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Visitor spending is a major driver of Hawai‘i’s economy. During 2023, visitors spent $20.8 billion, according to the State of Hawai‘i Department of Business, Economic Development & Tourism(“DBEDT”). Tourism is Hawai‘i’s largest export sector, representing 17.2% of the state’s GDP when including direct and indirect spending, rising to 23.6% when induced spending is included, according to the most recent DBEDT analysis.

In recent years, increasing numbers of Hawai‘i visitors have chosen to stay in vacation rentals. While vacation rentals have long been a component of Hawai‘i’s accommodation mix, the advent of vacation rental platforms such as Airbnb and VRBO has contributed to the growth of Hawai‘i’s vacation rental market. Our analysis of vacation rental visitors’ spending provides an understanding of the role that vacation rentals play in Hawai‘i’s visitor industry.

In the aftermath of the August 8, 2023 wildfires, Hawai‘i’s state legislature passed a bill that gives each of the state’s counties the authority to eliminate short-term rentals. Shortly after Governor Green signed the law, Mayor Bissen of Maui County proposed legislation that would phase out short-term rental usage of approximately 7,000 condominium units zoned for residential use. Mayor Bissen has stated that the purpose of the proposed legislation is to increase the supply of housing for Maui residents. Units in the condominium projects in question have been operated as legal short-term rentals for decades under a state law, HRS §46-4, prohibiting counties from phasing out this activity. The condominium projects in question are identified on a list known as the “Minatoya List”.

Maui County’s proposed legislation would eliminate short-term rental usage in the Minatoya List projects located in West Maui effective July 1, 2025. Effective January 1, 2026, short-term rental usage would be eliminated from the balance of the approximately 7,000 units in condominium projects on Minatoya List throughout the rest of the county. You have asked K&S to analyze the fiscal impact of the proposed phase-out of short-term rentals in Minatoya List condominiums as well as a potential total ban on all short-term rentals in Maui County