Recent developments have revealed an August 2021 proposed legislation at the Maui County Council that aimed to drastically reduce the number of short-term vacation rentals. That proposal, was entitled “A bill for an ordinance amending Chapter 19.12, Maui County Code, phasing out transient accommodations in the apartment districts.”
That earlier move is set against the backdrop of the 2024 proposal and ongoing debates over Hawaii’s housing and tourism balance.
It becomes clear that the latest plan was not as sudden or knee-jerk as it recently appeared. A deeper dive into the economic forecasts by well-respected Hawaii economist Paul Brewbaker reveals that the implications of such zoning changes had been calculated much earlier than most of the public and many stakeholders realized.
Historical context of plans to drastically reduce Maui vacation rentals.
Back in 2022, Paul Brewbaker, the Senior Vice President and Chief Economist at Bank of Hawaii, created a whitepaper (attached) that was commissioned by the Realtors Association of Maui.
The whitepaper was intended to analyze the economic impact of potentially eliminating up to half of all vacation rental units from short-term use and dedicating them to long-term rental use.
Largely under-discussed at the time, the plan suggested a significant reduction in Maui’s tourism capacity and a corresponding decrease in economic output and jobs impacting accommodation, retail, real estate and rentals, food services, transportation, and business services.
Economic implications from prior research highlighted stark economic realities for Maui.
“Maui County output would decrease $2.74 billion. An additional $508.4 million in output would be foregone by Oahu, Hawaii, and Kauai through inter-county, inter-industry effects. Statewide total Hawaii output would decline by $3.25 billion. That according to Brewbaker in 2022.
“A loss of approximately 14,000 jobs in Maui County alone, with additional job losses across other counties.”
“Maui County earnings would decline by $747.7 million.”
“State tax revenues from Maui County would decline $137.3 million.”
These figures made clear the potential for a major economic downturn on Maui, directly correlating with a reduction in vacation rentals.
While the intent behind transitioning short-term rentals to long-term housing might stem from a genuine need to address housing shortages, the economic trade-offs have been known to be substantial. Brewbaker’s analysis provided a quantifiable look at what might be lost in terms of employment, earnings, and tax revenue—essential elements for the Valley Isle’s overall economic viability.
Reevaluation of earlier projections.
With these earlier analyses now becoming more visible amidst renewed scrutiny of vacation rental policies on Maui, stakeholders and policymakers are faced with reconsidering the appropriateness of such drastic measures and how they could significantly reshape the economic landscape of Maui for years to come.
What will be revealed as a result of the latest $300k research proposal.
Understanding the full scope of potential impacts from policy changes is crucial for balanced decision-making on Maui. As Maui County continues to navigate the complex interplay between tourism and local housing needs, the insights from past analyses, like Brewbaker’s, should provide valuable lessons on the need for thoughtful, data-driven policy development.
The upcoming study, which will be performed on behalf of the Maui County Council, will add to that earlier report. It is also designed to better understand the ramifications of losing half of Maui vacation rentals prior to the plan’s adoption. More importantly, it could help Maui avoid lawsuits that are brewing in relation to the proposed ban.
Please share your thoughts on these latest Maui developments
Maui’s politicians have a real knack for destabilizing the tourism industry. First, they give the mistaken impression tourists shouldn’t return to Maui until the island has completely recovered from the Lahaina wildfire. Next, they make tourists believe they are driving the island’s housing crisis by booking short-term rental suites for $3,000 per week (as if most locals could afford to rent these units if they weren’t being used by tourists). It’s no wonder so many tourists feel they are doing something wrong when they consider visiting Maui. It’s going to take a change in government before tourists start feeling welcome on Maui, and that’s a shame. One more thing: Don’t get me started on this study to determine the economic impact of shutting down 7,000 short-term rentals on Maui. Everyone knows it would be disastrous for the island’s economy.
Jeff, they are like politicians all over—they have the voting constituency and the money constituency. They are always trying to juggle these 2 groups and are rarely able to satisfy both. So, they go for the money—after all, money can buy votes.
I haven’t been to Maui in forever – too slow for my taste. We go to Waikiki every year. It’s got it all – the rambuctous, boisterous city and the beautiful open spaces 20 minutes outside of Waikiki.
The solution to this dilemma and to be fair to current STR owners and the jobs created by these rentals would be for Maui to take two steps. 1) Do not approve future new STR developments. and 2) Begin using the current tourist monies to build low income housing for Maui residents.
And make the low income housing real, ie, do not allow sales of these units for much higher prices in the future; keep them low income. These two steps could solve the problems, real or not, that Maui politicians claim are the issue.
During the last 5 years, STR property taxes of $43 million has been set aside for affordable housing. We are the largest contributors by far. But the government doesn’t like to build. If it was serious about workforce housing, it would have already started building publicly-owned infrastructure services. Look at the mess in Lahaina – they are fast-tracking new housing for fire survivors, but there is no water for the development. We turn over our hard-earned money to them, but no subsidized housing gets built. And some locals think we’re the bad guys.
Wouldn’t it just be smarter to build more housing in Maui. There is still plenty of land for building especially since the sugar cane fields are empty. It seems to me the only one that will benefit by short-term rentals being shut down is the hotels. There are many people that want to come to Maui that can’t afford $2,000 a night for a hotel. The county has planned for many years to make Maui the island for the rich. Now they’re discovering that their plan had flaws. What is worse is the price of the rentals. Long-term rentals are way overpriced now and that’s why everybody’s leaving. FEMA did not help this . They only made it worse when they asked landlord’s to ask their tenants whose leases were running out to move so that FEMA could put the homeless people from the fire that are staying in the hotels into that housing at twice, and sometimes triple the rent. Who’s bright idea was that?
Most Maui STVR property managers have slashed their prices.
My company cut prices by 60% and still no one is coming bc of the negative anti-tourist minority (20% of local residents) here getting all the attention. Plus anti visitor sentiment on the county council – which started before the fire.
Maui is almost empty and hurting. We small business owners are doing all we can to keep our team members employed but those in government are making it almost impossible. Why this needless policy? What is real goal of STVR ban?
to help out the hotel industry. It’s shocking how a little payola paid before an election pays off for the multinational owners of Maui hotels. During Covid, the Council directed the Tax Collector to base taxes on less than full value of property, and they’ve never returned it to full value, like STR owners have always paid. They have a much lower rate than us, and now the mayor is proposing to put their competition out of business. The talk of converting STRs to affordable housing is just a cover.
Oh this was initiated by the hotels, not for housing needs, such baloney!
This is just the latest disaster caused by incompetent politicians. Lahaina could have been prevented. The demise of the sugar business was obvious for years but politicians did nothing to attract new use for land and water. Voters get to decide and until they do, nothing will change.
We’ve been closely following the short term rental debate. The reduction in rentals will never happen because Maui cannot afford it. It is quite simple.
Great analysis everyone. It all boils down to three words: “Follow the money.”
Let’s see 2021 discussions held to greatly reduce STR’s . In 2022 white paper states projected decline of jobs, economic impact and reduction of income for state & county. Knowing the cutie of STRS would happen sooner or later, nothing was done to provide alternate job opportunities for all who will be affected directly or in trickle down. Now 2024. No job development. In non tourist sector. No drawing of other busness. .How Will residents live?
Dear BOH,
Thank you for this wonderful blog, that I have been reading for years. I am a California girl who has been in love with Hawaii for longer than I can remember. The first time I visited Maui was over 20 years ago, and I fell head over heels for the magnificent beauty, the fragrance of the air, the dancing palms and soft sandy beaches, and the aloha of a people that were trained to be honoring and respectful (as I had also been trained to be). I have been in a hula halau, here in CA, for over 10 years, where we are learning the stories, language, dances, and culture of Hawaii. I have done everything possible to make sure my husband and I can visit for 10 days most years. It is the only vacation we take.
Here is my question: What percentage of the residents of Maui are against tourism? The loudest voice I hear screams “stay away”. Is that just a small group of discontented residents, or is it the majority?
Mahalo nui:)
Hi DjF.
Thank you. That is a question that has no simple answer. But if you want to know if you can continue coming to Maui yearly and having a great time, the answer is definitely yes.
Aloha.
City and County of Honolulu should commission their own study too. Their WAR on STRs has been forcing business closures and job losses and damaging the economy for at least two years now.
Bruce,
Not gonna happen. They couldn’t care less. They don’t believe in small businesses (including STR owners). They believe in doing favors for those who can afford to grease their palms.
They don’t believe in the greatest wealth-creating system ever devised – capitalism. They believe in crony capitalism.
You haven’t considered that some people (on Maui) don’t think that money is God. There’s a culture here that may be hidden from a visitor’s view. Even though our guests may not see it, they often feel it. As silent as a smile, as unseen as a warm hug, as reliable as Grandma’s love. Aloha has a first place in our culture.
One thing is for sure…
Aloha is not about money. It is much by far, way more valuable.
Aloha is dead.
If that was true, why do I read daily about yet another program that cuts costs for low income people? There is free food, subsidized housing, breaks on property tax, forgiveness of utility bills, free wifi, etc, etc. which I actually support. But it’s salt in the wound when the recipients turn around and say, “We don’t believe in money.” Yeah.
They are , allocated $300,000 to “study”. I can do the calculation in about 15 minutes, just start at 7,000 STR’s at 80% occupancy , 2 guests, x 365 days and attrach numbers for $$ spent, lodging , airfare, car rental, meals , groceries etc, them avg the 17% tax ….that alone is $25,000 a day in transient tax. Multiply that times 365! Yeah over a billion in my estimate, For 300 k I could tidy up my estimate.