AIRBNB CRACKDOWN and SMACKDOWN
The State of Hawaii began cracking down on “illegal” vacation rentals this past week and many OWNERS are canceling their reservations. There have been several clients of mine who had their reservations canceled and are scrambling to find places to stay. But, they are not exactly in panic mode.
“…if you can’t fly by the seat of your pants under stress then a destanation wedding isn’t for you…”
– one of my clients who got their reservations cancelled.
I have to agree with my client, but at the same time, the State of Hawaii is just stupid. Like many governments, our politicians practice word magic. I call it Sleight of Mouth, they literally say one thing, but they’re doing something else to fool you.
The state claimed that the move to make vacation rentals illegal was to improve the affordable rental market in Hawaii. Let’s be clear here, living in Hawaii is expensive, and if you can’t land an average to good job here, you’re pretty much up the creek. Just a quick search of craigslist, and you will find that there is no shortage of rentals in Hawaii. In fact, in most subdivisions, where there are strict HOA’s and vacation rentals are already outlawed, you will find a plethora of rentals, some are very affordable. NOT affordable is you only work at McDonald’s.
The crackdown happened because the hotel industry realized vacation rentals were cutting into their profits, and they lobbied out politicians to do something.
The question is if this measure will be upheld or challenged in the Supreme Court. Right now, I’m not hearing anything.
So, what does this mean for you? If you’re planning on coming to Hawaii, make sure to book a hotel, just to be on the safe side. If you’re still booking in a vacation rental, make sure it’s a legal one. How will you know if it’s legal? That I can’t answer for you because the State has not figured that out either. I also do not know how this will affect wedding venue sites. As more information leaks out, I’ll make sure to keep you posted. If you already are booked at a vacation rental, check with the owner to see what they will do. Right now, property owners risk a daily fine of a couple of thousand dollars per day, if they are convicted of operating an “illegal” vacation rental.
By the way, I put “illegal” in quotes because most vacation rentals have been operating for decades without a problem. They even paid a 12.5% hotel tax to the State, and were registered companies. So our government knew about them for decades and did nothing.
Only now… only since the hotels started complaining and created a millennial victim trend that yelled “affordable housing!” in a crowded island did everything come crashing down.
UPDATE AUGUST 1, 2019
- It looks like lawsuits are already pouring in. Vacation rentals in Waikiki are affected.
- the hotel industry said that it can handle around 8 million visitors a year. Tourist estimates has the State bringing in 9 million a year. Where that extra million will go now, nobody knows.
- Southwest Airlines who recently said they would advertise Hawaii as a destination is scratching their heads now. If there are not enough places to stay in Hawaii, why advertise more routes?
- The argument that outlawing “illegal” vacation rentals would spur more affordable housing is not true. Most homes that are vacation rentals are very expensive to rent out long term. Most are multi-million dollar homes with big mortgages attached to them.
- Only 4000 of the 5000 listed vacation rentals in Hawaii still remain active on AirBnB
- It is rumored that neighbors are being encouraged to report “illegal” vacation rentals, but I can’t verify this.
UPDATE AUGUST 7, 2019
- The Vacation Rental law is having an unintended effect on hotel rentals that exist outside the designated resort areas of Oahu. This means about half of the properties on Kuhio Avenue in Waikiki are now considered illegal, possibly even a few hotels. This also affects many condos on the Turtle Bay Resort property.
- Those who don’t own Vacation Rental Homes continue to get receive notices in the mail
- The Mayor has taken a hard-line stance against Vacation Rentals and has promised enforcement despite pending lawsuits
- This will drastically affect the housing market in Hawaii. Many homes multi-million dollar beach homes have been vacation rentals for more than two decades. Now they will be empty. Housekeepers, management companies, yard workers will soon be out of jobs on the North Shore as well. This isn’t panning out too well.
Steve Young
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