Controversial Move to Ban Hawaii Vacation Rentals Proceeds

The legislature continues to ponder two controversial bills late this legislative season related to banning Hawaii vacation rentals. Exactly what is going on? Will this really happen, and, is it also a cloaked attempt to scare visitors away from vacation rentals, or something else entirely?

Hawaii is at a tourism crossroads in many ways.

The state is grappling with its large vacation rental market while its housing crisis appears worse than ever. Proposed legislation in the Hawaii House and Senate seeks to dramatically curb or even ban short-term rentals, which, if nothing else, has sparked heated debate across the state. Hawaii residents’ well-being, the tourism industry, and more are at stake.

Vacation rental issues propelled after the Lahaina fire.

Hawaii arrived at this pivotal moment after the devastating wildfire and already out-of-control housing costs. The state legislature is charged up, considering two bills—HB 1838 and SB 2919 (embedded below) — that seek to phase out non-owner-occupied short-term rentals. This move, seemingly intended to address rising housing costs and homelessness, has ignited fierce debate and struck at the fears of Hawaii visitors who have generally preferred vacation rental stays for decades.

The impact of tourism and the decades-long growth of platforms Airbnb, Vrbo, and Booking allegedly have transformed many Hawaii neighborhoods, leading to scarce affordable housing and the ongoing displacement of locals. The phenomenon is not new, but the Maui wildfires last August indeed served to intensify the situation and gave rise to legislators and others seeking to irradicate their perceived cause of Hawaii’s problems.

The reality of the proposed legislation, however, is that if it should pass, it would lead to massive legal challenges since it may infringe on property owners’ rights while also leading to further unemployment among those in that sector of the tourism industry.

Legislation supporters, however, argue that these measures are necessary and will preserve Hawaii’s limited housing stock for residents while preventing further migration of Native Hawaiians and others out of state due to unaffordable living costs.

Clearly, Hawaii needs more low-income housing. The cost of vacation rental properties, however, does not typically fall into that category and are not affordable to most.

Lahaina Strong and others demand action against vacation rentals.

Community organizations that are in part comprised of Lahaina fire survivors have been outspoken while demanding action to convert vacation rentals into local housing in order to address the lack of affordability for residents.

Implications for visitors, vacation rental owners, Hawaii hotels, and the long-term housing market.

Whatever the outcome of this debate, there will be long-term implications for Hawaii tourism and the state’s housing market. In the meantime, nothing is likely to change short of long-embattled court cases.

But at the same time, visitors are becoming all too aware of the situation given the global news exposure.

Hawaii vacationers may be scared into changing to alternative Hawaii hotel accommodations as a safer bet. That certainly will benefit the hotel industry and its proponents, including Mufi Hannemann’s Hawaii Tourism Authority.

This story will continue to unfold as vacation rental challenges continue in Hawaii and globally. We welcome your input!

HB1838.

HB1838_

SB2919.

SB2919