The Tongan Government says it is seeking help from the World Bank's business arm, the International Finance Corporation, to help develop the Dateline Hotel.
That follows confirmation Fiji's Tanoa Hotel Group has pulled out of negotiations to buy it.
The government is now expected to assess the market with the aim of finding potential partners for the renovation and management of the hotel.
Radio Tonga reports the Minister of Finance and National Planning, Dr 'Aisake Eke, saying the hotel can play a key role in boosting the country's tourism industry.
The minister says the government wants a suitable private sector partner to undertake the project, and to ensure Tonga realises its potential through increased tourism and job opportunities.
The Tongan Government purchased the hotel in 2012 when the then operators went into liquidation.