After you meet the Island Kahuna, Hala, you go to Iki Town to participate in the festival.
Learn How to Catch Pokémon
When you go toward the door of your house, Professor Kukui will come in and ask you to go with him to Route 1. After the cut scene, go outside and follow Professor Kukui to Route 1. He will show you how to catch wild pokémon. You don't have to press any buttons during his pokémon battle. Afterward, he will give you 10 Pokéballs and 5 Potions. You can go back home and talk to Mom to heal up your pokémon any time. She will also give you a Poké Ball.
Some of the pokémon that you can encounter in this area are: Grubbin, Pikipek, Ledyba, Buneary, Caterpie, Yungoos.
Go to Iki Town
Go through Route 1, catching pokémon as you go. Be sure to get the Potion that is next to a rock near the fence.
After that, a pokémon trainer will be in the path and you will have to battle her. She is Lass Audrey, and she has a level 3 Buneary. You get 72 Pokédollars for winning.
Go north and you can battle Youngster Jimmy, who has a level 3 Caterpie. You get 60 Pokédollars for winning.
Go through the grass near Jimmy to find a Potion near some trees.
Go northwest and you will find a Rockruff that wants to play. You can try different actions. Rockruff will become more friendly and follow you around if you have played with it.
Go west and you can battle Preschooler Oliver. He has a level 3 Alolan Rattata. You get 36 Pokédollars for winning.
Try to enter Iki Town and there will be a cut scene. These people are looking for something. After they leave, go into Iki Town.
Iki Town Festival
Go up the stairs to enter Iki Town. Kahuna Hala will talk to you about the festival.
Go north and you find Hau and his pokémon. Kahuna Hala heals your pokémon, then asks if you are ready to battle. If you say no, you can talk to Kahuna Hala when you are ready.
You battle Hau, who has a level 6 Pichu (weak to Ground attacks) and a level 7 Rowlet (if you chose Litten), Litten (if you chose Popplio), or Popplio (if you chose Rowlet). You get 140 Pokédollars for winning.
After the battle, Kahuna Hala gives you the Z-Power Ring. Then after a cut scene, you go back home and rest for the night.
The next day, Lillie will be at your front door. Professor Kukui asked her to take you to the Pokémon Research Lab. Before you go, Mom gives you some money.