The vacation rental industry has exponentially expanded with the growth of online home-sharing platforms such as Airbnb, Flipkey, and Homeaway. The state of Hawaiʻi alone hosted approximately 23,000 vacation rental units (VRUs) in 2017, meaning one out of every 24 of our housing units is a VRU.

The number of VRUs across the state increased by 35 percent between 2015 and 2017, and VRU growth shows no signs of slowing down. Vacation rentals are proliferating rapidly because of the incredible profit-making opportunities they provide. A 2015 study by Honolulu’s Office of Community Services indicated that, at 80 percent occupancy, the average Airbnb unit brings in about 3.5 times more revenue than a long-term rental.

Nonresidents can speculate in VRUs, investing their money for virtually guaranteed returns while taking on little risk. Hawaiʻi’s low property tax—the lowest in the nation—and favorable inflation rate (up 2.5 percent from 2016 to 2017 in Honolulu) ensures this. Moreover, at least 52 percent of VRUs in Hawaiʻi are owned by nonresidents, suggesting that it is mainly out-of-state investors who reap these benefits.

While VRUs can increase visitor expenditures, bolster tax revenues, and help locals make ends meet, allowing their unfettered proliferation is ultimately detrimental. VRU-saturated cities across the world have begun to experience reduced affordable housing availability, increased housing costs, resident displacement, and threats to neighborhood quality of life. As a result, many are beginning to regulate VRUs.

From May of 2018 to August of 2018, Hawaiʻi Appleseed researched VRU ordinances to identify key cities, then made efforts to contact those cities’ VRU enforcement teams. For non-responsive cities, Appleseed attempted to speak to organizations involved in VRU regulation advocacy instead.

Appleseed spoke to city officials in Barcelona, New Orleans, New York City, Portland, San Francisco, Santa Monica, and representatives from Puget Sound Sage in Seattle and the Los Angeles Alliance for a New Economy (LAANE) in Los Angles. Appleseed conducted only online research for Chicago, Berlin and Boston. Based on this research, Appleseed finds that the most effective VRU ordinance:

• Holds platforms liable for illegal transactions on their websites;

• Requires platforms to provide data on VRUs to cities;

• Imposes meaningful fines;

• Focuses on bringing major offenders and commercial hosts into compliance;

• Empowers neighbors;

• Limits the number of units a host may rent and nights a unit may be rented;

• Bans VRUs from operating in inappropriate types of housing; and

• Provides clear restrictions on Non-Conforming Units (NCUs).

While not every city has adopted such a comprehensive strategy, Hawaiʻi’s counties have the opportunity to model their ordinances off of successful VRU regulations from around the world. The stakes are high: our housing costs are among the highest in the nation, and we have the lowest wages when adjusted for cost of living, the highest rate of chronic homelessness, and the highest rate of overcrowding in housing.

Commercial operators already dominate our VRU industry: as of November of 2018, 73.5 percent of Hawaiʻi hosts operate multiple listings, and 84.8 percent of Hawaiʻi listings are entire homes or apartments. VRU conversion will not go away on its own; the financial incentive to operate VRUs is so great that only powerful enforcement tools can save our valuable housing stock. It is imperative that our counties employ enforcement strategies that will help, not hurt, our residents.