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Hawaii vacation rentals hard hit in June by restrictions

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The lifting of COVID-19-related emergency vacation rental bans on the neighbor islands for the back half of June improved statewide vacation rental performance, but just barely.

Statewide vacation rental occupancy in June rose to 13.8%, a number that was 59.8 percentage points behind June 2019 but better than the prior month. In June 2020, the total monthly supply of statewide vacation rentals fell 61.5% to 339,441 unit nights and monthly demand fell 92.8% to 46,719 unit nights.

In comparison, only 9% of short-term units statewide were occupied in May, a month when emergency bans were active on all islands and occupancy experienced a 61.7 percentage- point drop. May’s supply of vacation rentals also was more constricted and demand was lower.

Unlike hotels, vacation rentals were not on the state’s list of essential businesses at the beginning of June.

The mayors of Kauai, the Big Island and Maui also put vacation rentals on COVID-19 lockdowns but on June 16 began allowing legal vacation rentals to reopen to guests who do not have to quarantine. The timing coincided with Gov. David Ige’s lifting of a mandatory 14-day quarantine for interisland passengers.

Oahu’s vacation rentals are still sidelined by Honolulu Mayor Kirk Caldwell’s emergency orders prohibiting them from operating as essential businesses.

Conditions, especially on Oahu, inspired the creation of the nonprofit advocacy group called Hawaii Legal Short-Term Rental Association (HILSTRA), www. Some 60 licensed property managers have joined HILSTRA.

HILSTRA President Munro Murdock said members collectively represent 1,500 legal short-term rentals statewide that before COVID-19 brought in more than $20 million in annual tax revenue per year.

“Our hope is that Honolulu County will soon allow legal short-term rentals to operate on par with other counties. Right now, the message they are sharing is that locals can enjoy short-term rentals on all islands but Oahu,” said Murdock,who as the founder of Love Hawaii Villas has personally experienced substantial coronavirus-related downturns.

Murdock said the continued shutdown of short-term rentals on Oahu has hurt his business, the clients that he represents and the 15 local workers that he employs.

“We’ve had to lay off or furlough just about everybody,” Murdock said. “Our business is still struggling.”

Murdock said Hawaii’s vacation rental industry is working to adopt new health and safety standards with many members taking cues from the Vacation Rental Management Association.

In addition to purchasing cleaning equipment like electrostatic sprayers, Murdock said many short-term rental owners and property managers have committed to leaving 24-hour gaps between reservations.

While Oahu vacation rentals have been the hardest hit, vacation rental performance across all the islands in June suffered due to the majority of flights into Hawaii being canceled amid COVID-19 fears and government lockdowns.

Hawaii’s 14-day quarantine for out-of-state passengers still runs through Aug. 31. The state had announced a pre-arrivals testing program that would allow passengers with approved negative COVID-19 tests taken within 72 hours of their trip to Hawaii to bypass the quarantine starting Sept. 1. However, that date is far from certain given the coronavirus spread in Hawaii and elsewhere.

The quarantine isn’t very appealing to travelers, who are required to confine themselves to a designated location for two weeks after arriving in Hawaii or face up to one year in jail and a $5,000 fine.

On Monday, only 3,462 out-of-state passengers flew into Hawaii. The 35 planes carried 958 visitors, the second highest count since the March 26 trans-Pacific passenger quarantine began. Daily visitor counts have mostly been rising since the threat of Hurricane Douglas passed; however, they are still far below the 38,000 or so daily passengers who came to Hawaii at this time last year.

In June, Oahu vacation rentals achieved the worst occupancy and lowest average daily rate (ADR) of all the islands. Oahu’s June vacation rental occupancy was 11% and the average daily rate was $155.

An interesting note, however, is that despite tighter vacation rental laws and stricter COVID-19 policies, Oahu had the largest vacation rental supply in June of all four counties with 110,668 unit nights, a drop of 62.9% from June 2019. Oahu’s June unit demand dropped 94.5% to 12,196 unit nights.

Maui County’s vacation rental occupancy wasn’t much better at 11.4%, but its ADR of $245 was the second-highest of the main Hawaiian islands. Maui County vacation rental supply in June fell 60.5% year-over-year to 106,907 unit nights. June vacation rental unit demand on Maui was 12,187 unit nights, a drop of 94.2%.

Hawaii island’s vacation rental occupancy was at 16.1% and its ADR was $166. Supply fell 58.6% year-over-year to 83,126 available unit nights, while demand dropped 89.7% year-over-year to 13,367 unit nights.

Kauai vacation rentals were 23.2% occupied and ADR was $288, the highest June ADR of the main Hawaiian islands. In June, Kauai had the fewest number of available unit nights at 38,740, a 65.1% drop from the prior year. Demand for Kauai’s vacation rental units dropped to 8,969 unit nights, an 89.4% decline from the prior year.

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