Hawaii’s short-term vacation rental business is still showing signs of struggle since the recent lifting of the COVID ban

COVID-19 restrictions banning short-term vacation rentals just lifted on Oahu, which moved into Tier 2 of its economic reopening Thursday.

That means roughly 800 short-term vacation rental properties on Oahu, which had been sidelined by Honolulu Mayor Kirk Caldwell’s pandemic restrictions since April 7, are now allowed to resume business like their neighbor island counterparts.

Short-term rentals, which rented for 30 days or less and weren’t being used to quarantine guests, have been allowed to operate on Hawaii island and Kauai and in Maui County since the middle of June, when the state’s first pandemic-inspired interisland quarantine was lifted. That didn’t change even after Aug. 11, when a partial interisland quarantine was reinstated for the counties of Kauai, Hawaii, Maui and Kalawao.

Still, it’s not exactly been smooth sailing for vacation rentals statewide, which have suffered from a COVID-19-related plunge in travel demand just like hotels, airlines and any other member of Hawaii’s visitor industry.

Overall, travel demand in September was still depressed significantly by the requirement that all out-of-state passengers abide by a 14-day self-quarantine. It wasn’t until Oct. 15 that the state launched a pre-arrivals testing program that allows some travelers to bypass the quarantine.

Even before the pandemic, Oahu’s short-term rental industry was more restricted than in other counties. Honolulu allows short-term rental lodging only in resort and certain apartment-zoned districts, unless the property is one of the roughly 800 or so that were issued a nonconforming use certificate back in 1989 and have maintained it.

Ordinance 19-18, otherwise known as Bill 89, created means for the city to issue roughly 1,700 permits to allow bed-and-breakfast homes to operate. However, there’s a bill to push back the start date for permits to Jan. 31 because of the pandemic.

In September, Caldwell didn’t yet consider Oahu short-term rental as essential businesses. But the isle’s owners and suppliers realized the highest, albeit still low, September occupancy statewide.

According to a report released Friday by the Hawaii Tourism Authority, using data from Transparent Intelligence, Oahu’s vacation rental occupancy for September fell to 14.5%, a 59 percentage point drop from September 2019. Oahu’s vacation rental supply fell more than 56% to 97,989 units. Oahu’s demand dropped to 14,160 units, but the nearly 92% drop wasn’t quite as steep as that experienced by Maui or Kauai.

September occupancy at Maui County vacation rentals decreased 68.8 percentage points to 5.4%. Maui’s supply declined more than 48% to 151,521, and demand dropped more than 96%, the most of any island, to 8,151.

Kauai’s vacation rental occupancy fell 62.3 percentage points to 5.6%. Kauai’s supply fell nearly 49% to 62,133, while demand decreased nearly 96% to 3,500.

Hawaii island’s occupancy declined 49.2 percentage points to 10.7%. Hawaii island’s supply dropped about 57% to 89,813, and demand decreased more than 92% to 9,620.

Despite the economic devastation that tourism lockdowns have caused Hawaii’s vacation rental industry, not all Hawaii residents support allowing them to operate during the pandemic, especially since the the Honolulu Department of Planning and Permitting has struggled with enforcement of the county’s rules.

Since the pandemic began, DPP has issued 166 notices of violation and 17 notices of order, which may include fines. DPP has assessed vacation rental owners on Oahu $1.88 million in fines through March but to date has only collected $20,000.

The challenges of vacation rental enforcement are a key reason why Angela Keen, co-founder of Hawaii Quarantine Kapu Breakers, doesn’t think it’s a good idea for vacation rentals anywhere in the state to host visitors during the pandemic.

“It’s just too dangerous. There’s no one at vacation rentals to assist visitors if they should get sick. There’s not enough oversight at vacation rentals to monitor visitors that suddenly need to quarantine,” she said. “Visitors need to stay at hotels. I also think that the state should set up mandatory locations for visitors that need to quarantine or isolate.”

But Andreea Grigore, senior vice president of property management at Elite Pacific and co-founder of the Hawaii Legal Short Term Rental Alliance, said members are adopting enhanced cleaning processes and adhering to industry guidelines to do their part in keeping employees, guests and communities as safe as possible.

“We welcome the ability to have our teams back to work and aid in Hawaii’s economic recovery,” she said. “We believe they can be managed responsibly and in a way that benefits our local communities and residents. Legal vacation rentals provide an ideal spot for families to unwind and relax while being able to abide by social distancing rules.”

The nonprofit HILSTRA was formed during the pandemic in part to advocate for parity for vacation rentals across the islands. HILSTRA’s members include over 60 licensed rental managers, who represent over 1,500 legal short-term rentals statewide.

Grigore said HILSTRA is “thrilled to finally be able to welcome guests back to our Oahu short-term rentals.”

Michel Rubini, owner of The Sunset Beach House, a beachfront Polynesian-style home near Sharks Cove, said Oahu’s vacation shutdown resulted in huge losses that were devastating to him and his family. He’s a retiree who counts on income from his legally permitted vacation rental to make ends meet.

“This is the best news that I’ve heard in the last eight months. I’m just hoping that we stay in this level and that we continue to get better,” Rubini said. “I had zero requests for vacation rental business in the past six months, but in the last two weeks, I’ve seen that people want to come back and they’ve been booking for next year.”

Rubini said just like hotels, vacation rentals have stepped up their COVID-19 safety and cleaning procedures and are detailing them for guests. Guests will find antibacterial soap, Lysol wipes, hand sanitizer and Lysol spray available on property for their use.

“We want everybody who visits us to not only feel but know that we are taking every precaution we can against this virus, and we will continue this policy as our new standard for cleaning our home,” he said in the home’s VRBO advertisement.

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Honolulu Star-Advertiser reporter Gordon Pang contributed to this story.