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Maui tourism should be managed, not prohibited

Viewpoint

On Maui, where the economy is largely driven by tourism, a balanced, responsible future requires development in areas intended to support tourism.

Last November, The Maui News published a story, “Maui County vacation rentals, hotels top in state for October.” Thanks to in-depth studies by Hawai’i Tourism Authority, we are able to look deeply and objectively at hospitality lodging trends in our state — and not only understand but, if we take the opportunity to act wisely, mitigate compounding issues of overtourism.

According to HTA’s studies, Maui County led the state in vacation rental occupancy. At 79 percent, Maui County was nearly 7 percent higher than the state average. The statewide increase in vacation rental occupancy was just over 4 percent, but South Maui County saw a 7.4 percent increase in vacation rental occupancy.

More surprising than occupancy is the growth in vacation rental inventory. Maui County saw a 28 percent increase in vacation rental units. By contrast, Maui hotel inventory has declined over the past 25 years, according to economist Paul Brewbaker’s analysis of DBEDT’s annual Visitor Plant Inventory reports. All net capacity growth since 1995 has been in vacation rentals.

Why should this be a concern for Maui?

For one, it limits affordable housing. Vacation rentals are often located outside of established resorts areas, reducing residential supply and driving up prices. There is no county mandate that vacation rental owners contribute to the development of affordable housing — unlike hotels and resorts that must contribute financially to workforce housing in direct relationship to the number of new lodging units.

Secondly, by and large, vacation rental owners are not thoughtfully collaborating with state and county agencies on traffic mitigation, regional roadway improvements or water and sewer improvements to offset the increased infrastructure burden created by their guests.

As vacation rental units have dispersed throughout the island, Maui has felt the impacts with neighborhood crowding, disruption to the residential way of life and degradation of our natural resources. These impacts are minimized by high-density destination resorts who offer on-property amenities, dining and controlled, hosted recreation.

Lastly, the economic benefit from vacation rentals is far below the contributions made by hotels and resorts, not only because of industry regulation, which a concerning number of vacation rental owners circumvent, but also because vacation rental units as a business do not contribute to jobs, income tax revenue and transient occupancy tax to the same degree as resorts and hotels.

What is our path forward? Tourism is too important a driver for Maui’s economic growth where other economic engines are limited. How do we maximize benefit while minimizing consequential impact when tourism in planned areas is constrained by a nearly maxed-out room supply?

The solution is twofold.

1. Call for increased controls of vacation rentals.

2. Support development in designated resort areas.

Sourcing data from HTA and DBEDT, Brewbaker’s analysis shows that seasonally adjusted monthly Maui hotel occupancy rose to 80 percent in 2019, near historical cyclical peaks. Without additional Maui lodging capacity, higher hotel room rates and shorter average stays risk eroding Maui’s nonlodging tourism receipts.

The Maui Island Plan — a countywide policy-based vision for population, land use and future growth in visitor destinations — seeks to maximize Maui residents’ benefits from the visitor industry. It identifies four resort areas, including the Wailea-Makena region, where tourism is expected, allowed and welcomed to grow. As described in the plan, a sustainable tourism future and “higher average spending can best be achieved by marketing focused on visitors who stay in hotels.” The facts speak for themselves: The share of wallet is greater when visitors stay, play and dine in designated resort areas.

Bottom line: Overtourism requires responsible management, not further inaction. We must rebalance traditional resort lodging against vacation rental growth. Resort-contained developments, like the planned enhancement at Grand Wailea, are good for Maui’s economic health. In the case of Grand Wailea, it is the first major renovation in the last 30 years on a property that employs over 1,500 people. As the largest private employer on the island, it’s critical that businesses like Grand Wailea remain competitive in the industry if Maui wishes to capture the most economic benefit from tourism and sustain the jobs it supports for Maui residents.

* Rod Antone is the executive director of the Maui Hotel & Lodging Association.