Group buys the Kona Inn Restaurant and Kona Canoe Club leases for $1.5 million, after two years on the market at a much higher ask.
- June 18, 2026: Kona Inn reopens with a new menu, a $200,000 renovation, and the original fan system intact.
- June 2026: Leeward Planning Commission Chair Dean Au voices support for the proposed renovation of Kona Seaside Shops.
- Ongoing: The Kona Inn Shopping Village, the real estate underneath the restaurant's new lease, remains on the market; its assessed value is over $12 million.
The two projects followed separate timelines. The Island Restaurant Group bought the Kona Inn leases and contents after the asking price was reduced. At Seaside Shops, the Edmund C. Olson Trust filed a permit application in December 2025 for a renovation proposal. Their shared point is timing: Kona Inn reopened in 2026, and the shopping-center proposal also moved forward that year.
What Comes Next
The Kona Canoe Club rebrand is still pending. Pabre has said the plan is to honor its history as the old sports bar once owned by Dodgers pitcher Don Drysdale while shifting the menu toward small plates from around Polynesia. Nothing has been announced for a launch date yet, so the current menu stays until it does.
If you want to watch the corridor change in real time rather than read about it after the fact, the easiest way is still the Kokua Kailua Village Stroll, the monthly Sunday afternoon event when Ali'i Drive closes to cars and becomes a walking market of local vendors, run by the Kailua Village Business Improvement District. It happens roughly once a month, and it is one of the few times you can walk the length of the changing corridor without worrying about parking or traffic.
Together, the developments offer a snapshot of change along Ali'i Drive in 2026: Kona Inn reopened under new operators, while a renovation proposal advanced for Kona Seaside Shops.
If you are watching Kailua-Kona change and want a local read on what it means for property owners and buyers along the way, Tessie Fontes has spent her career tracking exactly this kind of shift in East Hawai'i. Reach out anytime you want a grounded, honest take on what is happening in this corner of the island.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
