Hotels Claim Victory As Honolulu Limits Vacation Rentals

Share News:

Honolulu County awards pot of gold to hotel industry

Hawaii has had a complicated relationship with the short-term vacation rental market. Back before Silicon Valley got its claws into the process, these types of arrangements were called B&Bs (bed and breakfasts). Stereotypically, older ladies with a penchant for macramé would rent rooms and provide a meal or two – hence the name.

In recent years there’s been a (insert “large” synonym) growth in these types of listings. Back in the 1980s, Honolulu County (encompassing the island of Oahu) set a limit of 770 licensed B&Bs outside the tourist areas of Waikiki and Ko’Olina. It’s estimated there are 8,000 to 10,000 B&Bs operating on Oahu today. Suffice it to say that even subtracting those operating legally and in the designated tourist areas, there are still a ton operating illegally.

In June 2019, Honolulu County approved a measure that would increase the number of legal vacation rentals to 1,700 beginning in October 2020. That gives the city 14 months from the effective date of the legislation (August 1, 2019) to shut-down all the illegal ones. Essentially any ad placed without a license number will get a visit from the county. Violators can get slapped with a $1,000 fine for a first offence that’s then ratcheted up to $5,000 per day on the next violation and finally $10,000 per day on future offences.

The new regulations also shine a light on the already outlawed (though largely ignored) unhosted or whole-house rentals outside the tourist areas of Waikiki, Ko’Olina and Turtle Bay.

Note to readers: If you have a reservation after August 1, 2019 for a short-term vacation rental on Oahu outside designated tourist areas, you might want to recheck. The city is saying they have little sympathy for those already-made reservations. I assume landlords have been busy informing their upcoming guests.

Who benefits?

There are three issues at play here. First are the unpaid sales and occupancy taxes paid by hotels and skipped by many operators – estimated at $45 million a year (assuming the 8,000 to 10,000 survived). Second, there’s the neighborhoods not wanting the traffic, parties and the general disturbance of people on vacation – it’s why they don’t live in Waikiki in the first place. Third, the large hotels don’t like competition and have been throwing money into lobbying to restrict short-term vacation rentals – even though hotel occupancy rates remain strong.

Want to read more? Head over to SecondShelters.com.

Posted in
mm

Jon Anderson

Jon Anderson is CandysDirt.com's condo/HOA and developer columnist, but also covers second home trends on SecondShelters.com. An award-winning columnist, Jon has earned silver and bronze awards for his columns from the National Association of Real Estate Editors in both 2016, 2017 and 2018. When he isn't in Hawaii, Jon enjoys life in the sky in Dallas.

Reader Interactions

Leave a Reply

Your email address will not be published. Required fields are marked *