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Column: Revamp Hawaii’s tourism lodging model for multiple-bedroom units in resort zones

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                                Hawaii’s vacation rental industry has taken a financial hit during the state’s tourism lockdowns.


    Hawaii’s vacation rental industry has taken a financial hit during the state’s tourism lockdowns.

Speculation about post-COVID travel is rampant and while no one has a crystal ball, vacation rental demand is one common thread about travel’s return.

Hawaii long avoided managing the growing global demand for vacation rentals. Rather than looking at the proliferation of vacation rentals as an opportunity, our state tried to stifle rather than embrace it. We missed an opportunity to create an entirely new tourism model, become a global leader working together with some of the most exciting new tourism brands in decades, and influence global vacation rental policy.

Managing the vacation rental industry would have saved a lot of anger and resentment, encouraged visitors to use resort zones, potentially reduced traffic congestion, and proactively repaired one part of our antiquated volume-based tourism model. We have fantastic examples of brands successfully executing the hotel-vacation rental model, and many other companies figured out long ago how to capitalize on the demand. The issue is not vacation rentals, it’s that the model isn’t being executed in Waikiki.

While the worldwide demand for vacation rentals grew, our communities became resort destinations. The city Department of Planning and Permitting (DPP) could have required that all hotel renovations reduce their number of rooms and increase the number of vacation rental units. Increasing the supply of vacation rentals in designated resort zones would have reduced their impact on residentially zoned neighborhoods.

What if rather than renovate an 800-room hotel to an 800-room hotel, we start mandating that a percentage of rooms become vacation rental accommodations, i.e., with two or more bedrooms, a full kitchen, living room, dining room, laundry room, designated parking, etc.? The number of rooms will be reduced, but hotel revenue will increase given the insatiable demand for vacation rentals.

Bookings for six-plus-bedroom houses are greater than one- to five-bedroom houses across the U.S., as mentioned in a recent SKIFT Summit. If hotels remodeled six individual rooms into a single six-bedroom unit, this would provide supply to meet demand and incentivize visitors to stay in Waikiki and other resort- zoned locations, and reduce the number of rental cars on the roads, reducing congestion.

Rental management companies focused on developing vacation rental units in entire buildings, see the vacation rental industry as a post-COVID leader in leisure — but also in business travel. This real estate play is a move that Hawaii should be seriously considering. With the state’s shortage of affordable housing and horrible traffic and Hawaii’s tourism industry being the lowest-paying in the country, shouldn’t integrated and multi-use development be a priority?

According to Techcrunch, Airbnb has raised $1 billion in debt and equity, even as the online rental marketplace has seen its business plummet due to the COVID-19 pandemic. Its executives are developing global cleaning standards that are leading much of the industry, and developing quarantine policies in the event of a COVID spike or a future pandemic.

Hawaii tops the lists for post-COVID demand. Families and friends will want to travel together and stay longer. Will we revisit Honolulu’s Ordinance 19-18, or go down the same road in which demand is met illegally? (According to the city DPP, Ordinance 19-18 (Bill 89) seeks to balance the benefits of short-term rentals for hosts and guests, with the desire to keep residential neighborhoods from being overrun by STRs.)

Love or hate it, vacation rental demand isn’t going away — and given what appears to be the way forward post-COVID, demand will become even greater. There’s an opportunity here. The newspaper headlines of visitors arriving and using loopholes to stay in illegal vacation rentals didn’t have to be.

Oahu resident Debbie Misajon is a senior-level consultant in international sales and marketing hospitality working with luxury groups and consulting in Belize, Mexico and China, among others.

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