Vacation rental prices on the Big Island have increased by nearly 50% since prior to the COVID-19 pandemic despite a decline in occupancy rates.
According to new data from the Hawaii Tourism Authority, the average daily rate to stay in a Big Island vacation rental unit was $164 in 2019. In 2022, that rate climbed to $237, and as of June 2023, it’s $245.
The rising cost is especially pronounced in Kailua-Kona, where a $136 average daily rate in 2019 has ballooned by nearly 80% to $244.
But Hilo and Honokaa have fared little better, where $89-per-night units have become $141-per-night over the last four years.
The same trend is reflected throughout the state. Only on Lanai have vacation rental prices dropped since 2019 — a 1% decrease to $237 — while parts of Oahu had increases of 100% or more.
The rising prices have occurred alongside a decrease in people staying in vacation rentals. HTA reported that the Big Island’s available vacation rental units had an occupancy rate of only 46.5% last month, a 16% drop from the previous year and an 18% drop from 2019.
At the same time, the number of visitor arrivals on the Big Island is largely stable compared to both 2022 and 2019 — statewide, HTA reports that visitor arrivals have recovered by 93% since 2019 — and yet total visitor spending has leapt by 28% since 2019.
With vacation rental prices rising, Joshua Montgomery, president of the Ohana Aina Association, Big Island’s vacation rental association, said the “magic question” is when they will become too high for visitors to come to Hawaii.
Montgomery said that in his experience, vacation rentals tend to be used by visitors who have lower budgets than hotel guests and often are families who reduce their spending by cooking for themselves using rentals’ kitchen facilities.
“Often this is the only way they’re able to afford to come to Hawaii,” Montgomery said, adding that Southwest Airlines has made travel to the islands more affordable for that particular demographic of visitor. “It’s a very different market (than hotels), this medium-income visitor demographic.”
Montgomery also said that vacation rental owners are still feeling the pinch from a 2018 Hawaii County law that established regulations for short-term rentals in an effort to mitigate the impact of visitors in residential communities.
“There appears to be a desire at the state and county level to contract the scope of the tourism industry,” Montgomery said. “But tourism is our primary industry. And one of the few ways locals can directly participate in that industry is by setting up vacation rentals.”
Montgomery said more than 7,500 families on the Big Island financially depend on vacation rentals to some extent, and the income they earn tends to stay on the island, while the hotel industry is both more expensive for visitors and primarily benefits out-of-state businesses.
“We’re still having this discussion about who gets to participate in this industry,” Montgomery said.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.