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Hawaii Focuses on Illegal Vacation Rentals

Royal Fare April 10, 2019

Throughout the United States, states have been putting their attention on vacation rentals the affects it can have on local neighborhood, and the tourism industry as a whole. State officials of Hawaii approved two separate bills to limit the use of vacation rentals such as airbnb and homeaway. As of right now, vacation rental sites do not pay or collect taxes in Hawaii for their short-term vacation rentals. The bill aims to allow the state to collect taxes for the rentals.

The popular vacation city, Honolulu, currently has an estimated 800 legal vacation rentals on the market, and about 10x as many illegal rentals that do not pay tax for their accommodations. The bills have the support of local hotels and resorts, as they are held liable for charging taxes and have to remain competitive in price.

“We’re trying to capture the taxes from people that are doing the business in Hawaii. Which is the state’s responsibility,” said Richard Onishi, a Democrat representing Hilo and Volcano.

As for vacation rentals, they see the legislation as a risk of having to provide the personal information of the rental to the Hawaiian government, as violating federal law.

Airbnb has responded to the laws by stating that one of the bills “does not contemplate a fair process for regulating the industry but simply seeks to impose harsh fines.” The home-rental startup also added, “Hundreds of millions, if not billions, of dollars in tourist revenue could be at risk if this bill were adopted as currently proposed.”

Expedia (which owns VRBO.com and HomeAway.com) has stated that they believe these laws would threaten Hawaii’s tourism economy.

Lawmakers will meet later this month to discuss the proposed bills. Currently, Governor David Ige is withholding comments on the bills until they’ve undergone a legal and departmental review.