It seems contrary to the aloha spirit, but a great deal of time and political energy in Hawaii has been spent on trying to thwart or contain the phenomenon of short-term vacation rentals.
Three of the state’s four counties already have imposed burdensome regulatory regimes on residents who wish to rent out rooms in their homes to vacationing visitors, and now Hawaii County has joined the crowd, with its new rules set to go into effect April 1.
The Hawaii County Council approved a bill in November, subsequently signed by Mayor Harry Kim, that will prohibit short-term vacation rentals in residential and agricultural zones while allowing them in hotel zones, resort zones and commercial districts. Short-term rentals already existing in residential and agricultural zones will be grandfathered in, but those will need to obtain nonconforming-use certificates.
It is a vain attempt to keep up with the ever-evolving changes in technology and preferences of consumers. As with the ride-hailing business, government policy has lagged far behind the fast-advancing technology that led to the boom in short-term vacation rentals, which have become an important part of the tourism industry, not only in Hawaii, but worldwide.
Just as regulatory officials in Hawaii were caught flat-footed by the amazing technology that enabled ride-hailing companies to become so popular with consumers, so have the counties been struggling to cope with short-term vacation rentals.
Now joined by Hawaii Island, their policy responses have included setting quotas, banning them from certain areas, and generally imposing requirements, fees and fines, some of which might be unconstitutional.
Hawaii County’s new ordinance is not the worst the state has to offer, but it does miss an opportunity to encourage tourism and economic growth, especially in Puna, where residents are struggling to recover from a devastating disaster, brought on in part by government intervention in the insurance market that incentivized building in the lava zones.
Airbnb alone hosted 50,000 visitors on Hawaii Island in the summer of 2017, while in 2015, Airbnb visitors statewide spent an average $1,302 each during their trips, including for lodging, food, entertainment, shopping and transportation. Clearly, home-sharing contributes tens of millions of dollars to the island’s economy every year.
Critics argue that short-term vacation rentals make it harder for local residents to find affordable rental units, but that isn’t the case. On Hawaii Island, the primary reason for the lack of residential housing is the county’s strict zoning laws, which apportion only 2.1 percent of the island’s land for rural or urban housing.
Perhaps Hawaii County should be praised for its moderation in attempting to regulate short-term vacation rentals. But there are danger signs ahead. The promise of more regulation, an unspecified tax scheme aimed specifically at short-term vacation rentals, and potentially burdensome limits related to property and zoning could stifle the growth of a promising local industry.
But it’s not too late for Hawaii County to reverse course and lead the way for the rest of the state. A free and accessible market for short-term vacation rentals on Hawaii Island isn’t about just giving residents a potential source of extra income. It also could provide more tourist dollars and tax revenue for the county, so long as it is not stifled from the outset by regulatory overreach.
Like it or not, the shared economy is here to stay, and Hawaii Island could be the first of Hawaii’s four counties to truly benefit from making it easier for property owners to legally operate short-term rentals while helping rejuvenate our tourism industry.
Keli’i Akina is the president of the Grassroot Institute of Hawaii