Economic Impact Study on Short-Term Vacation Rentals

presentation to Hawaii County Council

The County of Hawai‘i has engaged Hunden Partners to conduct an economic impact study focused on the role and implications of short term vacation rentals (STVRs) across Hawai‘i Island. Directed by Hawai‘i County Council Resolution 556-24, the study is designed to provide a data-driven understanding of how STRs affect the local housing market, economy, tourism dynamics, and residents’ quality of life.

The Project will incorporate the latest legislative developments, housing and tourism trends, and stakeholder perspectives to assess the current and future impacts of STRs. Hunden’s work will include housing affordability and availability analysis, economic and fiscal modeling, visitor behavior research, and case study comparisons, to inform policy decisions. The study will support County leaders in evaluating the optimal approach to STVR regulation and long-term community development strategy….

Summary of STVR Impacts

The following section outlines the economic impact of STVRs on Hawai‘i Island in 2024, drawing from survey data, market research, and state economic benchmarks:

 ▪ In 2024, STVR lodging revenue on Hawai‘i Island is estimated at approximately $710 million, comparable to total hotel room night revenue on the island.

 ▪ According to the demand-side survey, 41 percent of visitors surveyed stayed in STVRs.

 ▪ STVRs contribute significantly to the island’s tourism economy through spending on food & beverage, transportation, shopping, and entertainment. According to the DBEDT, average per-person daily spending outside of lodging is $132.

 ▪ Based on AirDNA data and survey responses, this equates to a total estimated economic impact of $565 – $862 million on the island from STVR spending outside of lodging.

 ▪ Survey results show that 24 percent of STVR users would not travel to Hawai‘i Island if this lodging option were unavailable.

 ▪ This would represent a loss of $112 million to $170 million in annual STVR lodging revenue that would not be recaptured.

 ▪ For Hawai‘i County, this equates to $3.35 million to $5.11 million in foregone Hawai‘i County Transient Accommodations Tax (HCTAT) revenue annually.

 ▪ Non-lodging visitor spending losses would range from $136 million to $207 million if STVR restrictions were implemented.

 ▪ From a labor perspective, the supply-side survey found that each STVR unit supports an average of 1.6 full-time and 4 part-time employees. Limiting STVR operations would not only reduce visitor spending and owner income, but also eliminate jobs and wages tied to the STVR sector.

 ▪ Based on average 2024 listings, this would equate to a loss of more than 12,000 full-time jobs and more than 30,000 part-time jobs. While some of these jobs may be absorbed into the hotel market, it is unlikely that all employment would be recaptured.

Implications

Based on comprehensive market research, including three separate surveys targeting supply (STVR owners and operators), demand (visitors), and residents (Hawai‘i County residents), Hunden has triangulated the findings to assess the impacts and implications of the STVR industry on the County.

 ▪ Survey results show that if STVRs were unavailable, 24 percent of visitors would not have made the trip, 26 percent would have stayed in a full-service or luxury hotel, 19 percent would have rented a timeshare or condo, and 14 percent would have chosen a limited-service hotel. This indicates that restricting STVRs would result in a loss of close to one fourth of the lodging, food & beverage, transportation, shopping, and entertainment spending attributed to STVRs.

 ▪ The Hawai‘i County STVR market primarily appeals to budget-conscious travelers, larger groups, and frequent STVR users, while the hotel market is dominated by luxury properties catering to more affluent visitors.

 ▪ All visitors surveyed, regardless of lodging type, prioritized nature-based outdoor recreation. STVR visitors were more likely by 79 percent to engage in these activities as well as local culture. With the growth in wellness tourism and related trends nationally, Hawaii County is poised to continue to grow in this space, as wellness and community well-being remain central to the Hawai‘i Island Tourism Strategic Plan.

 ▪ If STVRs were restricted on the island, only 4 percent of owners and operators would definitely convert their listed units to long‐term rentals, while 68 percent indicated they would not. This suggests that the likelihood of STVRs converting to long-term housing for residents is minimal.

 ▪ Both hotel and STVR lodging revenues exceed $700 million annually on Hawai‘i Island, with additional daily visitor spending averaging more than $130 per person. Most STVRs are concentrated within designated Resort Zones.

 ▪ Resident sentiment toward tourism is largely positive, with respondents recognizing its importance to the local economy, job creation, and cultural vibrancy. Most do not believe STVRs have negatively impacted their neighborhood or quality of life. While 56 percent perceive that housing costs and availability have increased due to tourism, 61 percent said STVRs have not deterred them from renting or purchasing property.

 ▪ More than 75 percent of STVR owners operate only one rental unit, and 54 percent rely on the income to cover housing-related costs. Only 20 percent of owners view their property as a pure investment, suggesting that most STVRs are operated by individuals with a personal financial stake rather than large-scale investors.

Recommendation

Based on this study’s findings, STVRs contribute significant economic value to Hawai’i County and its communities. Resident survey respondents indicated that the community is largely in support of tourism and understands the importance of visitor spending to local economy and quality of life. Additionally, case studies of STVR policies worldwide have not identified substantial data that proves bans successfully addressed housing issues. The economic value of the STVR industry is substantial, and a county-wide ban would not be in the best interest of the county’s economy and community at large.

Instead, Hunden recommends that Hawai’i County continues to enable STVRs while building on the existing 2020 – 2025 Hawai‘i Island Tourism Strategic Plan, which seeks to align tourism growth with residents’ quality of life in a sustainable, community-based manner.

Drawing on demand and supply survey results, Hunden proposes the following four goals:

1. Continue to closely monitor STVR usage and supply growth on a bi-annual basis 

2. Achieve 100% compliance with STVR registration to ensure the economic benefits are captured on the island and to the County

3. Consider implementing strategic development guidelines for STVRs located within resort zones versus those located outside of such zones

4. Explore public-private partnerships to develop housing for local residents, ensuring that community members receive prioritized access to inexpensive housing

These initiatives would strive to achieve balance between the economic benefits of the STVR industry with community well-being and neighborhood integrity. No single finding should be interpreted in isolation; readers must consider the systemic context—including Hawai‘i Island’s unique geographic, cultural, and economic conditions—and acknowledge that no ideal model exists and many uncertainties remain.

read … Full Study Report

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PDF: Hawaii+County+STVR+Study.pdf

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