New short-term rental rules could impact Hawaii’s tourism industry by decreasing the amount of lodging for potential visitors, officials said.
Honolulu City Council unanimously passed Bill 89, which was signed into law June 25. The ordinance bans advertising of unpermitted short-term rentals and enacts penalties resulting in fines of up to $10,000 for persistent violators.
The city Department of Planning and Permitting ruled the law applies to Waikiki properties in apartment and apartment precinct zones, as well as townhouses at the Turtle Bay Resort. The visitor industry has expressed concerns the law will be applied to hundreds of units in resort districts.
“We supported Bill 89, but this was an unintended consequence that was never made clear to us by DPP,” said Mufi Hannemann of the Hawaii Lodging and Tourism Association.
The spread of vacation rentals has added to Oahu’s lodging supply and tourism growth, but the new ordinance could negatively impact those gains, officials said.
Oahu Alternative Lodging Association has estimated the law could cause a loss of between 50,000 and 80,000 visitors per month.
“We need vacation rentals to add capacity,” said Paul Brewbaker, principal of TZ Economics, who advised the council against passing the rental measure.
“Bill 89 also is coming at a time when all the low-hanging fruit in a long economic expansion has been harvested,” Brewbaker said. “What signal has Hawaii sent that investors should double-down on Hawaii?”
Investors outside Hawaii including airlines have said they are monitoring the results of the ordinance.