We usually stay there for a night or two using Marriott points / free nights before or after our primary destination on the island, depending on flights versus timeshare checkin. It is on the water, and there is some decent coral out around the pier, but you have to watch for boat traffic on your way in and out. I wouldn't plan a trip out of it, a couple of hours of snorkeling will cover most of it.
-The best "hotel reef" I've experienced on the Big Island is Mauna Lani Beach Club. Accessible from the hotel but actually closer to some of the vacation rentals in the Mauna Lani complex.
-The Hilton Waikoloa has a shallow lagoon that is great for young children to get their first snorkel experience in a very protected environment. Not super exciting, but enough stuff to be interesting, occasionally a turtle or eel and your normal tangs/triggerfish/parrotfish, and very safe and calm. I'm not sure which Hilton properties get access to it, we usually stay at the hotel.
If you really want to snorkel, grab a couple of nights in an AirBNB down by Captain Cook at the beginning or end of your stay. We usually stay somewhere with easy access to Manini Beach and you can swim around past the state park and out to Captain Cook. It's about a mile swim, super easy with fins when the water is calm, but there is a stretch in the middle that's a bit boring. Also anything in that area is a short drive to Two Steps.
I usually don't like "swim with animals in a huge group of idiots" activities, but I HIGHLY recommend the Manta Ray swim at Mauna Kea, it's limited to groups of 8 people, so even if only one manta ray comes out, you still get individual time where they point the light and get it to swim close to you. It's run by a conservation group.
I also have a fishing guide I recommend (I prefer trolling for mahi/wahoo/ahi, no desire to fight a marlin for an hour) and he does great snorkel trips, too:
Come experience Hawaii's warm tropical ocean just as you dreamed it. Epic fishing battles, intimate whale watching and wildlife experiences, and exclusive snorkeling adventure all included in our private boat charters. A perfect excursion for your family vacation!
www.chawkhawaii.com