Examining the Unintended Impacts of the “Resort Zone Provision” in Honolulu, Hawaii…and a Potential Solution 

Land use and zoning laws play crucial roles in organizing the use of properties, shaping the physical landscape of urban environments, and directing the growth trajectories of cities and local economies. In Honolulu, Hawaii, land use laws have been leveraged as a tool to manage the impact of tourism on the city, most notably by designating specific “resort zones” in which hotels, bed and breakfast homes, and transient vacation units are allowed to operate. This paper offers a proposed amendment to the “resort zone provision” that aims to better protect the economic freedoms of local populations while restricting the negative effects of the tourism industry on permanent residents of Honolulu. 

So what is this provision, exactly? Article 5: Sec. 21-5.730A of the City and County of Honolulu Department of Planning and Permitting’s Land Use Ordinance is a provision that details the specific zoning districts of Honolulu in which bed and breakfast homes (B&B) and transient vacation units (TVU) are permitted to operate. These designated zoning districts are also known as “resort zones,” and are located in tourism hot spots throughout the city. According to the definitions outlined by the Department, B&Bs and TVUs refer to registered dwelling units, hotel units, timeshare units, and nonconforming hotel units that receive compensation for providing overnight accommodations for travelers for less than 30 consecutive days.  

Restricting B&B and TVU operations to resort zones strives to accomplish two key goals: 1) apply downward pressure on tourism in Honolulu to preserve the interests of local residents; and 2) protect housing availability in Honolulu’s severely supply-constrained housing market. According to one survey conducted in 2022 by KHON2, a local Honolulu-based news network, 67% of respondents reported that they felt the “island was being run for tourists at the expense of local people.”¹ In response to this sentiment, vacation rental laws have been growing increasingly restrictive over time, and Honolulu Mayor Blangiardi’s ongoing efforts to more strictly enforce restrictions described in Article 5 demonstrates the city’s efforts to combat the negative impacts of tourism on Honolulu and prioritize the needs of local residents.

By concentrating tourism-oriented land uses to specific districts, the provision provides limitations on the maximum capacity of tourist lodging in Honolulu at any given time and ensures that housing units outside resort zones can only be utilized for residential purposes. Additionally, restricting B&Bs and TVUs to particular locales safeguards against non-local investors from purchasing properties for solely investment purposes and subsequently reducing housing stock for in-state populations. While this provision successfully mitigates the increased displacement of residents, further actions may be taken to benefit local populations.

The “resort zone provision” offers a reasonable solution, but also comes with unintended impacts on the local community. The City’s most recently available online record of permitted short-term rental properties lists 34 B&Bs and 759 TVUs in Honolulu County (Figures 1 and 2).² Vacation units account for approximately 4% of all housing units in the state of Hawaii (over 50% owned by non-residents) and supports the lucrative tourism industry, an industry that accounts for roughly a quarter of the economy and supports approximately 216,000 jobs throughout the state.^{3, 4}

The combination of increasing tourism and restricted growth of tourist accommodations across the state (Figure 3) plus population growth and limited new housing construction in Hawaii (Figure 4) has led to soaring housing prices.

Honolulu County, home to over 70% of the state’s population, has also experienced declining housing availability over time (Exhibit 5), resulting in dramatic housing affordability challenges (Figure 6).⁵

According to one report in 2019, approximately 60% of B&Bs and TVUs were being operated illegally (Figure 7), adding further challenges to Hawaii’s housing shortage problem.⁶ In 2018, total revenues associated with vacation rental operations amounted to $3.3B. With recent political efforts to curb tourism and illegal vacation rentals, this number was expected to drop to $2.6B in 2023 (Figure 8).⁷ Enforcing Article 5’s provision provides environmental and overcrowding relief caused by tourism, but also involves penalizing locally owned B&Bs and TVUs operating outside of resort zones.

So how can the provision be revised? The proposed amendment to Article 5: Sec. 21-5.730A (detailed below) would remove resort zone restrictions for Hawaii state ID-holding property owners looking to provide B&B and TVU services to Hawaii state ID-holding customers. This amendment would enable more in-state property owners to gain vacation rental business opportunities without attracting more out-of-state tourists. At the same time, the amendment would allow in-state travelers to gain more abundant and affordable lodging options in the city and county of Honolulu.

Kama’aina is a Hawaiian term that colloquially refers to local residents and Hawaii state ID-holders. Many businesses throughout the state offer “kama’aina discounts” and rates to allow local residents to avoid tourism-inflated costs of goods and services. The provision amendment would extend kama’aina benefits to the vacation rental industry, thereby helping increase the supply and decrease the prices of B&Bs and TVUs in Honolulu for local populations visiting the state’s capital for work or leisure purposes.

In 2010-2015, Hawaii saw the country’s largest increase in “super commuters” (those traveling 90+ minutes for work), mostly driven by commuter traffic into downtown Honolulu (Figure 9).⁸ With the proposed amendment, kama’aina would be able to provide B&B and TVU services to other kama’aina throughout all of Honolulu county. This would create opportunities for seasonal workers (especially those employed by the tourism industry) to access more short-term housing options. In addition to supporting local mobility, reduced restrictions on vacation rentals for kama’aina would facilitate inter-island travel to the state’s capital and greater economic stimulation generated by in-state residents.

While the provision amendment is unlikely to yield significant revenue benefits for the state, the proposal would provide greater mobility options for local residents traveling to Hawaii’s urban epicenter for work or vacation. The amendment offers a low-risk, uncomplicated solution for benefiting in-state residents that have endured increases in cost-of-living, housing shortages, and environmental degradation caused by Hawaii’s growing tourism industry. 

Removing B&B and TVU restrictions to solely resorts zones for kama’aina would not entirely solve the problems that tourism has inflicted on the Hawaiian housing market. Only the creation of new housing supply, while limiting out-of-state purchase of new supply, would alleviate housing shortage pressures. However, this amendment would serve as an extra step towards prioritizing the needs of local communities and ensuring mobility within the city and county of Honolulu.

Draft Provision Amendment 

Bed and breakfast homes and transient vacation units are exempt from “permitted area” zoning district designations if the following criteria are met: 

1. Registration and operating standards compliance. The bed and breakfast home or transient vacation unit shall abide by procedures, restrictions, and standards detailed in Section 21-5.730 subdivision (B); 

2. Kama’aina owner-operator. The owner-operator of the bed and breakfast home or transient vacation unit holds a valid current Hawaii state-issued ID;  

3. Kama’aina transient occupants. All transient occupants of the bed and breakfast home or transient vacation unit hold a valid current Hawaii state-issued ID; 

The provisions of this section do not terminate or supersede private restrictive covenants or other restrictions that prohibit the use of real property as a bed and breakfast home or transient vacation unit. The violation of any provision of this subsection will be grounds for administrative fines and non-renewal unless corrected before the renewal deadline. 

In conclusion, the precedent of kama’aina discounts and benefits for local residents in Honolulu provides an opportune starting point for protecting kama’aina from tourism-related affordability challenges beyond inflated costs of goods and services. Removing “resort zone” restrictions for Hawaiians providing B&B and TVU services to other permanent in-state residents would grant increased flexibility to both B&B and TVU providers seeking income opportunities and consumers pursuing vacation rentals in Honolulu. The proposed amendment offers a simple solution for enabling Hawaiian residents to circumvent policies designed to curb over-tourism that, inadvertently, restrict income and mobility opportunities for local populations. While kama’aina benefits are primarily geared towards local enjoyment of retail and tourism businesses at fairer prices, this model could serve as a unique mechanism for protecting local interests in Honolulu, and even, potentially, other heavy-tourism cities across the world.

1. OmniTrak Group, “Resident Sentiment Survey Spring 2022 Highlights (Project #5808),” August 2022, https://www.hawaiitourismauthority.org/media/9744/dbedt-resident-sentiment-spring-2022-hta-board-presentation-accessible.pdf. ↩︎
2. City and Council of Honolulu, “Approved STRs,” https://www.honolulu.gov/dppstr/approved-strs.html. ↩︎
3. Paul Migliorato, “Is Housing Sacrificed to Attract More Tourists?” Civil Beat, December 28, 2018, https://www.civilbeat.org/2018/12/is-housing-sacrificed-to-attract-more-tourists/. ↩︎
4. Shannon Wianecki, “Rebotting Hawai’i’s Visitor Industry,” Sea Grant University of Hawai’i, https://seagrant.soest.hawaii.edu/rebooting-hawaiis-visitor-industry/. ↩︎
5. Data Commons, “Honolulu County,” https://datacommons.org/place/geoId/15003. ↩︎
6. Stewart Yerton, “Vacation Rental Bill Could Starve Windward Businesses that Cater to Tourists,” Civil Beat, November 18, 2021, https://www.civilbeat.org/2021/11/vacation-rental-bill-could-starve-windward-businesses-that-cater-to-tourists/. ↩︎
7. JLL, “Hawaii’s Home and Vacation Rental Market: Impact and Outlook,” April 20, 2020, https://www.hawaiitourismauthority.org/media/5370/impact-of-home-rental-market-on-hawaii-2019.pdf. ↩︎
8. Tim Henderson, “In Most States, a Spike in ‘Super Commuters,'” Stateline, June 5, 2017, https://stateline.org/2017/06/05/in-most-states-a-spike-in-super-commuters/. ↩︎