What the Recent STVR Study Reveals: Implications for Hawaii County’s Economy
- Jan Nores, RS
- 6 days ago
- 6 min read
If you live on the Big Island or follow local news, you likely remember the heated debates last year over proposed bills that aimed to restrict—or even ban entirely—short-term vacation rentals (STVRs) in Hawaii County. These discussions stirred passionate reactions from homeowners, business owners, and community members alike, all concerned about the potential economic consequences and impacts on housing availability.
The County eventually set those bills aside, recognizing that any decision this significant needed to be backed by hard data rather than assumptions. To that end, Hawaii County commissioned a comprehensive economic study from Hunden Partners, a global advisor specializing in tourism and real estate development. The results are now in, and they shed important light on what STVRs really mean for Hawaii Island. Let’s take a closer look.
Download a full copy of the report here:
A Quick Recap: Why the Study Was Needed
Tourism is Hawaii’s largest industry and the lifeblood of our economy. On Hawaii Island alone, visitor spending exceeded $3.2 billion in 2024. At the same time, there’s no denying that our island faces a serious housing shortage. Advocates for STVR restrictions argued that eliminating vacation rentals would free up housing stock for long-term residents.
But would it really? That’s the key question the Hunden study set out to answer.
Summary of STVR Impacts (Report, p. 10)
The study found that STVRs are far more than a side note to our tourism economy:
$710 million in annual lodging revenue – STVRs generate nearly the same lodging revenue as hotels on the island ($729 million).
41% of visitors stayed in STVRs – A huge share of Hawaii Island’s guests prefer this type of accommodation.
Visitor spending outside lodging adds another $565 – $862 million – Food, shopping, transportation, and activities are all boosted by STVR visitors.
24% of STVR visitors would not come if rentals were unavailable – Meaning those dollars would not shift to hotels but disappear altogether, costing the County $112 – $170 million in lost lodging revenue and up to $207 million in lost visitor spending.
Tax revenue at stake – Hawaii County could lose $3.35 – $5.11 million in Transient Accommodations Tax (TAT) revenue each year if STVRs were banned.
Jobs tied to STVRs – Each unit supports an average of 1.6 full-time and 4 part-time jobs. A ban could eliminate more than 12,000 full-time and 30,000 part-time positions island-wide.
In short, the economic footprint of STVRs is massive.
Key Implications (Report, p. 11)
The study highlighted several critical implications:
Tourism Losses Are Real – Restricting STVRs could cut nearly one-fourth of visitor spending. Hotels are unlikely to absorb these losses, since STVRs and hotels serve very different clientele.
- STVRs appeal to budget-conscious travelers, larger families, and groups.
- Hotels, especially on the Kohala Coast, cater primarily to affluent, luxury-seeking guests.
Minimal Housing Conversion – Only 4% of STVR owners said they would convert their unit to long-term housing if banned. Nearly 70% said they would not. The assumption that restricting STVRs would solve our housing crisis simply doesn’t hold up. Besides, what would happen to that inventory if STVRs were banned? As a realtor, I know that would affect the market, and not in a good way.
Local Ownership Matters – More than 75% of STVR owners operate just one unit, and 54% rely on rental income to cover their housing costs. These are not faceless corporations but families using rentals to make ends meet.
Positive Resident Sentiment – Most residents surveyed recognized tourism’s importance. A majority reported that STVRs had not harmed their neighborhood quality of life, though some did perceive an indirect link to higher housing costs.
Outcomes: Ban vs. Status Quo (Report, p. 61)
The study compared two scenarios:
With STVRs (status quo):
$710 million in lodging revenue
$565 – $862 million in non-lodging visitor spending
12,000+ full-time jobs and 30,000+ part-time jobs supported
Millions in county tax revenue generated.
Without STVRs (strict ban):
Loss of more than $110 million in lodging revenue
Loss of more than $135 million in visitor spending
Loss of $3.35 million in annual TAT revenue
Elimination of tens of thousands of jobs
No significant gain in long-term housing, since owners would not convert rentals
The outcome is clear: a ban would devastate the economy without meaningfully solving the housing shortage.
Recommendations (Report, pp. 12, 62)
Instead of bans, the study suggests balanced strategies:
Monitor STVR growth on a bi-annual basis.
Achieve 100% registration compliance to ensure the County collects all available tax revenue. (Current collections are less than half of potential, leaving about $12 million on the table each year.)
Create zoning-specific guidelines to differentiate between resort-zone STVRs and those in residential neighborhoods.
Public-private partnerships for housing – Rather than relying on eliminating STVRs, actively invest in affordable housing solutions for locals.
Lessons from Case Studies
The report also looked at other destinations:
New York City – After strict regulations, STVR listings dropped dramatically, but rents continued to rise. The ban didn’t fix housing issues and reduced visitor choice.
Oahu – Despite restrictions, rents and home prices remain among the highest in the nation. Even Governor Josh Green acknowledged that eliminating vacation rentals entirely would only reduce rents by about 5%—far from solving the crisis.
These examples underscore that restrictions do not automatically translate into more affordable housing.
Hotels vs. STVRs: Complementary, Not Substitutes
Page 65 of the study shows that STVRs generate $709 million annually, nearly matching hotel revenues of $729 million. But the two markets serve different visitors:
Hotels – Luxury, high-income travelers, often seeking resort amenities.
STVRs – Families, budget-conscious groups, and those seeking longer stays with more space and flexibility.
Taking revenue away from STVRs doesn’t mean hotels will benefit. In fact, the study found that many visitors who choose STVRs would not come at all without that option.
Could the Hotel Industry Be Behind the Push?
Some argue that these restrictive bills were pushed forward by the hotel industry, which sees STVRs as competition. While we can’t say for sure, the numbers tell an interesting story: the hotel industry and STVRs generate nearly identical revenue, but from different audiences. Hotels are not likely to fully capture STVR market share, but $709 million in revenue is undobubtedly an attractive target.
The Bigger Picture: Housing Shortage and Economic Balance
There’s no question that Hawaii needs more affordable housing. But the study makes it clear: eliminating STVRs won’t solve the problem. At best, it would free up a handful of units, while stripping away hundreds of millions of dollars in visitor spending, tens of millions in tax revenue, and thousands of jobs.
Real solutions will require new housing development, thoughtful zoning, and creative partnerships between public and private sectors—not simply eliminating one of the pillars of our tourism economy.
Final Thoughts
The Hunden Partners study is eye-opening. It validates what many in the community already suspected: banning STVRs would do far more harm than good. STVRs are not the root cause of our housing crisis, and restricting them would have a negative ripple effect through our economy.
The study’s recommendations offer a more balanced path forward: improve compliance, regulate thoughtfully, and invest in real housing solutions. By doing so, Hawaii County can protect both its residents and its economy, ensuring that tourism continues to support local families while long-term housing needs are addressed more effectively.
For those of us in real estate, tourism, or simply living here, these findings matter. They shape the future of our communities and livelihoods. As we move forward, let’s hope decision-makers weigh the data carefully—and choose solutions that truly benefit Hawaii Island.
Download a full copy of the report here:
Puako 143: A Licensed Vacation Rental Home by the Ocean
Now, let’s talk about one of the most exciting opportunities currently available in Puako: Puako 143.
Located at the quiet south end of Puako Beach Drive, this property offers expansive Mauna Kea views, peeks of the ocean, and a beautifully maintained full-size lot just steps from the shoreline.
A Flexible Layout for Your Needs
Recently renovated, the home has been thoughtfully designed with two distinct living areas:
Upstairs: 3 bedrooms, 2 baths, an open floor plan, and a spacious covered lanai perfect for sunsets, dining, and gatherings.
Downstairs: A large, serene studio with its own patio and garden views—ideal for guests, extended family, or additional rental income.
This flexible setup makes it easy to live in one part of the home while renting out the other, maximizing your earning potential.
Ta Da!
Aloha,
Jan
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