The occupancy gap between Hawaii hotels and Hawaii vacation rentals has never been this wide. Year-end statistics for 2024 show that while hotels soared relatively, at 73%, vacation rentals are stuck at 52%. In 2019, those numbers were so very different, with hotels at 81% and rentals at 75%. So what happened?
Vacation rentals struggle while hotels hold steady.
The latest Hawaii Vacation Rental Performance Report reveals a stark reality.
While visitors aren’t skipping Hawaii altogether, they mainly skip vacation rentals. This marks a dramatic shift from past decades when vacation rentals were ultra-popular as an alternative to high-priced Hawaii resorts. A major correction is underway, with the rental market still in a free-fall.
Maui takes the biggest rental market hit.
While every island has seen a downturn over time, Maui has faced the most severe decline. Compared to 2019, Maui vacation rentals lost 33 percentage points in occupancy—by far the worst drop of any island.
Several factors are at play. In the aftermath of the Lahaina fire, visitor patterns changed, with many travelers shifting their plans to other islands or canceling Hawaii vacations entirely.
At the same time, ongoing and proposed restrictions on vacation rentals have tightened the supply, particularly in West Maui. The combination has left the market in turmoil, including units sitting empty despite better visitor numbers in other parts of the state.
Higher prices, lower demand: Is the model broken?
Despite falling occupancy, the average daily rate for vacation rentals continues climbing. In 2024, the statewide rate reached $323 per night, a 55% increase from 2019. On Maui, it was even higher, reaching $389. That is before taxes and a myriad of potential fees.
This pricing imbalance is pushing vacation rentals into a precipitous spiral. Many owners raised rates to compensate for lower demand, but the strategy doesn’t work. Instead of booking at higher prices, travelers opt for hotels that offer a more consistent service model, often including daily housekeeping and regular amenities.
Hawaii’s hotels also benefit from bundled travel deals, like CostcoTravel for Hawaii, and loyalty programs, which vacation rentals usually cannot match. For travelers, this can mean a lower overall cost for a hotel stay than an expensive rental with added cleaning fees and strict policies.
Regulatory pressure and uncertainty.
Hawaii’s ongoing discouragement and seeming crackdown on vacation rentals, from the governor to the neighbor islands, is another major factor driving the decline. In recent years, counties have passed strict zoning laws, permitting rules, and enforcement measures to reduce the number of short-term rentals.
Maui, in particular, has led the charge by eliminating rentals while placing even more under the scepter of elimination. Oahu has also moved to limit new rentals, while Hawaii Island and Kauai continue to adjust regulations. With such uncertainty, many owners either leave the market or struggle to attract guests.
For visitors, this regulatory uncertainty has been a part of making vacation rentals a less appealing option. Confusion over legal versus illegal rentals, at least the potential for cancellations due to enforcement, and the risk of booking a property that could be shut down have come together to drive potential guests toward Hawaii hotels instead.
Are vacation rentals in Hawaii in permanent decline?
With demand stagnating and regulations concerning, the long-term outlook for Hawaii’s vacation rental market remains unclear. Some owners may be forced to sell, while others may potentially slash rates to compete with hotels.
The bigger question is whether Hawaii’s tourism industry can adapt. The entire market could be reshaped if visitors continue shifting away from vacation rentals. At the same time, if hotels continue to raise rates due to growing demand, travelers may eventually return once again to rentals as a lower-cost alternative.
Hawaii’s vacation rental market is flat now, and the numbers don’t lie. With occupancy not growing over 2023 and prices at all-time highs, the industry is at a crossroads. Whether this is a temporary correction or the beginning of a long-term shift remains to be seen.
What type of accommodation are you booking? Have your feelings changed about vacation rentals?
Photo Credit: © Beat of Hawaii, taken from a vacation rental.
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I barely find vacation rentals in Honolulu. Clearly the rules have eliminated many to most of these. So as a result we come less often and for shorter periods of time.
I get that Hawaii wants to regulate vacation rentals, but it feels like they’re pushing too hard too fast. The whole industry seems to be in freefall, and it’s affecting the entire economy. Not good.
What do you expect? Maui’s crackdown on vacation rentals is only going to make the market much more chaotic. Visitors don’t want to book a place if they aren’t sure it’ll still be legal by the time they arrive.
Hotels over vacation rentals provide consistency. With a hotel, you know somewhat better at least what you’re getting. With a rental, you might be hit with all forms of surprises including fees, weird rules, last-minute cancellations, or just issues with the unit itself.
I was shocked at just how expensive vacation rentals have become. We booked one in Maui last year and between the base rate, fees, and taxes, we ended up paying way more than we expected. We’re probably one of those sticking to hotels from now on.
Hawaii vacation rentals used to be a great alternative to hotels, but now they’re just as expensive, if not more. Add in cleaning fees, additional checkin and checkout chores, and uncertainty about legality, and it’s no wonder travelers are looking elsewhere.
the Honolulu County requirement of the 30 days day for vacation rentals, favoring hotels, which are nonexistent on the Windward coast, or enlarge measure responsible for this decline! I can no longer afford to visit my children who live in Kailua!
Just like He said: “Many owners raised rates to compensate for lower demand, but the strategy doesn’t work. Hawaii’s ongoing discouragement and seeming crackdown on vacation rentals, from the governor to the neighbor islands, is another major factor driving the decline.” I can not afford to go to Maui anymore. The last trip cost me about 5k or more for 2 weeks just to stay in a safe place so that locals would not bother me. I was scared since social media was a huge threat from many locals for 2 years. Maui has a lot of growing up to do.
Politicians and “activists” on Maui have been pretty clear white people aren’t welcome on Maui.
Who else are they talking about when they scorn tourists from the mainland ruining everything?
Regarding vacation rentals: All good news that rentals are way down. Need to stamp out vacation rentals and get those properties back on the market as long-term rentals or get them sold to local residents. Visitors need to stay in hotels, not look for cheap short-term rentals.
The prices haven’t come down at our favorite condo
in Wailua on Kauai?
Don’t go to Hawaii for vacation. Locals don’t want you there. With all the tourist taxes and STRs illegal, it’s a signal to look elsewhere…Me I o, Florida for example.
The beauty of vacation rentals is that you can still pick where your room is. In October we stayed at a beautiful one-bedroom oceanfront condo (40 feet from the breaking waves) for $310 a night. A view like that up at Waikoloa would have cost you 1200 bucks a night. There was no fitness facility or room service but there was also free parking and no “resort fees”.
The reason we have not returned to Maui is strictly based on the comments that the Governor made after the fire, the price gouging in terms of rentals, the warnings to ‘behave’ and be respectful, when we always are as we are very polite and decent people, made us really feel unwelcome. The welcome Aloha vibe wasn’t there. Now, there are extra fees and they are talking about tolls, ect.
I feel they have prices themselves out of the market. I was going to go with my family of four. After a little research, middle of the road lodging and a basic rental car were $4000-$5000 for nine days, give or take a little. Add in airfare, groceries, a few dinners out or activities and we were $10,000 plus. It just isn’t worth it. Yes, I can afford it if we choose to do so. There are plenty of alternatives that offer a better value.
I would guess that vacation rentals save you a lot of money on longer stays. You get hit with a big cleaning fee that makes the cost of a short term stay much higher per day, so the hotel makes for more sense for short stays. If visitors think Hawaii is overpriced, they will go for the shorter hotel stay and skip the shopping and cooking that you do with a longer vacation rental stay. To often the visitors at a weekly rental don’t have anyone on site to deal with the little issues that come up. In the post covid labor shortage, stuff just doesn’t happen.
Beyond lower demand for Maui, visitor surcharge costs including GET/TAT, rental car surcharges compete with and eat into the base rental rates. Mainland owner costs continue to dramatically increase from property taxes, insurance and for many properties HOA costs. The “investor” market is just about gone.
Ya all need to go back to 2019 rates if ya wanna see in rrase in rentals. We cannot afford your rates, so we go to other islands or Mexico.
Good Day~
A trend of concern for us VSTR owners who follow the rules and price fairly. We have seen strong demand in Q1 (booked 11 of 13 weeks), weak in Q2 (4 of 13) and starting to fill in in Q3 (9 of 13). Advance bookings are happening closer to the dates selected than in previous years. The next few months will tell the tale on how this year shakes out. The hotes do have a built in advantage with their loyalty programs and tour operators. However, VSTRs do offer more flexibility in combating high eat-out prices and provide a lot more room for a family to spread out.
If the island governemts are villifying us as the root of evil for political gain and defelction from the true root cause, that course of action will result in streadily increasing hotel rates and lowering of service standards, as documented by the BOH editors. There is enuf room for all us (pun intended) if common sense regulations are rolled out for VSTRs and politicians stop demonizing VSTRs.
People keep blaming regulations, but the fact is, occupancy was dropping even before these rules took effect. Maybe travelers are just over the short-term rental model in Hawaii.
It’s interesting how hotels are holding steady in Hawaii while rentals keep tanking. Are travelers shifting back to full-service stays, or is this just a short-term reaction to all the uncertainty?
I used to think vacation rentals were a way to get more space and a kitchen, but now they just feel like overpriced hotel rooms without the perks.
The writing has been on the wall now for years. Hawaii’s government doesn’t want vacation rentals, residents don’t want them, and now it seems like visitors don’t want them either.
Not true, I love them.
But the price has skyrocketed ever since COVID.
If rental occupancy is down but prices are still rising, it tells me owners are holding on, hoping for a rebound. But at what point do they give up and start selling? This is getting weird.
I’m not convinced vacation rentals in Hawaii will bounce back anytime soon. Between rising costs, visitor pushback, and new laws, it’s looking like a permanent shift in Hawaii travel now.
Maui’s vacation rental crash isn’t just about pricing or tourism—it’s a direct result of the county’s crackdown. The 2025 phase-out will only make things worse, and lawsuits are inevitable too.
I’ve stayed in Hawaii vacation rentals for years, but this time, I booked a hotel instead. The extra fees, long list of rules, and risk of last-minute cancellations due to new regulations made it too much of a headache.
It’s no surprise vacation rentals are struggling when rates have jumped so much. A hotel room might cost the same, but at least you get daily cleaning and don’t have to take out the trash before checkout, etc.
Our Kauai TVR is booked solid through the first half of September. YMMV.
This is not altogether fair and truthful. Many folks are not staying in vacation rental talks because our governor and mayors keep threatening closers so they are afraid of being stuck. Hotels are boycotting the vacation rental industry and the government gets a percentage from the hotels this is the real truth as to why hotels are thriving. Its greed and deception
Well … let’s keep things simple.
Governor Green holds a press conference and tells visitors to stay away. They do.
Mayor Bissen disappears so the ship is rudderless. No clear/concise leadership.
Politicians are doing absolutely everything they can to upend the natural selection of businesses. Ok; businesses close
A what if …
The mainland begins to assign tariffs to Hawaiin residents travelling to, or thru, the mainland. Airfare, hotels, car rentals, food, etc.
William
Regarding vacation rental decline, I think you are missing an important point. I believe that many visitors, myself included, are opting for hotels instead of vacation rentals so that they do not negatively impact long term housing opportunities for residents. Aloha.
We often return to Oahu to visit friends. We often used to rent vacation rentals for a few days and enjoyed that experience; however, the minimum stay now is often a full month. I have heard that a regulation is in place controlling the numbers and locations of vacation rentals, but because of this, the prices for the fewer available vacation rentals has become super high. And fewer people can rent for a month!
Hawaii’s rental policies have finally killed the golden goose! Higher and higher rates along with increased fees have driven consumers to find new venues. I visited Hawaii for 20 years in a row. No longer going there – bought a house in Florida. Easier for people to visit and much more affordable. Aloha Hawaii!
On the Big Island, vacation rentals do relatively well. However visitors dont want to be gouged and I advise my clients to price them appropriately and suggest making them all inclusive of cleaning, etc so the guest doesn’t see a bunch of fees. Visitors may still tend to gravitate towards a hotel vs a vacation rental because they feel that they have more recourse if there is a problem. booking through VRBO or AirBnB, visitors may steer clear after reading reviews and horror stories about some other person’s visit.