In 1845, Kamehameha III established a permanent seat of government in Honolulu (moving from the prior capital at Lāhainā.) He acquired for his capitol the former Hanailoia (a home built by Governor Mataio Kekūanāoʻa for his daughter (Princess Victoria Kamāmalu)) and named it Hale Ali‘i, it was the palace used by Kings Kamehameha III, IV, V and Lunalilo.
Various residences were placed around the grounds, the Palace being used principally for state purposes. Kauikeaouli (Kamehameha III) built a large, old-fashioned, livable cottage on the grounds a little to ewa and mauka of the palace (near the Kīna‘u gate, opening onto Richards Street.) He called his home ‘Ho‘iho‘ikea’ in commemoration of the restoration of the sovereignty and independence of Hawai‘i by Admiral Thomas of the British Navy, on July 31, 1843.