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Vacation rental occupancy statewide was even better in July than it was during the same month in 2019, a record-setting year before the pandemic shut down the industry for much of 2020.
But vacation rental occupancy came in lower than occupancy at Hawaii hotels, disrupting a nine-month trend that emerged in October after Safe Travels Hawaii allowed some visitors to bypass the state’s COVID-19-related travel quarantine.
Statewide vacation rental occupancy in July was 81.8%, up 67.8 percentage points from the same month in 2020, and 4.2 percentage points from July 2019, according to a Hawaii Tourism Authority report released Tuesday that was produced by Transparent Intelligence, which analyzes short-term rental markets.
In comparison, statewide hotel occupancy in July was 82.4%.
Vacation rental supply in July fell to 592,914, a nearly 35% drop from July 2019. July vacation rental demand dropped just over 31% from July 2019 to 485,272. The average daily rate in July increased to nearly $251, an almost 21% increase from the same month in July 2019.
A major concern for government officials during the pandemic has been the growth of occupancy at vacation rentals, which were already catching flak before the pandemic for changing neighborhoods like Kailua and the North Shore. Demand for vacation rentals has brought more businesses and jobs to these neighborhoods, but some say it also has increased traffic, strained infrastructure and tightened rental housing supply.
Fewer visitors stay in vacation rentals in Hawaii than in hotels, but in recent years vacation rental occupancy growth had begun to outpace hotel occupancy growth. That run was disrupted when vacation rentals were sidelined for a time during the pandemic, while hotels were allowed to operate as “essential businesses” during Hawaii’s COVID-19- related shutdown.
In recent months the occupancy gap between vacation rentals and hotels has been narrowing.
Violet Carlsberg, director of Castle Vacation Rentals Hawaii, a division of Castle Hospitality Group, said vacation rental customers were more comfortable traveling during the early stages of Hawaii’s reopening given that vacation rental accommodations “are perceived as a much safer alternative to hotel accommodations. “
“As travel restrictions loosened and pent-up demand surged, consumer confidence increased and the ‘hotel customer’ began returning in large numbers, boosting the hotel occupancies even more,” Carlsberg said in an email. “Even though hotel occupancies surged in July, so did vacation rental occupancy to very healthy levels and higher than 2019.”
Another conjecture is that car rental supply challenges and prices also might have disproportionately affected vacation rentals, causing some of the occupancy gains to recede.
Carlsberg said Hawaii’s vacation rental industry is “concerned about the current situation with the delta variant and rise in positive (COVID-19) cases here in Hawaii. However, we are hopeful the newest restrictions will have a positive impact and prevent any future lockdowns.”
She said Hawaii’s vacation rental industry doesn’t know “what to expect on the heels of the governor’s latest plea for visitors to delay their Hawaii travel, combined with the delta variant surge and growing local resident sentiment to slow down Hawaii visitors.”
Beth Churchill, owner of the Churchill Group LLC, said fears that vacation rentals could get locked down are not unfounded.
“I think they already realize that they are the focus of everyone’s animosity right now,” Churchill said.
If short-term rentals were sidelined again, she said, “it would be devastating for all of these small-business people, who live in Hawaii, pay taxes in Hawaii. These are small businesses that are based here.”
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