Study finds short-term rentals generate lodging revenue on par with hotels; estimates $12 million in uncollected county TAT

Hunden Partners presented an island-wide economic impact study of short-term vacation rentals to the Hawaii County Communication Reports and Council Oversight Committee on Sept. 16, concluding that STVRs produced roughly $710 million in lodging revenue in 2024, similar to hotel room revenue of about $729 million.

The study, commissioned under County Council Resolution 556-24 and led by the county Department of Research and Development, used data sources including AirDNA, Hawaii Department of Business, Economic Development & Tourism (DBEDT), Smith Travel Research and surveys. Hunden Partners said publicly available platforms show about 8,000 active STVR listings while county registration records show about 3,500 registered units, creating a gap the consultants estimated could represent roughly $12 million in unreported TAT and $1.6 million in uncollected general excise tax (GET) for 2024.

Researchers reported results from three surveys: a resident survey with 1,726 responses (87% full-time residents), a supply-side survey of 688 STR owners/operators, and a visitor survey with 101 responses. Key findings included that 24% of STVR visitors said they would not have traveled to the island if STVRs were unavailable; on average STVR occupancy was about 65% with an average daily rate near $379; and most STVR owners operate a single unit and rely on the income to cover housing costs.

The consultants presented two illustrative scenarios: maintaining current STVRs (with improved registration/compliance) and a strict ban. They estimated that a strict ban could reduce annual lodging revenue by more than $110 million, reduce non-lodging visitor spending by more than $135 million and put thousands of full- and part-time jobs at risk. Hunden Partners also found a low likelihood that existing STVR units would convert to long-term rentals: 4% of owners said they definitely would convert under restriction scenarios while 68% said they would not.

Hunden Partners' recommendations to the council included: (1) biannual monitoring of STVR supply and usage; (2) striving for 100% compliance with island registration to capture TAT and GET revenue; (3) consider differentiated development guidelines for STVRs in resort versus non-resort zones; and (4) explore public-private partnerships to develop housing for local residents and prioritize local access.

Deputy Director Jared Lim (Department of Research and Development) and Council member Heather Kimball led discussion. Council members asked for methodological detail (survey timing, sample frames, revenue and per-unit averages); Hunden Partners said detailed tables and appendices in the report include unit-level revenue (average annual rental revenue reported about $70,000) and that modeling could continue to examine additional policy scenarios. The committee voted to close file on Communication 500; the motion passed 8in favor, none opposed.