Oahu’s vacation rental supply and demand slump as other islands experience growth

Oahu was the only major island to experience a drop in vacation rental supply and unit demand in January, according to a vacation rental report released today by the Hawaii Tourism Authority.

The report showed strong double-digit increases in vacation rental supply and demand for Maui, Hawaii island and Kauai. The data came from Transparent Intelligence Inc., which gleans its information from listings on Airbnb, Booking.com, HomeAway and TripAdvisor. For January 2020, the vacation rental report included data for 32,319 units, representing 56,536 bedrooms in the Hawaiian Islands.

HTA reported that statewide vacation rentals in January rose more than 8% to 797,257 unit nights, while monthly demand increased about 15% to 657,926 unit nights. The supply-and-demand ratio resulted in an average monthly unit occupancy of 82.5 percent, a gain of 4.6 percentage points although vacation rental units unlike hotels aren’t necessarily available year-round or on a daily basis throughout the month. The average daily rate (ADR) for vacation rentals statewide in January was $247, a more than 15% increase from January 2019.

In comparison, hotels across the state in January were 84.1% occupied and charged an average daily rate of $314, according to HTA’s hotel survey, which was compiled using data from STR.

The rate differential alone appeals to some vacation rental customers; however, others are simply looking for larger accommodations or a more local experience. Regardless, the numbers show that in Hawaii there continues to be strong demand for the product and growing supply save for Oahu, where the city Department of Planning and Permitting has been enforcing a city crackdown on illegal vacation rentals since August.

January room supply on Oahu dropped 13% year-over-year to 224,634 unit nights, while demand fell almost 6% to 181,852 unit nights. However, Oahu’s occupancy grew 6.3 percentage points to 81% and its ADR rose 20% to just over $190.

The impact of Oahu’s more onerous vacation rental rules, which ban even advertising illegal vacation rentals, can perhaps be seen in the comparisons between the county as a whole and Waikiki, where more exempt vaction rental resort inventory exists and some buildings fighting the issue in court have gotten a temporary enforcement pass from the county.

Waikiki’s vacation rental supply grew nearly 12% to 110,836 unit nights and demand rose 24% to 95,119. Occupancy grew 8.2 percentage points to 85.8% and ADR rose more than 11% to more than $168.

Maui County saw its vacation rental supply grow more than 27% to 265,374 unit nights and its demand rise 29% to 227,218 unit nights. Occupancy increased to 85.6%, a gain of 1.2 percentage points while ADR increased more than 10% to more than $311.

Hawaii island’s unit supply rose more than 9% to 192,034 unit nights, while demand increased 23% to 156,712 unit nights. Occupancy rose 9.1 percentage points to 81.6% and ADR climbed more than 10% to more than $184.

Kauai’s supply increased to 115,215 unit nights, a gain of nearly 24%. Demand rose more than 19% to 92,144 unit nights. Occupancy fell 2.7 percentage points to 80%, while ADR rose 11% to more than $308.