Work will start this week and was expected to finish in August.
The Heritage New Zealand Category 2 building was designed by local architect Herbert Henry Clemson and is the only remaining hotel on The Strand from the era when the port was located nearby.
The 1918 building was designed to accommodate 50 or 60 people and has had several owners and numerous licensees in its time.
The most recent co-owners are couple Matthew Young and Sarah Meadows, who also own the business operating from the building, Harbourside City Backpackers.
"It's fantastic to carry on the legacy," Young said.
The couple spied the grant opportunity in the news and Young began researching and preparing the grant in January last year.
In May last year, they received a $43,700 grant for professional advice from Heritage EQUIP to get a seismic assessment and detailed structural design.
Photograph of the Hotel St Amand on The Strand taken in 1963. Photo / Tauranga Heritage Collection
He said the project was complex and expensive but would preserve two businesses and create local jobs. Their goal was to transform it into the "best backpackers in New Zealand".
"Saving a piece of Tauranga's history is important for the local community.
"It's our honour to have the opportunity to restore this building to its former glory."
The couple were grateful to Heritage New Zealand for the support.
The grant would be used to remove the concrete from the reinforced concrete-framed brick infill design and replace it with wood, install brick-fixing screws to hold the brick cladding together, improve floor and masonry connections and tie the parapet back to the roof structure.
Young said the building had been built to be "absolutely fireproof" in 1918 after the original went up in flames in 1916.
Heritage New Zealand area manager of lower northern, Ben Pick, said it was pleasing to see the building preserved as the CBD grew and developed.
"The Strand is a very important piece of history in Tauranga but not many of the heritage buildings have been kept along there ... It's great to see that it can be used otherwise old buildings can fall into disrepair."
Hotel St Amand through the years: The building pictured in 2008. Photo / Supplied
The building also housed a Cobb and Co restaurant until recently. The downstairs area would be available for lease after construction finished. This was expected to be around August this year.
Associate Minister for Arts, Culture and Heritage, Grant Robertson, said it was pleasing to see the professional advice grant information being put into practice.
"Regional projects make up 75 per cent of all applications since the grants' criteria was changed last year to ensure the private owners of regional heritage buildings have the same opportunities as those in metropolitan centres where rents are higher and access to advice is easier."
The St Amand's early years
1916: The Commercial Hotel, the original timber building on the site - previously occupied by a timber yard - is destroyed by fire 1917: Architect Herbert Henry Clemson submits plans for a new 21-room hotel building to be erected on the site. Plans for a 'ferro-concrete and brick structure are approved. Meanwhile, a temporary bar had sprung up on the site. 1918: The new hotel, built by Ashton and Crump and opened in August 1918. It was promoted in advertisements as being 'Absolutely Fireproof'.
The two-storey hotel, with a partial third storey, had a full-width balcony along the main street frontage supported on ornamental cast-iron columns.
On the ground floor it had two entrances from The Strand, a small luggage room, parlour, large dining room, storeroom, two staff bedrooms and a laundry. There was a commercial room with velvet carpets and rimu furniture from the Tauranga Furnishing and Manufacturing Company.
The first floor housed 20 guest bedrooms and a drawing room facing The Strand.
A staircase led to a flat "promenade" roof with a large apartment, and a concrete parapet enclosing the roof area.
