No More Vacation Rentals In Maui. Here's How The Mayor's Plan To Strip The Island of Short-Term Rental Will Affect The Economy

While the island of Maui has always been a vacation paradise, it may no longer be a paradise for vacation rentals. That’s because Mayor Richard Bissen plans to ban short-term stays to help the island’s burgeoning housing crisis. Many locals aren’t happy about it, Realtor.com reports.

Maui’s housing issues were brought into sharp relief when the island’s 2023 wildfires destroyed over 2,000 homes and buildings, leaving many residents without accommodation. The island scrambled to provide temporary accommodation until a more permanent solution was found. That solution, according to the mayor, is phasing out short-term rentals. However, a new study by the Economic Research Organization at the University of Hawaii found that the Mayor’s solution is far from black and white.

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“Reducing transient vacation rentals on Maui could contribute to greater housing affordability, particularly if paired with homeownership support programs and new workforce housing construction,” Trey Gordner, one of the authors of the analysis, told Realtor.com. “Our analysis finds that repurposing these units for long-term housing could meaningfully ease the housing shortage, especially if paired with policies that encourage actual occupancy rather than vacancy,” says Gordner.

Vacation Rentals Are A Big Draw For Visitors

However, the result of doing away with vacation rentals could dent the island’s tourism business. The study found that visitor days would decrease by 32%, and spending would decline by 15%, which amounts to $900 million annually. Housing prices would also suffer, with condos estimated to decrease in value from 20% to 40%, which would have a knock-on effect on property taxes, which could drop by about $60 million annually. Another $15 million would be lost in taxes derived from visitor rentals. In addition, around 1,900 jobs would be stripped from the hospitality sector’s 22,600 total labor force, according to 2022 figures. 

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A Price Worth Paying

According to a statement published by the Associated Press, Bissen feels that the economic toll is a price worth paying, saying that the report’s authors “fail to acknowledge the cultural loss we face when our people are forced to leave — when generations of knowledge, tradition, and aloha are displaced from the very communities that shaped them.”

Skepticism About The Plan’s Efficacy

The Maui County Council Housing and Land Use Committee, led by Chair Alice Lee, is tasked with deciding whether to adopt the mayor's proposal in a new bill. It also appeared to have reservations about the plan’s efficacy. 

“My understanding is that many [short-term rental] owners will elect to retain their units and not sell or rent their units and use them when they visit Maui,” Lee told the AP. “The Council would like to establish a fair and equitable solution that works for all parties.”

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Instantly Creating A Decade’s Worth Of Housing

Vacation rentals are a big draw in Maui. They are used by over 30% of visitors, attracted to their relatively low cost compared to hotels and the ability to self-cater and work remotely that they offer, according to the AP. However, they also account for about one-fifth of Maui’s housing supply, which is much higher than other recent wildfire-affected areas such as Los Angeles. As Maui only builds 600 housing units per year, converting short-term rentals to permanent housing would create about a decade’s worth of housing in one fell swoop. 

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