The number of residential vacation rentals on Oahu continues to fall, according to the latest monthly Hawaii Tourism Authority study released this week.

That suggests the city’s contentious new law cracking down on enforcement of illegal short-term rentals may be having the impact intended by the City Council and Mayor Kirk Caldwell when they adopted Bill 89 (2018) in June.

“It’s becoming more clear,” said Erik Kloninger, of Kloninger and Sims, which partnered with Transparence Intelligence to gather the data for HTA. He cautioned, however, that “it’s still a very fluid situation as far as the market adjusts to the new enforcement.”

Enforcement began in August, five months ago.

The data gathered over that period show the overall vacation rental supply on Oahu dropped to 237,306 unit nights in December, down about 13.7% from the 274,886 unit nights available in August. Those numbers are based largely on properties listed on electronic booking platforms like Airbnb, Booking.com, HomeAway and TripAdvisor and do not determine or differentiate between units that are permitted or unpermitted.

The year-over-year comparison also shows a deep drop. There were 261,059 unit nights available in December 2018, which means there was a 9.1% drop through last month.

Kloninger said the drop is more dramatic when compared with the double-digit growth in available units in Waikiki alone, where there are areas where short-term residential vacation rentals are allowed. There also was double-digit growth in Maui and Kauai counties.

In Waikiki there were 120,086 available units in December, up 14.4% from 104,997 units in December 2018. In Maui County there were 293,100 available units in December, a 27.6% increase from the 229,736 available units 12 months prior. In Kauai County there were 121,998 available units, up 28.6% from the 94,861 units available at the same time the previous year.

“Some of the Oahu demand that is no longer being accommodated outside of Waikiki is moving into Waikiki, which is what the administration wanted and the City Council voted for,” Kloninger said.

Depending on how you feel about residential vacation rentals, that’s either good news or bad news.

Supporters of bed-and-breakfast establishments and transient vacation units argue that the residential short-term rental experience is a necessity if Hawaii is to compete with other locales as a visitor destination. They also argue the units allow the property owner a chance to earn some additional income to help counteract Hawaii’s high cost of living.

Opponents argue that B&Bs and TVUs overtax street parking and other infrastructure in residential communities, ruin the traditional neighborhood environment, make a mockery of zoning laws and take away jobs from the traditional hotel-resort industry.

The new law cracks down on illegal vacation rentals largely through the tracking of advertising. No new vacation rentals (outside of hotel- resort zones where they are legal without permits) have been allowed since 1989.

A Department of Planning and Permitting spokesman said Friday that since Aug. 1 the city has issued 298 notices of violation related to vacation rental infractions. Violation notices are considered warning letters. The city also has issued 16 notices of order, which are given if notices are ignored. They result in fines.

The new law also allows for permitting of 1,715 new vacation rental units, only of the “hosted” bed-and-breakfast variety where the owner-occupant must be present. No “whole home” rentals, which the city refers to as transient vacation units (TVUs), would be permitted. Additionally, vacation rentals would need to be at least 1,000 feet apart from each other. Laws have yet to be drafted for how to apply.

Kloninger’s company has been tracking vacation rental availability for several years, and he said the number of available units had been on a steady climb, even on Oahu, until just before the new law went into effect.

One consequence of the drop in vacation rental inventory on Oahu is that daily rates are skyrocketing for what inventory is available. On Oahu the average daily unit rate in December was $191.40, a whopping 26.3% increase from December 2018.

“That is a huge increase, and that was driven mostly by increases outside of Waikiki,” Kloninger said. “Those are the places where the supply has been trending downward (largely due to enforcement), so it appears that the people who continue to operate have taken the opportunity to increase their prices. Clearly, the demand remains robust.”