In-home vacation rentals multiply

A recent study commissioned by the Hawaii Tourism Authority has identified tens of thousands more home-based vacation rentals advertised online than the agency thought were available.

According to the study, released Tuesday, 22,238 vacation rental units were advertised online this year and in late 2013. That’s 15,295 more than the agency’s estimate of 6,943 for all of 2013. The difference is this year’s survey counted rentals advertised on popular websites such as AirBnB and Vacation Rentals by Owner (VRBO).

The HTA said the home-based rentals now represent 25 percent of all lodging units, with hotels accounting for 50 percent. Time shares and condo hotels contribute 12 percent each.

While the HTA has not taken an official position on the growth in home-based rentals, the new numbers are likely to spark further controversy about how many vacation rentals are acceptable in neighborhoods.

It’s an issue that has divided the community for years but has grown in urgency with the popularity of the online booking sites that have made it easier for homeowners to list rooms for rent and visitors to book them.

"The vacation rental issue is highly controversial," said Hono­lulu Mayor Kirk Caldwell. "I can’t think of a more controversial issue when you think of all the different things that come before the City Council or the mayor of the City and County of Hono­lulu."

Proponents of expanding home-based vacation rentals say the growth is good news for the state’s No. 1 industry because hotels cannot keep up with the demand for rooms in Hawaii. This year the state expects to host a record 8.25 million visitors, a benchmark that some, including Hawaii economist Paul Brewbaker, said will be hard to exceed without adding more accommodations.

However, critics of the spread of home-based vacation rentals say the counts are thousands of units higher than what has been permitted. They say the bulk of vacation rental owners are flouting restrictions designed to protect local neighborhoods and the supply of affordable long-term rental units. The critics point out that until the market is better regulated, it’s virtually impossible to know how much money state and county governments are losing due to homeowners not paying appropriate taxes.

"This is an issue across Hawaii and in every state," said George Szigeti, president and CEO of the Hawaii Lodging and Tourism Association. "Much like Uber is challenging the traditional transportation model, this is challenging the lodging model. I’ve had a lot of discussions with key people in Hawaii’s House and Senate, and we plan to propose some legislation that will address how to get a better count of vacation rentals and how to enforce them. We aren’t trying to put anyone out of business. If people want them, I say give them to them. However, they need to pay their fair share of fees and taxes. We want a level playing field." 

The HTA’s estimate of 25 percent of lodging units being home-based rentals might be understating the reality. That’s because home-based rentals tend to be larger than a hotel room and can accommodate more people per unit. The 22,238 home-based rental units have 43,499 rooms that can hold 117,607 visitors per night, according to the HTA’s survey. The number of rooms is comparable to the size of the state’s entire hotel industry, which was estimated at 43,570 units, and most hotel units consist of one room.

The HTA, which surveys visitor accommodations each year, commissioned the $80,000 survey after finding evidence in 2013 that there were many uncounted vacation rentals across the state.

"While hotels continue to be the accommodation of choice, the popularity and demand for alternative accommodations have grown rapidly over the years," said Ronald Williams, chief executive officer of the HTA. "As a knowledge-based organization, the HTA initiated this study to help us, the state, the counties and the industry further understand the reach of this specific market segment. It will provide the counties with information to help them better understand this segment when making policy decisions in the future."

Management of individually owned vacation units are handled differently by each county, but their spread is creating similar controversies across the isles. According to the HTA survey, there might be as many as 4,411 vacation rental units on Oahu, while surveyors counted 4,986 on Hawaii island, 8,840 on Maui, 3,614 on Kauai, 365 on Molo­kai and 22 on Lanai.

While vacation rentals on Hawaii island are regarded as a permitted use, Oahu, Maui and Kauai have all attempted to legislate the issue with varying degrees of success.

On Oahu the frequency of complaints about the spread of illegal short-term rentals in Kai­lua and on the North Shore indicates that these oceanside communities might be bearing the largest burdens and trying to overcome the steepest divides.

"When the city (Hono­lulu) put a moratorium on them in 1989, we said, ‘Great, no more,’" said Donna Wong, executive director of Hawaii’s Thousand Friends. "Then they started proliferating. First, there would be one on a street, then three, until they had amassed so much that it was just shocking."

Wong said the expansion, which has changed the character of Kai­lua, must be stopped. Her opinions are shared by the Kai­lua Neighborhood Board and residential advocacy groups such as Keep It Kai­lua and Save Oahu’s Neighborhoods. They say vacation rental owners who are operating illegally are profiting at the expense of their communities, many of which are grappling with affordable-housing shortages that could be improved if some of these owners would offer their units as long-term rentals.

Others depend on the home-based visitor accommodations for income.

Honolulu City Council Vice-Chairman Ikaika Anderson said many Windward Oahu residents have told him that they need to rent their homes to tourists to raise money to pay their mortgages and taxes. City Council Chairman Ernie Martin said there are small-business interests to consider, as well.

"There would be a lot of businesses in Hale­iwa or Kai­lua that would be devastated should we move or take assertive action to either eliminate or seriously reduce the number of vacation rentals or bed-and-breakfast homes on Oahu," Martin said.

Jonny Kono, manager of Kai­lua Ocean Adventures, said increased Kai­lua tourism has created opportunities for people to work where they live.

"I was against tourism growing up here, but my attitude changed," said Kono, who commuted to Pearl City for his previous job. "There are more jobs here than ever before. Eight of our 10 workers are residents like me, and many of us ride our bikes or skateboards to work. It’s awesome."