Illegal Rentals Hurt Honolulu's Hotel Sector and Deepen Housing Crisis

Industry leaders warn that the unchecked growth of illegal vacation rentals is eroding the state's housing supply and public tolerance for tourism.

Published on Feb. 16, 2026

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Honolulu's hotel sector generates over $12 billion annually and supports nearly 64,000 jobs, but industry leaders warn these gains are at risk as illegal vacation rentals drain housing from residents and erode public support for tourism. A new study found that hotel operations and visitor spending in Honolulu generate $1.9 billion in annual tax revenue, but short-term rental advocates argue they distribute visitor spending beyond hotel districts and support small businesses. Hawaii's governor says converting short-term rentals into long-term housing is one of the fastest ways to add supply, as the state grapples with a worsening housing crisis and an exodus of young people.

Why it matters

The clash between hotels and rental operators highlights the tension between Hawaii's dependence on tourism and its worsening housing crisis. Industry leaders argue that unchecked growth of illegal short-term rentals is draining housing from residents and eroding public support for tourism, which is a crucial part of the state's economy. Addressing this issue could have significant implications for Hawaii's economic stability and quality of life for local residents.

The details

A new Oxford Economics study found that hotel operations and visitor spending in Honolulu generate $1.9 billion in annual federal, state, and local tax revenue, supporting public services, infrastructure, and small businesses. However, industry leaders estimate there are over 30,000 illegal short-term rentals statewide, worsening the affordability crisis and weakening the hotel sector. Short-term rental advocates argue many operators comply with laws, rental income helps families, and vacation rentals distribute visitor spending beyond hotel districts. Hawaii's governor says converting short-term rentals into long-term housing is one of the fastest ways to add supply, as the state grapples with a housing crisis and an exodus of young people.

  • In his Jan. 26 State of the State Address, Gov. Josh Green pledged to 'return more homes to local families — including short-term rentals that have taken too many units off the market.'
  • In December, Maui Mayor Richard Bissen signed Bill 9 into law, repealing an exemption for grandfathered short-term rental units and designed to phase out more than 6,200 units in South and West Maui.

The players

Josh Green

The governor of Hawaii who says converting short-term rentals into long-term housing is one of the fastest ways to add supply and address the state's worsening housing crisis.

Rosanna Maietta

The president and CEO of the American Hotel and Lodging Association, who warns that the proliferation of illegal short-term rentals is straining the industry's workforce and intensifying Hawaii's housing shortage.

Jerry Gibson

The president of the Hawaii Hotel Alliance, who says the unchecked growth of illegal rentals across the counties is eroding both the state's housing supply and public tolerance for tourism.

Caitlin Miller

The executive director of the Hawaii Mid and Short-Term Rental Alliance, who argues that short-term rentals are a meaningful part of Hawaii's economy, generating over $11 billion annually and supporting an estimated 66,000 jobs.

Richard Bissen

The mayor of Maui who signed Bill 9 into law, repealing an exemption for grandfathered short-term rental units and designed to phase out more than 6,200 units in South and West Maui.

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What they’re saying

“If you could flip a switch and have short-term rentals go to the housing market, we would not really have a housing shortage.”

— Josh Green, Governor of Hawaii (Honolulu Star-Advertiser)

“Every unit lost to illegal vacation use is a unit taken from a local family. They remove a gigantic amount of housing from the local market, worsening a crisis that is already driving young people and kupuna to leave the islands.”

— Jerry Gibson, President, Hawaii Hotel Alliance (Honolulu Star-Advertiser)

“Our issue has never been about competition or the Mom-and-Pops — it's really been about tax parity and affordable housing.”

— Rosanna Maietta, President and CEO, American Hotel and Lodging Association (Honolulu Star-Advertiser)

What’s next

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The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.