Maui’s Vacation Rental War: A Crackdown or Engineered Uproar?

What is really going on with Maui vacation rentals and the dispute about ending the rentals of 7,000 units starting in just a few months?

It will likely trigger a legal showdown, with lawsuits and injunctions expected to follow. If pressed, this could begin a long, drawn-out legal battle that may lead nowhere. At the same time, the uncertainty surrounding these restrictions has already slowed the vacation rental market, casting doubt among both potential visitors and owners about the long-term viability of Maui’s short-term rentals.

This essentially began with the August 2023 Maui wildfires that devastated Lahaina, destroying thousands of structures and leaving thousands of residents displaced. In the aftermath, Hawaii’s leadership, including Governor Josh Green and Maui Mayor Richard Bissen, immediately vowed to prioritize housing for displaced residents over short-term vacation rentals. This quickly put Maui’s rental market under intense scrutiny.

One of the key battlegrounds became the “Minatoya List”—a long-standing legal carve-out that allowed specific properties, primarily condos, to operate as short-term rentals even in apartment-zoned areas. While these rentals had been considered legal for years and were purpose-built as vacation rentals, pressure mounted to either phase them out or convert them into long-term resident housing.

Maui’s mayor aggressively stated that he wanted to end transient vacation rentals in many residential areas, citing the need for housing relief. Meanwhile, Hawaii’s Governor Green proposed using state powers to take over hotel rooms and rentals for displaced residents. Owners of Minatoya list properties have been caught in the crossfire, uncertain whether their legally authorized rentals would soon be deemed illegal.

However, owners and advocacy groups, including the Maui Vacation Alliance (MVA), were quick to voice their opposition. Not taking this sitting down, they pushed back against these moves, warning that such drastic actions could have serious consequences for property owners and the island’s economy. The MVA’s efforts to challenge these policies set the stage for a much larger confrontation that may soon play out.

Despite the aggressive rhetoric from officials, the likelihood of a significant shutdown of short-term rental availability appears slim. Legal experts anticipate that this battle will ultimately play out in the courts if it is pursued, where drawn-out litigation could stall any significant changes for years.

The Maui vacation rental market’s decline: inevitable or engineered?

For longtime visitors and property owners, the steep drop in bookings is said to be no accident. Maui’s policy changes have systematically reduced short-term rental availability and desirability, leaving many to wonder if this was the plan all along.

Alan T., a frequent visitor from Vancouver, put it bluntly: “The crazy prices, uncertainties over condo legality, and anti-tourist vibe from all levels of government caused us to go to Thailand this January instead. That’s around 25K USD not spent in Maui. Multiply that by others doing the same—it’s a big hit to the economy.”

That frustration is echoed across the board. Dr. S., a longtime traveler to multiple Hawaiian islands, believes the message is clear: “You’re getting your wish. The anti-tourist vibe, whether from residents or pricing strategies, is being felt loud and clear. If it continues, it’ll be interesting to see how Hawaii shifts from a hospitality economy to… what exactly?”

Some believe the hotels stand to gain the most from the decline of vacation rentals. Dennis D. questioned the motivations behind the policy shifts, comparing Hawaii’s crackdown to similar moves in New York City. “So you note that New York City has been significantly clamping down on short-term rentals, and hotels are benefiting. Golly, could Hawaii’s hotel corporations be helping out the distressed legislators’ meager lifestyles in anticipation of even more patronage and profits?”

Visitors are reacting with their wallets.

For many travelers, the rising costs and uncertainty surrounding rentals are enough to reconsider their plans entirely. Bill B. laid out the numbers: “It’s clear what is going on—a 50 percent rise in rates since 2019, turning an already expensive location entirely unaffordable. In the same amount of time, I can fly to Europe, which is much more affordable, or closer to home, the Mexican Riviera, with true tropical weather and residents who don’t constantly complain about tourists.”

Roy, a former frequent visitor, told us he had already made his decision. “At over $300 a night, and lots of places are way more than that, coupled with exorbitant rental car rates, I’m out. I used to go there quite often before 2020, have not been there since. No plans to return either, a lot more inexpensive warm places to go.”

For those who still vacation in Hawaii, some have returned to hotels, but not without frustration, much of which is focused on vacation rental fees. The reality, however, is that costs to rental homeowners have exploded in recent years, including insurance and taxes. Megan M., a longtime advocate for vacation rentals, admitted defeat: “The fees are ridiculous. I used to prefer vacation rentals, but now I’m back to staying at hotels. At least they’re more upfront about costs.”

What would losing vacation rentals mean for Maui’s economy?

While the debate over short-term rentals has been framed as a housing issue, the economic implications of reducing or eliminating them are also massive and consideration-worthy. If 7,000 vacation rentals were to disappear or be significantly restricted, the financial fallout could ripple through multiple sectors of Maui’s economy.

Maui’s short-term rentals generate substantial tax revenue through the 18% total transient accommodations taxes (TAT) and general excise taxes (GET). The TAT alone brings in hundreds of millions statewide, a large portion of which emanates from Hawaii vacation rentals. Without this revenue stream, Maui County would either need to make up the difference elsewhere—likely through increased property taxes or budget cuts—or accept the burden of a financial shortfall.

The state’s research arm, UHERO, recently suggested increasing property taxes on vacation rentals rather than an outright ban as a more practical approach to Maui’s housing shortage that avoids legal challenges while encouraging a shift toward long-term housing.

Beyond the benefit of tax dollars generated, visitors staying in short-term rentals contribute directly to the local economy in many ways. Vacation rental travelers traditionally remain for extended periods, shopping at local stores, dining at restaurants, and booking excursions. If many of these visitors shift their travel plans elsewhere outside of Hawaii, it could mean millions in lost spending for small businesses that depend on tourism.

Vacation rentals also support thousands of local jobs, from cleaners, property managers, maintenance workers, landscapers, and administrative staff. Many of these positions are filled by Maui residents. Unlike hotel employment, these jobs often provide more income and flexible schedules that allow workers to balance multiple sources of revenue. Reduced short-term rentals could leave those in the community struggling to find replacement income.

The question remains whether Maui’s hotels could realistically absorb displaced visitors in areas with restricted vacation rentals. Hotel rates on Maui are already among the highest in the country, compounded by the current 18% accommodation tax—one of the steepest nationwide—with proposals for further increases.

Reducing vacation rental inventory would likely increase prices, making Maui an even less affordable destination. This could lead to a scenario where hotels and vacation rental owners suffer, as rising costs drive visitors elsewhere, ultimately hurting the local businesses and workers who depend on a steady flow of tourism dollars.

For now, vacation rentals remain a significant part of Maui’s tourism economy ecosystem despite growing restrictions and threats of more. But if they were to disappear, the financial impact would be impossible to ignore.

Owners are caught in the middle.

Both local and off-island vacation rental owners tell us they are struggling to keep up with the shifting legal and financial landscape. Some say the constant changes make it impossible to plan for the future. Michael, who owns a short-term rental and follows all regulations, described the uncertainty: “I own a rental and follow all the rules, but I’m constantly stressed about whether the laws will change again. It’s hard to plan for the future.”

Lisa, another Maui homeowner, is torn between the financial reality of owning property and the growing hostility toward STRs. “I understand the housing problem, but vacation rentals help me afford to keep my home. Without that income, I’d be in trouble.”

That financial strain is precisely what some critics say is the goal. BOH reader Bill didn’t mince words in response to owners who say they rely on short-term rentals to pay their mortgage: “If you can’t afford your home without speculating in the housing market, maybe you shouldn’t have bought the home. All investments are not guaranteed a return.”

But for some owners, it’s not about speculation—it’s about survival. MHP pointed out that the assumption that all STR owners are investors is misguided: “People rent out a room in their house to afford the cost of housing here. This isn’t real estate speculation in a lot of cases.”

What happens next?

Despite the backlash, many believe that Maui vacation rentals will remain a key part of Hawaii’s visitor industry, whether opponents, including officials, want them to or not. As PatG noted, these types of trends ebb and flow. “I don’t think one can say with certainty that a certain trend will continue and that a trend portends some sort of ominous, permanent prophecy of things to come.”

For now, the uncertainty remains. Travelers are choosing alternatives, owners are reconsidering their options, and the debate over short-term rentals in Hawaii is far from over.

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Lead Photo: © Beat of Hawaii on West Maui.