Lots of info and pictures from tikiroom.com.

The Hawaiian Room in the Lexington Hotel, Lexington Ave. and 48th St., is and has been for the past 20 years one of the most colorful spots in town. Until recently it was actually better known in Honolulu or San Francisco than in New York. Recent television shows using the room as a background have made New Yorkers more aware of it.

The story of the HAWAIIAN ROOm dates from 1937.

The management of the Lexington Hotel, completed six months before the market crash of 1929 and costing $5,000,000, found itself stuck with a large and useless basement dining room. In 1932, it opened as the SilveL Grill, featuring bandleaders Ozzie Nelson, Little Jack Little, Artie Shaw and Carl Ravel (now Carl Ravazza) .

When its popularity waned, the manager, Charles Rochester, decided to experiment for a few months with all-Hawaiian entertainment in a cafe decorated with South Sea motifs and featuring Polynesian food. In 1937, the HAWAIIAN ROOM opened with Andy Iona as bandleader and Ray Kinney as featured singer. In '38, Kinney returned to Hawaii and brought back with him a trio of lovely hula dancers, Napua, Mapawana and Pualani; also a singing comedienne called Hilo Hattie, whose specialty was "The Cockeyed Mayor of Kaunakakai." The show was an instantaneous success and the pattern has varied little from then on.

That's from a 1958 article.