Hawaii Vacation Rentals Plummet to 52% – What’s Behind the Drop?

Why Are Vacation Rentals Struggling?

The Hawaii vacation rental market is facing a major downturn, with occupancy rates plunging to just 52% in 2024. In contrast, hotels in Hawaii maintained a much stronger performance, with an occupancy rate of 73%. This marks a significant shift from 2019, when vacation rentals were nearly as popular as hotels, boasting a 75% occupancy rate compared to hotels at 81%.

Several factors have led to the drop in vacation rental occupancy, while hotels have remained relatively stable. Changes in visitor trends, rising costs, and increasing regulatory restrictions have all played a role in reshaping Hawaii’s short-term rental market.

Maui Takes the Biggest Hit

While all Hawaiian islands have seen a dip in vacation rental occupancy, Maui has experienced the sharpest decline. The island saw a 33-percentage-point drop in occupancy compared to 2019.

The devastating Lahaina wildfire in August 2023 significantly impacted tourism, with many travelers shifting their plans to other islands or reconsidering their Hawaii trips altogether. On top of that, tighter regulations on vacation rentals in West Maui have further limited supply, leaving many properties sitting empty despite a steady flow of visitors elsewhere in the state.

The Cost of Staying in a Vacation Rental is Soaring

Another major factor contributing to the decline in vacation rental bookings is cost. Despite occupancy rates dropping, the average nightly rate for Hawaii vacation rentals continues to rise.

In 2024, the statewide average price for a vacation rental reached $323 per night, a 55% increase from 2019. On Maui, rates were even higher, averaging $389 per night—before taxes and additional fees.

While owners have raised prices to compensate for lower demand, this strategy has backfired. Instead of paying premium rates for rentals with added cleaning fees and restrictions, visitors are opting for hotels that offer a more consistent experience—daily housekeeping, full-service amenities, and access to loyalty rewards programs.

Hawaii’s hotels also benefit from bundled travel deals, such as those offered through Costco Travel, which help keep costs competitive. When compared side by side, hotels often present a better value than vacation rentals with fluctuating fees and uncertain policies.

Tighter Regulations Are Reshaping the Market

Hawaii’s state and county governments have steadily increased restrictions on short-term vacation rentals, further squeezing the market.

Maui County has cracked down on vacation rentals, eliminating many existing units and threatening more with future regulations.

Oahu has tightened restrictions on new rentals, making it more difficult for owners to enter the market.

Hawaii Island and Kauai continue to adjust their rules, adding to the uncertainty surrounding short-term rentals across the state.

This ongoing regulatory pressure has led many rental owners to exit the market entirely or struggle to attract guests, as travelers grow wary of booking properties that could be shut down or face legal uncertainty.

Are Hawaii Vacation Rentals in Long-Term Decline?

With occupancy rates stagnant and costs at an all-time high, Hawaii’s vacation rental market is at a crossroads.

Will travelers return to rentals if hotels continue to raise their rates? Will stricter regulations force even more rental owners out of the market? The future remains uncertain, but one thing is clear—Hawaii’s vacation rental industry is undergoing a major transformation.

If you’re considering purchasing a vacation rental property in Hawaii, it’s more important than ever to stay informed about market trends and evolving regulations. Whether you’re an investor or a visitor, the shifts in Hawaii’s short-term rental market could shape the future of travel in the islands for years to come.