Hawaiʻi Vacation Rental Market Mid-Year Report
Hawaiʻi's breathtaking natural beauty continues to attract millions of visitors annually. As such, rental properties in Hawaiʻi have a high potential to be an excellent investment.
Today, we will go over a comparative analysis of current 2023 data from the Hawaiʻi Tourism Authority against data from the same period last year. To simplify things, we’ll focus on five key data points, including tourism, unit supply, unit demand, occupancy, and rate, spanning the mesmerizing Oahu, Maui, Kauai, and Hawai‘i islands.
With Hawai‘i Life's comprehensive presence on all four major islands, we offer unparalleled real-world insights and detailed data points to help you make a well-informed investment decision.
The Tourism Wave
Hawai‘i has seen a 16.4% rise in tourism in 2023 so far, with 3.23 million visitors gracing the islands compared to 2.81 million visitors just a year ago. Oahu has witnessed the highest visitor growth of an impressive 27.2% compared to the same period in 2022. With 1.8 million visitors gracing its shores, Oahu stands tall as the island with the highest overall footfall.
The Valley Isle, Maui, saw a growth of 11.3%, welcoming 969K visitors. Not far behind, Hawai‘i Island and Kauai have also seen tourism increase by 13.6% and 13.4%, respectively, hosting 585K and 448K visitors each. These numbers affirm Hawai‘i's continued allure for global travelers looking to experience everything the islands offer.
Unit Supply Surge
2023 has seen a rise in unit supply growth across all the islands. The total unit supply for all islands has surged by 18% to 2,605,200, up from 2,208,206 in 2022, which signals a promising upward trend for potential guests and investors alike.
Maui leads the pack with 782,850 units, registering a growth of 6.3% compared to 2022. Oahu follows closely behind, with 768,573 units, marking a rise of 16.8%. Notably, Hawai‘i Island has seen the highest percentage increase in unit supply. At 655,144 total rental units, this represents a stunning increase of 31.2% over 2022. Kauai saw 26.7% growth from last year, with a total of 398,633 units for tourists.
Market Demand Dynamics
Unit demand, depicting the number of booked rental units, saw a moderate 1.2% uptick in 2023, with demand for all islands rising from 1,585,658 last year to 1,604,116 at present. While Maui saw a slight dip of -1.7% and Kauai’s unit demand decreased by -4.1%, Maui maintained its lead with 528,237 total unit nights.
Oahu and Hawai‘i Island registered increases of 3.6% and 5.7%, respectively, translating to 469,380 and 385,681 unit nights. While the post-pandemic surge anomaly may have caused slight fluctuations, the general trend points toward steady unit demand.
Overall Occupancy Outlook
Despite a slight dip of 14.2% in 2023 occupancy rates, largely due to the post-pandemic tourist surge, the occupancy rates for Hawai‘i vacation rentals continue to demonstrate a healthy trend. The average occupancy rate for all islands combined is currently at 61.6%, which is down slightly from 71.8% last year.
Regardless of the fluctuation, Maui currently leads the islands with a 67.5% occupancy rate, showing a 7.5% decrease over 2022. Oahu stands second at 61.1%, marking an 11.3% dip over the previous year. Hawai‘i Island and Kauai registered occupancy rates of 58.9% and 55.4%, respectively, with decreases of 19.4% and a more significant 24.3%. This dip in occupancy rates isn't indicative of a decline, but is more a reflection of the market's response to the exceptional post-pandemic surge.
Rising Value Appreciation
The Average Daily Rate (ADR) across the islands of Hawaiʻi shows a healthy increase of 9.5% so far in 2023, up to $323.33 from $295.26 in 2022. Maui stands out with the highest ADR of $415.72, a significant 15.2% increase from last year. And Oahu follows suit with an ADR of $246.61, marking a 13.2% increase.
The Big Island of Hawai‘i exhibits a 5.7% increase with an ADR of $250.53, while Kauai shows a 1.6% rise, standing at a notable $392.53. The upward trend in ADR attests to the continued appreciation of Hawai‘i’s vacation rental market and showcases just how lucrative it can be to own a vacation rental property.
Overall Investment Insights
Oahu, Maui, Hawai‘i Island, and Kauai have all seen a significant increase in home and condominium values, with Maui demonstrating a stunning 10-year appreciation rate of 135.6% for homes and 117.7% for condos. Even with a slight dip in occupancy rates, the potential for steady rental income and significant capital gains remains strong, making these islands a profitable choice for property investors.
Furthermore, the islands’ ability to sustain and increase their average daily rental rates suggest that the allure of Hawai'i as a vacation destination hasn’t faded. Despite occupancy rate decreases, average daily rates have grown substantially, with Oahu's popular Waikiki area experiencing an incredible 21.2% surge. This steady growth, along with the potential for future capital gains and the islands’ inherent beauty and appeal, underscore the compelling investment opportunity that a Hawai'i vacation property presents.
Charting Your Course with Hawai‘i Life
Set against the backdrop of new taxation and regulatory policies, these trends present an optimistic scenario for rental rates in the future. The insights above are pivotal for helping vacation rental owners and investors aiming to navigate the nuances of Hawai‘i’s burgeoning vacation rental market.
At Hawai‘i Life, we’re properly positioned to help you maximize opportunities in a shifting market. Our inventory of over 800 vacation rentals and array of property management services make us your perfect partner in navigating your investment journey. Connect with us today at Vacations@HawaiiLife.com or call us at 855.447.3685.