Hawaii tourism industry fears negative impact of rental law

New short-term rental rules could impact Hawaii tourism industry by decreasing amount of visitor lodging

More restrictive rental rules on Oahu were scheduled to take effect Thursday, The Honolulu Star-Advertiser reported Thursday.

Honolulu City Council unanimously passed Bill 89, which was signed into law June 25. The ordinance 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.

The spread of vacation rentals has added to Oahu's lodging supply and tourism growth, but the new ordinance could negatively impact those gains, officials said.

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?"

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Information from: Honolulu Star-Advertiser, http://www.staradvertiser.com