Honolulu's new restrictions on short-term rentals take effect in October

by Merrilee Gasser, The Center Square, May 4, 2022

(The Center Square) - A new law will make short-term rentals located outside designated resort areas illegal in Honolulu. A report shows that Oahu's available vacation rentals have already fallen over 37% since 2019, more than any other island.

Mayor Rick Blangiardi signed Bill 41 into law last week, prohibiting short-term rentals like Airbnb and Vrbo from lasting less than 90 days. The bill drew over 750 pages of written testimony both for and against the measure. It takes effect on Oct. 23. 

The bill also limits short-term rentals to areas in Waikiki, Ko Olina and Turtle Bay. It increases fines for anyone violating the short-term rental regulations from up to $1,000 to up to $5,000. 

A report by the Department of Business, Economic Development and Tourism showed the total monthly supply of statewide vacation rentals for March was unchanged from 2021 but had decreased by 23.9% since 2019, before the coronavirus pandemic. Although all islands saw a decline, Oahu's decline in vacation rentals was the most pronounced at 37.1% since 2019.

A 2000 report from the Hawaii Tourism Authority (HTA) showed Honolulu was projected to see decreased revenue from the vacation rental industry by 2023 due to restrictive legislation. It found the total spend in Hawaii associated with home and vacation rentals was expected to decline by $700 million due to a decrease in the supply of rentals resulting from Bill 89. Enacted in 2019, Bill 89 restricted the number of new bed and breakfast homes in non-resort areas and made it illegal for owners to advertise short-term rentals that did not comply with the city's zoning laws. 

The latest measure is meant to help address the housing industry by returning housing inventory to long-term rental and for-sale marketplaces, according to Blangiardi.

However, property owners contest it is not a practical solution for securing more affordable housing. They also say the bill is set to benefit the hotel industry while hurting families who rent out property to afford Hawaii's high cost of living.

"Why should the city and county restrict my rights and the rights of my guests to stay 1-6 months in a residential neighborhood?" said property owner Jason Healey in written testimony against the bill. "This flexibility helps everyone: me to pay my mortgage and provide for my family, the ability of temporary workers to find price-accessible accommodation and friends and family to stay close to loved ones. This bill unequivocally favors the hotels that operate here."

According to the bill's text, the city council found "any economic benefits of opening up our residential areas to tourism are far outweighed by the negative impacts to our neighborhoods and local residents."

"This is about protecting our place. First and foremost, this is about getting our residential neighborhoods back," Blangiardi said. "Our neighborhoods have clearly been disrupted by the thousands of vacation rentals that have operated outside of the designated resort areas. This is a form of managing tourism, but it's also about getting housing back on the market and protecting the natural resources on O'ahu for decades to come."