In the tropical paradise that is Hawaii, renowned for stunning landscapes and vibrant tourism, a less visible but now more frequently discussed challenge is making big waves. Hawaii’s exceedingly high cost of living has placed a burden that’s especially serious among those who work within the travel sector, where wages generally do not keep pace with the escalating expenses of living in Hawaii.
Hawaii retains the dubious honor of having the highest cost of living in the U.S. According to data from the Missouri Economic Research and Information Center, the average cost of living in Hawaii last year was a staggering 80.3% above the national average. That is being driven primarily by housing expenses, which are 213% higher, too.
Hawaii also has one of the highest median household incomes in the U.S. at over $92k.
That, however, also includes high earners and does not reflect the reality of those employed in lower-wage travel industry jobs. With such high costs, many Hawaii residents find themselves struggling to afford basic necessities. According to Forbes, Hawaii has the lowest disposable income in the nation, averaging just $5,929 per year.
The travel industry remains vital to Hawaii’s economy.
The strain of the situation is felt acutely. Many of those employed in the sector, from hotel and restaurant staff to others, earn wages insufficient to cover the cost of living. This discrepancy is leading to a high turnover rate, staffing shortages forcing irregular service and hours, residents leaving the state, people working three jobs, multi-generational living, and an overall reduced quality of life. This trickles down to also impact visitors’ experiences and is damaging Hawaii’s reputation as a top travel destination.
Moreover, inflation continues to be an issue in Hawaii. The obvious and continuous increases in prices here add more pressure to an already bad economic environment.
The implications for Hawaii travel are big.
With a high and fast-increasing cost of living, attracting and retaining quality staff in Hawaii travel has become an enormous challenge. Various sectors including restaurants, as an example, must often increase wages or offer additional and sometimes unusual benefits to keep their employees.
We know of more than one travel business that has taken to providing housing for their employees in order to retain them. That, however, also leads to higher costs that are passed on to visitors. Hawaii’s competitiveness with other destinations is being eroded when compared with other destinations offering quality travel experiences at a lower cost.
How can Hawaii address these issues?
It isn’t clear how Hawaii can develop policies to help alleviate any of the financial burdens faced by those in the lower income brackets, especially those employed within the travel sector. The most important suggestion that always surfaces but remains unsolved is providing more affordable housing solutions.
As Hawaii continues to attract tourists worldwide, overlooking the needs of those who make the tourism industry run will surely backfire. Balancing the cost of living with wage growth in Hawaii travel is crucial for both the well-being of residents and for the ongoing success of our primary economic engine, the Hawaii travel industry.
What do you think Hawaii should do to help deal with runaway costs impacting the travel sector?
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Attacking tourism will cause significant economic harm which will directly impact locals. Wait and see.
Have been to Maui for 20 years . it has reached the point of looking elsewhere for new vacations. Prices are through the roof. Thought I would never say that however it is out of touch with average travelers.
Part 2
Next would be for the State of Hawaii to grant these houses to residents in Hawaii at a sliding scale rate. Those who can pay more would do so and those who can pay less would pay less.
Who will pay for the maintenance?
Who will pay for the insurance?
Will those who have been given these houses at a reduced rate be able to afford the high costs of home ownership?
So, is it again the State of Hawaii who would pay for the maintenance and insurance of these houses?
It is a suggestion to take away the strs from those who legally own them and somehow this would solve the problem of the housing shortage, but it does not seem to be a viable solution.
I do not know the solution, and I do care about the kind people of Hawaii.
Part 1
Dear People who Love Hawaii and want to help and do not know exactly what to do to solve the lack of housing issue,
Many have made the suggestion to eliminate short term rentals as the solution. “If those houses were available for the people of Hawaii, there would no longer be a housing shortage.”
Let’s follow the logic on this suggestion:
People who own strs, if forced to sell, would need to have their str purchased from them. The State of Hawaii would have to purchase the str at market rate. Also, it is reasonable for the people being forced to sell their str, that the related expenses would be reimbursed and loss of future rental income for ‘x’ amount of years.
So, do you think the State of Hawaii is going to do that?
Governor’s Ige and Green, need to recognize that as an Island, everything is imported except Fish, maybe water and some veggies! Wood, Bricks, Concrete, Glass, Tile, Steel are took major hits pre-pandemic in the Continental U.S. as well, even the Pre-fab business has to be shipped in. What pays the freight, is Tourism and Military, in their case probably 96%! The corruption in One Party Rule is seen nationally, the surprise is The NY Times has identified the game in Hawaii, in the entire State House and Federal Representatives, out of roughly 60 Elected, there are but 6 in other party! Hawaii Electric is in trouble for their handling of Lahaina, Unemployment compensation is $500M upside down, Politico’s failed to act!
Hawaii used to have affordable housing. Sugar and pineapple workers had low-cost places near their jobs to live. Then the visitor/tourist
industry took over and lobbies the government to subsidize their low paid workers with taxpayer funds to reduce the cost of housing. Require hotels to provide a certain amount of affordable rentals for their own employees themselves. Reduce taxes for the other workers.
This is one of the sanest solutions I’ve heard on this topic. I’m surprised I haven’t seen it offered before.
Thank you.
And of course the hotels should provide affordable housing, just like historically happened during the sugar-cane-pineapple years.
Why should affordable housing be placed on the backs of STVR-mom-and-pop businesses?
And why should workers who live hours from the hotels be out of a job in their own communities because the Hotel Lobby has gotten to legislators who are now trying to ban STVRs?
It’s insanity, not to mention likely illegal, to legislate against small business owners.
Your article is false. It is Not housing but all the taxes we pay for the homeless, food cards and the rent. Food is crazy but the drug dealers and addict get free food.
If we are ever going to have affordable housing for local residents in Hawaii again, the State of Hawaii needs to ban STVRs and simultaneously put a high cost of ownership on out-of-state, out-of-country home owners. And this includes my own brother-in-law that moved to the mainland for college, stayed, and is now able to buy a million dollar + condo in Maui because he can pay the mortgage with his STVR income. That’s the reality and unfortunately greed will prevail in this issue because the wealthy have so much to loose and many resources (i.e.-Airbnb & STVR lobbyists) at their disposal. Google it.
Stop blaming the bnb ‘s .they provide work to managements, cleaners, gardeners handyman ..Hawaii has never been the land of paradise for jobs. . Store, food establishment will be dead without bnb. There are many fake section eight in my neighborhood, and no one looks in to them?
The Hawaii travel and hospitality have raised prices above the average income population. Price of paradise has exceeded our family budget and we had to break our 30 year vacation tradition and we now look for affordable vacations in Europe, Mexico, South America and the Caribbean. I don’t think you will ever be able to put the genie back in the bottle. I will miss paradise.
Our inflation is high because the current president and administration keeps spending money. They have no clue how to run a country or its on purpose to make people depend on government so they can control you. HI has a government that is also at a loss on what to do. I think a new government is needed one that can solve problems and bring jobs back. One who puts Americans first instead of supporting other countries wars. Problem is the want everything that’s happening to continue. It’s not an accident we have inflation, loss of jobs, and illegals taking over cities to a point they are going broke.
From this complaint I’d think that this was a political forum, not geared to travel. We all can share an opinion, but when axe-grinding is the point, no problem is ever going to be on the way to solution. What’s the point? I’m not interested in your politics.
Well, Debbie makes some very valid points regarding the causes of inflation in HI. Also, the HI government is at a loss of what to do… think limiting STR’s, rail system in Honolulu, wasted tourist money etc. When you have one party rule for so long this is what happens, it’s not political, just reality. And she must be saying something right, four times the likes.
I’m not looking for a catfight over politics, and the blame game of Dems for the ills of HI (though I do agree that one-party control of all levers of power isn’t healthy). Linda Lingle was very popular and had a chance to whack the pinata in her term, but the problems persist.
I am a fan of the Grassroot Institute (and support the earlier post by Steve H) of its efforts to vault the venting and find solutions that have been tried and may be working in other parts of the country (e.g. Re- Honolulu rail and its inability to find riders).
On Kauai, convert some of the protected ag land into affordable housing facilities.
Perhaps the solution is to drive visitors to hotels rather than short term rental units that could be converted to long term rentals, thereby reducing home/rental costs that can eventually impact home prices. Too many homes are either being built as STR, are being allowed to convert or just renting illegally. You can’t build enough homes fast enough to deal with this need.
Ray, please tell me where new STRs are being built, and/are being allowed to convert from regular housing. That was all capped years ago to the current legal numbers existing at the time. No new STRs can be built or converted, at least on Maui, and I’m almost positive on the other islands as well. The only legal STRs are over 40 years old, were built as STRs, and have always been STRs.
If there are new STRs being built, they are probably being built by the hotels. Hotels seem get easy exceptions to strict permitting and zoning. For years, hotels have been trying to get into the STR business to compete with the Mom & Pop STRs, many of which are owned by the kapuna on your island. Are these the “new STRs” you are referring to?
Until the State of Hawaii gets serious about eliminating (or, at least, minimizing) corruption, and allows transparency into the Legislature’s not-serving-the-people behavior, and enacts common-sense housing and construction reforms (see grassrootinstitute.org/2023/11/hawaiis-housing-crisis-deemed-eminently-solvable/ for some common-sense solutions).
We have a political class that doesn’t seem to Want to solve the problems of Hawaii`s citizenry (that of course doesn’t apply to all of them, but to far too many…). Just look at the travel industry corruption uncovered by the New York Times, and you get a good idea as to how things get done in Hawaii. It’s disgusting.
Would you refer me to th NYT article or series you mention, pls? I subscribe, but I missed that.
Hi Nick.
Are you referring to this article, that contains the NYT link? https://beatofhawaii.com/alleged-hawaii-travel-industry-corruption-exposed-by-nyt/.
Aloha.
Yes, thanks so much!
Hawaii not only needs to pay more hourly wages but it also needs to lower taxes that usually go to pay fake section eight, drug addicts, people that know how to manipulate the system and they do not contribute to society in general. Tired of having to pay for them
It seems to me that a lot of the housing being built in Honolulu is intended for non-Hawaii residents. Too many condo/apt units are left vacant and used for ‘cash parking’. Many int’l buyers buy just to have their money out of their country, hoping their unit will increase in value that they can cash out later. That would be fine if housing were being built for typical Hawaiian residents, but it’s not. This is a problem in NYC too. I think the US as a whole should not allow foreigners to buy property in the US and all property should be ‘owner occupied’.
Regarding the high cost of living. My family and I live in East Hawaii big island. The recent news that the Manago Hotel in Captain Cook will be turned into an affordable housing building comes as sad news for us. The Manago is the last affordable hotel we know of and our family looked forward to staying there a couple times a year. We too are a struggling working family here in Hawaii and now even a short affordable vacation to the Kona side is gone for us. We understand the need for affordable housing this is not only a Hawaii problem, but a national problem. We feel that converting Manago into affordable housing units only putting a bandade on a huge problem.
Regards, Richard P
Hawaii needs to develop into a 2-party state where different voices are not only heard, but considered.
In California, effective this month, we have the statewide min wage of $16, but major fast food restaurants must pay $20.
Something like that will cost jobs, but perhaps the majority of the retained workers will be better off.
And, allow BnB. We always stay at our former timeshare, but if vacation is more affordable while providing extra income to the folks, it could help.
The State can help by cleaning the place up – people will pay more if the natural beauty is not diminished by the roads etc.
There’s not a size fits all solution.
Aloha BOH. Maybe if the representatives would stop pilfering off the tax/tourist money, the state/counties would have the money to build some affordable housing. When will the people of Hawaii wake up to what’s going on? Thanks for letting me sound off.
The Hotel Lobby is doing a bang-up job trying to ban Airbnb’s. By propagating myths, they’ve all-but-persuaded lawmakers to eliminate them, and have gotten support in the community through fear mongering.
The truth is, hotels do not pay staff a livable wage, and with the resorts so far removed from civilization, staff in Kona are commuting from Hilo for work.
I am both a guest and a host on Airbnb.
As a guest, I prefer getting to know a new place at the neighborhood level.
As a host, I pay my housekeepers $50 an hour, which means, they don’t have to commute hours to get to work. And I hire local gardeners, handypeople and caretakers, also at living wages. My guests shop locally.
Inflation has hit the entire US, not just Hawaii. People on the mainland no longer have the disposable income to afford the luxury of a trip to the islands. Instead of lowering all the things that are keeping tourists away like taxes, hotel rates, car rental rates and parking fees, those things just keep going up. Like it or not, when the tourists stop coming to a place that depends on them to survive, the jobs disappear and locals suffer. Talk to your representatives who are in the pockets of the hotel lobbyists.
With all due respect, that’s a gross oversimplification of the myriad of problems Hawaii faces.
1. We are a remote island chain. 90% of everything consumed has to be imported.
2. Most hotel & car rental companies are based on the mainland and set their own pricing.
3. Over-tourism is taking its toll. Too many visitors, not enough infrastructure.
4. Overentitled visitors frequently like to wield the threat of going elsewhere like a cudgel, which is never well received.
Well said Sheryl B.
In addition to talking to their representatives, residents need to vote out the incompetent politicized that have been running the state Hawaii for decades.
I personally believe the question that first needs to be answered is Why HI has to be so expensive??? Is it the location on the planet and cost (actual, not ‘market price’) of goods? Is it the increase in visitors willing to pay high prices for food, lodging, etc. for their short visits? Is it the lack of Available (as well as Affordable) housing? Is it just a ‘demand’ issue, or is it ‘how much can I charge for it’ greed situation?
I think the HI legislature knows the answers to the questions, and that they are part of the problem. But, they have ‘theirs’, and you don’t have yours, so if they are satisfied and you aren’t, tuff!
It’s high time everyone in the travel sector paid their employees living wages commensurate with the outrageous prices they’re charging the public. It’s time for shareholders to take a back seat in exchange for stabilizing the situation with an eye towards stable long-term gains. Because if the situation continues, everyone loses.
It’s also time to find way to reign in the robber-barons like Alexander & Baldwin, and other huge property owners from selling to the highest bidder. If it takes tax incentives to have them cede property to housing trusts, so be it.
Too many people are competing for scarce resources.
Even if some genius came up with a brilliant plan,
where would the money come?
Perhaps a more significant question could be, “Where does all that high tax money the state receives Go?!”
The Federal Government will just print it. That’s what causes high inflation in the first place.
The answer to the affordable housing crisis is to put houses into a community land trust, so that affordable homes don’t go back into the market for seven generations or more. pal-hawaii.org/
Where would the money come from to do that?
Well, first of all, Stop the elicit old boy (and girl) parties with cash stuffed boxes…