Since then, the resort's ruins have sat idle. But a Honolulu developer is looking to change that.
Coco Palms Hui, LLC is taking charge of a major restoration project to bring the historic hotel back to life. The group says the resort will feature about 350 rooms, as well as restaurants and shops. They hope to open hotel in 2019.
"It's beyond exciting because I think it's going to be something that is going to create a lot of those memories that bring people back to Kauai," said Jon Gibb, creative director for Coco Palms Hui.
Demolition crews have cleared out the rooms, torn down the walls, and removed overgrown brush around the 46-acre property.
But they are still waiting for final approval of permits.
"It's looking like construction will start probably mid 2018 just with the way the permitting process has been going," Gibb said.
The group decided to keep many of the structures intact, as well as the iconic Coco Palms name.
"The integrity of the structures were incredible especially once we cleaned everything up and saw the interior," said Gibb.
The $175 million resort will open under Hyatt luxury collection, and the developer says the project will create about 1,800 jobs, including construction.
But some county leaders are skeptical of the Coco Palms project, questioning if it will really be restored.
"There's a lot of concern about how much more tourism growth we can handle at this point. I know there are some alternative visions for that site and it may be time to take a look at those," said Kauai County Councilwoman JoAnn Yukimura.
Sue Kanoho, executive director of the Kauai Visitors Bureau, said a lot has changed since Coco Palms was in business.
"The competition is so great now when you think about all the other hotel properties and amenities," she said.
Another suggestion that's been floated is to transform the site into a cultural park that could be a part of the Kauai Community College system.
Meanwhile, a group of Native Hawaiians -- who say they are descendants of Kauai's last ruling king and queen -- continue to live on the property after a Circuit Court judge allowed them to stay for the time being.