The Hilo Hawaiian Hotel on the Big Island was sold yesterday for $17.3 million to a group of local investors led by Castle Resorts & Hotels.

The sale marks the first time in 20 years that the hotel has been under local ownership.

Besides Castle, the new ownership includes RAM Corp., the parent company of Allied Builders System; and Honolulu attorney Rick Fried.

The previous owners, CarVal Investors of Minnetonka, Minn., and Japan-based Capital Medica Co. Ltd., bought the 286-room hotel in July 2007 for an undisclosed price. Before that the hotel had been owned since 1991 by Tonichi Carlife Group Corp. of Japan. The property was built in 1975.

"This is the premier property in Hilo and has done well for many years," Fried said. "Both locals and tourists seem to like that hotel when they go to Hilo despite the economy. The strategy is to continue to upgrade the hotel and provide good service at a reasonable price."

CarVal had invested about $1.2 million during the past 12 months to upgrade public areas, meeting and banquet facilities, and the Queen’s Court Restaurant. Castle declined to disclose how much the new owners would invest in future renovations.

The sale has no impact on current operations or the hotel’s 120 employees, according to Alan Mattson, Castle’s president and chief operating officer.

"The hotel is navigating through this economic downturn in good shape," he said. "We’re pleased to be in a position to take the hotel to the next stage of development and bring the ownership back under local control."

The sale comes as welcome news for Hilo resident Yolanda Keehne, who has lived in the area for more than 30 years.

"When it’s in the hands of foreign owners, a lot of times there’s a risk of losing that control or the connection to local people and visitors," said Keehne, 56. "When times are bad, I think they have to rely on the local community."

Castle will continue to manage the Hilo Hawaiian, which it has operated for more than 20 years.