Ever since 2019, Airbnbs have been severely restricted in the main island of the vacation hotspot of Hawaii. The move came to be known as the infamous Bill 89, which created a minimum stay of 30-days for short-term rentals.
But on last Wednesday, April 13th, Honolulu City Council voted to pass Bill 41, effectively a ban on vacation rentals on the island of Oahu, by increasing the minimum stay from 30 days to 90 days, and prohibits both whole-home rentals (entire place) and properties in which the rental is shared with the owner (private/shared bedroom) outside of the resort zones (Waikiki, Turtle Bay Resort, and Ko Olina Resort).
Hawaiians have a particularly bleak view on tourism as the island takes a brunt of sheer number of tourists that visit the island and rather irresponsible tourism from a sizable group. The island state, which is already the most expensive state in the country, has been taking extreme measures to counter over-tourism.
Now that the whole world is recovering from the pandemic, with health safety measures being lifted all over the world (Hawaii has ended all it’s pandemic restrictions for tourists last week when it lifted the mask mandate in public transport in airports) and tourism is skyrocketing, Oahu’s residents were afraid that this move would drive the already massively heated up real estate prices further.
Though the move didn’t come without opposition. There are several questions over the effectiveness of such a measure to the actual impact of tourism in Hawaii. Opinions have surfaced indicating that the Bill was “rammed through”, without going through normal protocol, and had no study, nor discussion, on the benefits and repercussions of such a sudden and impactful change.
Some critics even questioned if it will have any effectiveness whatsoever, explaining that this move will only hurt legal short-term rental owners as the original Bill 89 was enough to separate tourist-induced demand from local residents’ property demand, if it was properly enforced.
Other criticism came from the Honolulu Board of Realtors, who said that the bill does not make exceptions for legitimate cases of need for short-stay rentals. For example, throughout the Covid-19 pandemic, Airbnb’s were widely used by health professionals for short-term relief in areas severely impacted by high numbers of cases. In less emergency and risk situations, home buyers/sellers who are waiting to close on a deal, military personnel, government and contract workers, people whose homes are undergoing renovation, etc.
The deliberate complications on commercial rentals is the latest in a series of actions the island state is taking to combat over tourism, other measures include Increasing fees for out-of-state tourists, increased enforcement on popular highways etc. At the end of last year, the city of Honolulu approved a 3% accommodations tax on Honolulu hotel rooms and other visitor rentals across the island of Oahu.
It would be expected for prospective tourists to be asking themselves what will be the repercussions of this move on their vacation plans to Hawaii.
The new regulation will surely reduce the demand for short-term rentals and it’s highly possible that some properties will be taken off the short-rental market and “converted back” into housing for local residents, reducing supply, besides the fact that the increase in minimum-stay will naturally reduce supply by up to 66% due to the extra 60 nights being occupied. Honolulu already has the highest percentage of resident occupancy for Airbnb in the US at 68%, that is 20% more than the overall average. .
But the move will mostly impact tourists who were planning to stay for the whole season in Hawaii, digital nomads remote working, or such cases of longer-stay. Specifically those who were planning on staying exactly between 30 and 90 days.
If you are someone who fits in this category, and you are planning a stay in Oahu in the next few months, you don’t need to worry just yet as the ban will only go into effect 180 days after being signed into effect (which the mayor of Honolulu, Rick Blangiardi, still has not done).
If you were planning on it for further in the future though, you will now need to make the choice of increasing the stay to match the minimum requirements, or spending the time in a hotel/resort tourist accommodation which will certainly cost much more.
For those who were planning a shorter stay, nothing will change as the vacation rentals were technically not available to begin with.
Regardless of your accommodation in Hawaii, it is wise to book your flights in advance as disruptions in the airlines are causing flights to be canceled for the upcoming summer season, which allied with the high fuel prices will drive the fares up. Plan your travels as soon as possible as the post-pandemic tourism boom is coming up much faster than expected.
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