The project will be called the Royal Kai Lani and plans include commercial use on the ground floor and a new two-story-tall restaurant with outdoor dining along Kalakaua Avenue.

The company has filed a draft environmental assessment with the state Office of Environmental Quality Control and is seeking public comment on the project.

The condominium-hotel will be managed by Aston, Richardson said.

Richardson said the selling price for the condo-hotel hasn't been set. Each unit will be 3,500 square feet, have three bedrooms and take up an entire floor of the 12-story building.

Robert Finley, chairman of the Waikiki Neighborhood Board, said a presentation of the project was given to the board in November and he is concerned about the shrinking number of hotel rooms in Waikiki.

"It concerns me," Finley said. "Waikiki tourism is our (state's) primary income and if we have less rooms we will have less tourists."

Richardson said while the number of people staying at the Aston Waikiki Beachside may be down, the income will be up.

The number of hotel rooms on O'ahu dropped 2.2 percent from 2002 to 2003, according to the state, as older hotels are converted to condominium or apartment buildings.

There were 35,664 hotel rooms on O'ahu in 2003, down from 36,457 the previous year, according to state figures. No room totals are available for 2004, but the trend of fewer rooms is continuing, said Rick Egged, president of the Waikiki Improvement Association.

"There is no question we are seeing a change in the product mix in Waikiki which will end in reducing the total number of units," Egged said. "That will affect how we market things like conventions, and we are already feeling a pinch in terms of the number of hotel rooms that are available in blocks."

Egged said projects like the Royal Kai Lani do have a positive effect in that they offer a new product to upscale customers.

"It is going to diversify the product mix we have in Waikiki," he said. "To the goal of attracting a higher spending visitor, that is a positive thing."

According to the assessment, construction is expected to begin this fall and take about 15 months to complete.

The proposed exterior alterations include enclosing the corner lanais with blue-green glass panels and keeping the center lanais open, adding limestone veneer on building facades and placing curved aluminum canopies on the ground floor.

The project site is in a Special Management Area and the resort mixed use precinct of the Waikiki Special District.