How Hawaii's Vacation Rental Changes Will Affect Tourists Hoping To Vacation There

Hawaii's ultimate swimming destinations, gorgeous beaches, and breathtaking views of nature make it a coveted vacation spot for both long-term residents and short-term visitors. Rising inflation and a housing crisis, however, have led to an acute shortage of affordable homes for Hawaiians. 

Now, a new law targeting services such as Airbnb aims to regulate short-term vacation rentals and boost the housing supply for locals. "This bill provides counties with home rule authority to see that vacation rentals are not allowed in communities that do not want them," Hawaii Governor Josh Green said in a statement when signing the bill in May 2024. "This will help against the adverse impacts of non-resident ownership of short-term rentals, which impedes housing supply for residents and emphasizes the unique needs of each county in regulating such accommodations."

That means finding a short-term vacation rental in Hawaii will likely become more difficult and more expensive, requiring some visitors to rethink their accommodation plans.

According to a 2024 study by the University of Hawaii, home prices in the state have quadrupled since 2000, with only one in five households able to afford the median price of a single-family home. How much is that? According to recent real estate reports, prices on the most populated island of O'ahu hover around $1 million. The University of Hawaii housing study reports that the lack of affordable housing was exacerbated in 2023 when devastating wildfires on Maui destroyed about 3,000 homes, displacing more than 6,000 households.

At the same time, tourism is a major driver of Hawaii's economy, bringing in about 24% of the state's GDP in 2022, according to government figures. Millions of people visit the islands yearly. Tourists spend money, but they also outnumber Hawaiians 5 to 1, according to a 2023 report by Statista. That puts tremendous pressure on housing. Studies are now trying to measure how short-term vacation rentals affect housing prices in other states, cities, and countries. Even San Francisco, the home of the popular short-term rental platform Airbnb, has recently passed stringent rules to restrict short-term vacation rentals and ease a housing shortage. Some travel pros, including Rick Steves, urge travelers to rethink booking an Airbnb and consider booking traditional bed and breakfasts instead.

Some data suggests travelers are already heeding that advice. Certainly, some travelers have already stopped using Airbnb and are searching for other alternatives. This means looking for vacation rentals only in designated resort areas. In O'ahu, local authorities have cleared areas for short-term rentals in cities such as Waikiki, Ko Olina, Turtle Bay, and Mākaha. 

Some hotels have also adapted to the needs of travelers who want to feel more at home when they vacation. The Westin Nanea in Maui, for example, has suites with kitchens, as does the Ilikai Hotel in Honolulu. For short stays, traditional bed and breakfasts also provide that homey feeling. Aloha Guest House has been operating continuously for over 20 years on the South Kona coast, offering rooms with sea views from their organic fruit farm. Research is key. Check with local guides on Hawaii to find a place that suits your needs and benefits local communities.