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Wide fallout in Oahu from vacation-rental law


Steve Shur on September 26, 2019

(Source: Honolulu Star-Advertiser)

Oahu’s Bill 89 has been in effect for only one month, yet local residents and visitors alike are already experiencing the negative impact of these short-term rental regulations. In addition to hurting families who rely on homesharing to keep up with the rising cost of living in Hawaii, these hotel-sponsored restrictions are also keeping away thousands of visiting families who both want and depend on short-term rentals for their stays.

Since Bill 89 was signed into law this June and enforcement began on Aug. 1, it has reduced the lodging supply by around 5,000 vacation rentals and caused havoc among travelers who lost their accommodations.

Without the additional capacity from short-term rentals, the Oahu Alternative Lodging Association estimates there will be between 50,000 and 80,000 fewer visitors per month. That means Oahu is already losing millions of dollars in economic activity and tax revenue the state so desperately needs, a full year before the law fully kicks in.

Tourists concerned about the regulations have canceled reservations out of fear of being stranded on the island without a place to stay. Travel Weekly has reported that the impacts are being felt well beyond just travelers, with hosts and many local business owners scrambling to deal with trip cancellations and lost revenue.

On Hawaiian Airlines’ recent investor call, financial analysts worried about the impact of the new law. And with vacation rental operators already considering cutting back their staff, the new law could leave some locals without jobs.

The households and small businesses that are reliant on the flexible accommodations marketplace to make ends meet are also feeling the brunt of this ordinance, losing essential income for their families and employees — and the blame lands squarely on the hotel lobby and the local elected officials they back.

Mayor Kirk Caldwell and other leaders who supported Bill 89 did not bother to downplay the role hotel lobbyists and their allies played in passing legislation aimed at stifling competition from short-term rentals.

When the mayor signed Bill 89 into law, four hotel industry leaders proudly grinned behind him. They knew the more than $50,000 in hotel industry campaign contributions to Caldwell, Councilmember Ikaika Anderson and Councilmember Ron Menor had bought results — a dangerous effort to divert money from local short-term rental hosts into the pockets of the big hotel corporations.

It’s not shocking to see that these short-term rental restrictions are already hurting Oahu families. A June 2018 study conducted by Hawaii-based consulting firm Kloninger & Sims showed the local Oahu economy stood to lose $1.2 billion and 7,000 jobs if alternative accommodations were severely restricted. These new regulations will make those predictions a reality.

Let’s be clear: The hotel lobby and its beneficiaries are to blame for this assault on the tourism economy and, most importantly, to the families harmed as a result. The hotels’ fear of competition from short-term rentals directly hurts those in Hawaii who are willing to open their homes and show tourists that Hawaiian hospitality isn’t restricted to hotels and resorts.

The consequences of Bill 89 are already being felt, and their impact on Oahu’s economy and community are trending in the wrong direction — but not for Oahu hotels.