Hawaii tourism industry fears negative impact of rental legislation

US: Hawaii’s tourism officials have warned that new short-term rental rules will reduce the amount of accommodation available for visitors to the islands.

More restrictive rental rules on Oahu took effect last week – Bill 89 bans advertising of unpermitted short-term rentals and enacts penalties resulting in fines of up to $10,000 for persistent violators.

The city Department of Planning and Permitting ruled the law applies to Waikiki properties in apartment and apartment precinct zones, as well as townhouses at the Turtle Bay Resort. The visitor industry has expressed concerns the law will be applied to hundreds of units in resort districts.

“We supported Bill 89, but this was an unintended consequence that was never made clear to us by DPP,” said Mufi Hannemann of the Hawaii Lodging and Tourism Association.

Oahu Alternative Lodging Association has estimated the law could cause a loss of between 50,000 and 80,000 visitors per month.

“We need vacation rentals to add capacity,” said Paul Brewbaker, principal of TZ Economics, who advised the council against passing the rental measure. “Bill 89 also is coming at a time when all the low-hanging fruit in a long economic expansion has been harvested,” Brewbaker said. “What signal has Hawaii sent that investors should double-down on Hawaii?”

A federal judge is expected to consider a restraining order against the ordinance. A U.S. District Court judge is scheduled to hear the case Aug. 15.

The Hawaii Vacation Rental Owners Association says it reached a previous settlement agreement with the city that is being violated.

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