There have been hundreds of comments in the past week about Hawaii vacation costs, and suggesting that Hawaii is ripping off visitors. That’s what gave us the idea for this article. It frankly just isn’t how some commentors would like to portray it, and it is complicated.
There have been many people blaming the state of Hawaii for the high costs of travel and questioning what the state does with their hard-earned dollars. And there’s no doubt that the cost of vacations is skyrocketing. We see it, too, when planning trips from Hawaii instead of to Hawaii.
Ideally, we’d like to think that at least most of the money we spend on a Hawaii vacation would make its way back to the local economy. Ideally, it would help local businesses and in doing so offset Hawaii tourism’s negative impact.
However, that isn’t exactly what’s happening. Most of the money spent in Hawaii doesn’t stay in Hawaii. For the large part, it ends up feathering the pockets of big companies with little to some Hawaii connection. That’s true for many tourist destinations globally.
The taxes you pay, however, do stay here and that’s up to the state, regarding what happens with that money. As you may know, Hawaii taxes everything including food, and both residents and visitors pay all taxes including those on accommodations. But that’s outside the scope of what we’re discussing here, and Hawaii’s taxation and spending of tax money is certainly something we might all question.
When you support a locally owned business, more of that money stays here.
We didn’t find great data on how much of your money stays in Hawaii, but we saw an interesting, and likely related piece from the United Nations. It said that in some places at least, as little as 5% of the money stays in the local economy. It pointed out that corporate hotels returned about 50% to the local economy, whereas locally owned accommodations retained more than 90% within the local economy.
How to increase the return of money spent to Hawaii’s economy.
Accommodations.
Large hotel chains aren’t owned in Hawaii. The money is shared between the owners, based elsewhere, and their management company. Not to say that many jobs aren’t being created locally, because they are. Are those high-paying jobs? Mostly not. So, simply put, much of the money visitors spend on accommodations doesn’t stay in Hawaii. And the rates charged are up to those corporations, which Hawaii has no control of.
The photo above features Hilton Hawaii Village in Waikiki. Park Hotels and Resorts own it. That company “is one of the largest publicly-traded lodging real estate investment trusts (REIT).” That’s the norm, rather than the exception, and a simple search of “who owns” yields this about virtually any Hawaii hotel.
If you stay at a vacation rental, chances are some of the money stays in Hawaii, depending on the circumstances. If you rent from Vacasa, that isn’t the case, while if you rent from a local management company, more of the money stays here. Also keep in mind that there is a share of the money split between the owner and the vacation rental management company. Most vacation rental home owners aren’t based in Hawaii. It’s estimated that more than ¾ of all Hawaii vacation rentals are owned outside Hawaii.
Where does expensive car rental money go?
The same is true at Hawaii car rentals. These are multi-national corporations which have cars and staff in Hawaii, but again, the bulk of the profit is exported and the jobs created aren’t generally high level.
What about restaurants.
Some restaurants, even chain ones, are locally owned. But that’s not always the case. One example is Roy’s restaurants, which are Hawaii-owned. And speaking of food, most of the food sold and consumed in Hawaii is not produced here. Therefore, food money be it from a grocery store or from a restaurant, is largely heading out of Hawaii.
Activities.
Most activities are likely to be island-owned and operated. That’s one industry you can normally be sure of.
Hawaii airline tickets.
Obviously the only airline with a strong Hawaii connection is Hawaiian Airlines. Certainly, Southwest, United and others have significant Hawaii workforces, but as with hotels, the jobs created aren’t for the most part, high-level. Hawaiian is the largest private employer in Hawaii, and their whole team is here. So that does return a much larger part of the money to the state. But even then, we can’t help but note that Hawaiian is a Delaware corporation, rather than a Hawaii corporation.
Things you can do.
- To support local, look for Hawaii-owned companies rather than national businesses. That helps to move the needle towards a more sustainable Hawaii tourism product.
- Seek out locally-owned restaurants, especially ones focused on locally grown food products. Shop at Hawaii farmers markets.
- Be suspicious. Research. Don’t assume something’s locally owned or produced, and do some checking and ask questions. Did you know, for example, that many of the inexpensive souvenirs visitors assume are from Hawaii are from the Philippines?
- Car rentals are more problematic because there’s a comfort level renting from national brands. Turo is problematic, but, on the other hand, it can be an option to go more local.
- Consider seeking out and staying at Hawaii-owned hotels and vacation rentals.
We look forward to your thoughts. Can you share examples of ways you’ve been able to help Hawaii by thinking locally instead of globally?
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Other channels through which money spent in Hawaii moves out of state include building materials and home goods purchases (Home Depot, Lowe’s) as well as Helco. The major shareholders of all these three are the same East Coast investment firms.
Aloha, Regarding the last communication, Turo for cars, are generally provided by locals, as are VRBO and AirB&B rentals. Why are Hawaiian lawmakers so against their own people providing these services, and why aren’t the companies listed above being supported by Hawaiians?
I have had a vacation rental for 11 years. I employ a local cleaner who has her own business and employs others. I use local service people and businesses,handyman, painters, appliance repair, etc. I encourage Guests to support local businesses, food trucks, spas, restaurants. I donate to the food bank and human society.
Yet, Hawaii continues to make it difficult to have a vacation rental.Raising taxes.Adding new local TAT all in the name of trying to get lower housing costs. There is a lot of money generated, especially with the increase in values. My taxes are triple. But Hawaii has no solid plan to create affordable housing.
Local people need conveniently located, affordable housing.This is what the county council should be focused on.
Susan, I to own a vacation rental condo here on Maui for 17 years and totally agree. Until now, it is finally worth what I paid for it in 2005! Yet the politicians here have successfully made us out to be the bad guy, because the large hotels are in their pockets, and want all the money, they’ve done an incredible job of pitting people against STR’s which is really sad. I’m not the issue the big hotels are, and they continue to build them. All the funds from my condo stay right here in Hawaii, I pay hard working cleaners and handymen, site managers and exorbitant property taxes, condo dues, and mortgage payment. I Do Not charge the extras the hotels and management companies charge. All the money the state makes goes where?
My daughter and her husband live on Maui; it’s extremely difficult to find a house to buy there due to the short term vacation rental industry driving the prices up and depleting the supply of housing for all but the very wealthiest. In just a year the prices have doubled – this is a huge part of the reason younger educated residents end up leaving for the mainland. When no one is left to work on the islands what will happen to the few who can afford to live there wake up?
Thanks for an insightful article. Definitely makes one think. Unfortunately we need the large corporations from out of state with their greater financial capacity to sustain operations during downturns. Production cost resulting in competitive pricing is also a factor when thinking of souvenirs and such. There is no easy answer. Information on what businesses are local will help visitors who want to take the extra step to support locals, as suggested by another poster. But, will the Hawaii tourism bureau dare offend the Big Boys by doing more to promote patronizing local enterprises?
You stated: “Some restaurants, even chain ones, are locally owned. But that’s not always the case.”
Did you mean Some restaurants, even chain ones, are “NOT” locally owned?.
Hi,
Great article, eye opener! Since you have whetted our interest and curiosity, can Beat of Hawaii provide us a detailed list of Hawaii owned businesses? I realized that it would be a formidable task. Thank you! Steve Y
Hi Steve.
We have no plan to create and maintain that, but never say never. Thanks for the suggestion.
Aloha.
I liked your article. In all the years of renting condos, I don’t think I’ve ever rented a condo from a local Hawaiian. That brings up a question, what exactly is a local? We do tend to use local management for the rental of condos. Some islands are better at local car rentals than others. We’ve never had a problem with the local car rentals. However I agree, most of the monies generated by Hawaiian tourism go out of the state of Hawaii.
Aloha
Hi Roy.
Thanks. Good point. Maybe it would be useful to distinguish Hawaii-based or owned. And then does where you are incorporated matter, or just where your c-suite is, or your employees.
Aloha.
I would love to see a list as well! Great suggestion, Roy!
I know I am not there yet, but it actually a dream of mine to start a store that will morphe into onto a branch of shops across the islands that sell local product and hand made items from Hawaii only.
Some day. Sigh.
Delaware is the most common state for incorporation in the country because of its tax laws; where a company is incorporated is pretty immaterial in the grand scheme of things.
Great idea! I will definitely look for local owned businesses in the future.
Unfortunately, we haven’t stayed at local hotels, but always seek out small independent restaurants and businesses, shop at local farmers markets, attend local craft markets and support local events whenever we can. Last trip (Oahu 10 days) we attended three local farmers’ markets and one local craft market, and ate all our meals at locally owned businesses – (Poke Fix, St.Louis Drive-Inn, Side Street Inn, Poi Factory to name just a few). Why would we want to eat at national chain when there are so many amazing locally owned options? The reason we want to keep coming back is the culture – so very different from the rest of the USA. I would love to come back, but I don’t want to add to strain that tourism is putting on the islands.
Yikes, it’s complicated.
Every vacation rental conversion is one less affordable housing option for Hawaiian residents.
Ban all vacation rentals and young Hawaiians might not be forced to move to the mainland to afford housing.
Ban the vacation rentals that have been here 40-50 years won’t solve the housing need, those condo’s are not new buildings, they were built for vacation rentals meaning one parking spot, no storage, thin walls, no pets high condo dues and assessments, condo dues are $1500 a month add that to a mortgage payment that is not affordable housing no matter how you slice it. Hawaii elected uses that as an excuse to keep the Hilton’s in business and in their pockets.. they still allow time shares and hotels to go in, 388 Hilton accommodations going in right now in Kihei, with a restaurant on the beach! how does that happen? All while they try to shut down the Short term rentals that have been here since the 70’s- 90’s.hmmm called brain washing
Corporations and individual investors are buying up houses and land all across America.
Would we be ok with someone buying all the food or medicine or water and charging double or triple?
How much of Hawaiian housing do you think should be AIR BNB? Are you ok with 50% or70% or 99%?
Think of the young people that have no hope of even affording rent.
There is a housing crisis nationwide, just like you mentioned.. do you really think that airbnb/vrbo/tripadvisor is the issue? Not so, nor are the “investors” buy up all the housing, Not so.. food, medicine etc was plentiful during the last administration.. not now, I see the grocery store shelves here on Maui empty most of the time, and oh gas prices.. Costco leased ships to get their shelves full, the rest rely on??? hmmm Other States provide housing with affordable rents, however the 14.42% hotel tax money here in Hawaii goes to Oahu.. its being used to build a gazillion dollar rail to nowhere, it could have been used for housing. who is going to profit from the sale of condos/homes here HI/Federal capital gain taxes
B, The older condos we rent are made from concrete and re bar. You couldn’t hear a bomb go off next door.
Aloha
Renting a condo at the llikai For one week in October. I’ve always loved our trips to Hawaii and look forward to doing business with the local residents and insuring them of our support for their community. Also we will be back again in 2023.
Robert, are you saying the Ilikai is locally owned?
This is from an article in Pacific Business News Jun 26, 2015:
“New York’s iStar Financial, which acquired more than 200 residential condominium units at the Ilikai Hotel in Waikiki through foreclosure more than five year ago, has settled a lawsuit with two individual owners of units at the condo-hotel, the head of the firm’s Hawaii regional office said.”
I think locally owned is somewhat meaningless. Would we look for locally owned businesses in Hawaii & not at home.
And, what does that even mean – owned by a small business or just a local billionaire. And, who pays higher wages and benefits – my guess is large businesses pay more to that local talent.
Don’t forget that the State of Hawaii has allowed all of these corporations to set up shop in Hawaii and that the state receives tax monies from those corporations. I do try to spend my money as locally as possible while in Hawaii and stay in vacation rentals by owner, but even those are just as expensive as the big hotel chains.
Hotels pay property tax and income tax in Hawaii. Perhaps other taxes as well.
Hotels pay less property taxes than the Short term rentals do, the mill rate is higher for the “little guy”.. wonder why? The HI GET and TAT are the same for both. The “little guys” property taxes during covid were not forgiven, the higher taxes were still collected
Just a quick comment about money staying local with private rentals….. I agree that many rentals are owned by off island owners, but chances are as much $$ is going to the management company (which is hopefully local) as it is to owner after taxes and mortgage….. so I will continue to rent through them as opposed to a giant hotel conglomerate. 🤙🏼🌺
BOH,
“Large hotel chains aren’t owned in Hawaii. The money is shared between the owners, based elsewhere, and their management company.”
A little misleading – Hilton, Marriott, and Holiday Inn are just a few of the hotel chains with properties in Hawaii. Those and many others are publically traded on stock exchanges. So, Hawaiians, like all Americans can and do buy stock in those companies. And, retired Hawaiians may have indirect investments through their retirement funds. In fact, most of the money does remain in Hawaii, for salaries, local purchases of food, furniture, maintenace…
I know more mainlanders who will no longer go to Hawaii because some of the the local Polynesian people are do rude to them. They say Mexico is cheaper and the locals are not rude. I have been to the islands 8 times and love Hawaii. However I may not be back.
while grocery chains like Safeway, all their money is funneled out of state to their corporate headquarters, the very next day, this is true in every state they operate in.
More reason on why we should not be funding tourism promotion with tax dollars.
Instead of renting a car would calling an Uber or Lyft help Hawaii more? Can I trust that my Uber or Lyft driver has insurance and a good driving record? I don’t know who regulates Uber or Lyft drivers. I would think the State of Hawaii would have some regulations for Uber and Lyft drivers. How do I find Hawaii owned businesses, i. E. Hotels, motels, restaurants. Is there a website to find all Hawaii owned businesses. One hotel I believe is Hawaii owned is the Kamuela Inn on the Big Island. I highly recommend this hotel to anyone visiting the Big Island. I also recommend an adventure tour on the Big Island called ‘Welcome To The Jungle”. You can book thru Air BNB, it is a Hawaiian owned business & Umekes restaurant & food truck.
Thanks. This is good info. A ‘list’ of locally owned hotels and restaurants and businesses would be nice to have as a reference. We had our 50th Anniversary photos taken by a local Kona girl (just starting out) and they were lovely and I can guarantee 100% of the money we paid her stayed in Hawaii. :0) Just happened to see info about her on 365Kona and it was a wonderful experience and we are hoping our business helped her as she began her career. We also bought hand made in Hawaii dresses for our granddaughter as souvenirs. I must admit we also bought the little plastic hula girls for our windowsill. :0) But supporting local is the way to go if at all possible. Thanks again for the tips.
Hi Colleen.
Good to hear from you! Not sure we will do that list but concur it would be a useful to have. You have always been a big Hawaii supporter, we know that.
Aloha.
Born a Cali Kid but my true love is Hawai’i & without a doubt larger established resorts do want to keep you onsite & your $$$ in their coffers. Self employed for 35yrs I have always tried to help others working outside of corporate entities. When visiting my island “home” I make it a point to rent from those who live there, eat from small family operations & make sure my $$$ go to those like me that make with their hearts, souls & hands. I shop at the farmers markets & buy from the islanders that work to support their ohana & those around them. I write reviews to inspire support & up sell their products whenever possible. Hawai’i is a unique & wonderful place that needs respect, support & all the Aloha we can muster to keep it so.
What you say about the revenue these outside interests take in and goes out of state is mostly untrue. The state is still the government body that controls all the state requirements and laws. Sounds to me like some or a lot of changes should be made!!
Sure would be nice to have a list of those services which are locally owned rather than having to research each and every location for food, and lodging which tend to be the most spent. Would love to know a local rental housing management company as an example.
Also a list of the local farmers markets.
Thanks for this fascinating article.
On a recent trip we stayed, for the first time, at the Kaimana Beach Hotel. It was great and we definitely look forward to returning soon.
I did a quick Google search to see who owns the hotel and was very happy to see that it is owned by a local company, Blacksand Capital and operated by Private Label Collection, also a Hawaiian company. So, we feel even better about our choice. Thank you
Hi Peg.
Thanks for that feedback, and we’re also happy to hear that the hotel is locally owned.
Aloha.
Aloha, thank you for the article and for opening people’s eyes. We rent cars from a local Maui car company. We employee a employee a local husband wife team to clean our vacation Al rental condo. I always feel a bit badly that we own a condo, while most locals will never be able to afford it. We try to tip well, be polite, do what we can. Our property tax is high, the tax the visitors pay on vacation condos is now 17.42%, however sales tax is around 4%
I’m always trying to think of something the people of Hawaii could do to bring in revenue. I think legal marijauna is one. Another is allowing repairs for ocean erosion. Our building hired an engineering firm from The Midwest to fix repair our seawall, should have hired local!
Mahalo
Hi Lanell.
Thanks. It is complicated and eye-opening for us too.
Aloha.
Even if out of state companies own large institutions here, the wages they pay to the local workforce stays here.
Saw an article today about food producers gouging. Now markets are making them show why they need to increase food prices before they will put them in the shelves Joe won’t put them on at all or on a lower shelf. Customers they said are becoming increasingly less brand loyal same will happen with Hawaii if they aren’t careful. Lots of options out there.
When I go to Hawaii I buy Christmas gifts even in July and go to outdoor bazaars where arts and crafts display Hawaiian made items. I provide a bunko group once a year and buy soaps and gifts local made as well.
I find it astonishing that you even needed to write this article. Why would Hawaii be any different than any other vacation destination.
It’s different because the natives are still there. Hawaii is special because the people hold onto Aloha. You will not find the Island feeling anywhere else. Trying to keep what is spent there might make it worth their while to deal with the tourists.
Great article. I makes one stop and think about the true Hawaiian economy. Thank you
Hi Doug.
Thanks. We appreciate your input and dozens of comments.
Aloha.