How to Start an Airbnb Business in Hawaii

Hawaii pulls nearly 10 million visitors a year and generates over $21 billion in tourism spending. That demand creates real opportunity for short-term rental operators — but Hawaii is also one of the most heavily regulated STR markets in the country. Every island has its own county government, its own permit system, and its own political stance on vacation rentals. What works on the Big Island will get you fined on Oahu. What was legal on Maui last year may not be legal today.

This is not a market where you wing it. You need to know exactly which permits apply, which zones allow STRs, what taxes you owe, and how fast the rules are changing. Below is a county-by-county breakdown of Hawaii’s STR landscape, the tax obligations every host must handle, revenue benchmarks by island, and the compliance pitfalls that catch operators off guard.

Why Hawaii’s STR Market Is Unlike Any Other State

Most states have a patchwork of city-level STR regulations. Hawaii has that plus an entirely separate governance structure on each island. There are four counties — Honolulu (Oahu), Maui County (Maui, Molokai, Lanai), Hawaii County (Big Island), and Kauai County — and each one controls its own zoning, permitting, and enforcement. State-level taxes apply everywhere, but the permit rules, caps, and penalties differ dramatically.

The political pressure on STRs in Hawaii is intense. The August 2023 Maui wildfires displaced over 12,000 residents and destroyed 5,400 households, accelerating a push to convert vacation rentals back to long-term housing. Oahu passed a 90-day minimum rental rule that took effect September 2025. Maui signed a law phasing out over 7,000 vacation rentals. The Big Island is implementing its first-ever registration system. Kauai has held firm on its strict TVR permit caps for years.

The result is a market that rewards operators who do deep regulatory homework and punishes those who assume “Hawaii is Hawaii.” Each island is its own game with its own rules.

Island-by-Island Regulatory Breakdown

Oahu (Honolulu County) — NUC Certificates, Resort Zones, and the 90-Day Rule

Oahu is the most restrictive island for short-term rentals. As of September 30, 2025, Bill 62 (CO 25-02) requires a 90-day minimum rental term for all residential properties outside designated resort zones. That means traditional Airbnb-style stays of a few nights are only legal in resort-zoned areas like Waikiki, Ko Olina, and Turtle Bay.

The only exception is properties holding a Non-Conforming Use Certificate (NUC). These are grandfathered permits issued to properties that were operating as STRs before October 22, 1986. No new NUCs are being issued. If you have one, you must renew it annually between September 1 and October 15 — miss that window and you lose the NUC permanently. Contact NUC@honolulu.gov for renewal details.

For operators considering Oahu, the path forward is narrow: either secure a lease or property in a resort-zoned area, or find one of the rare NUC-holding properties. The Honolulu Department of Planning and Permitting maintains the official list of eligible zones. Advertising a stay shorter than 90 days in a non-resort, non-NUC property is now explicitly prohibited and carries fines.

Despite the restrictions, Honolulu’s STR market still performs. Legal properties in Waikiki run at roughly 87% occupancy with an average daily rate around $212, generating median annual revenue near $62,000. The limited legal supply keeps demand — and pricing power — strong for compliant operators.

Maui County — Phase-Out Law, Permit Caps, and Uncertainty

Maui is the most volatile STR market in Hawaii right now. In December 2025, Mayor Richard Bissen signed Bill 9 into law, initiating a phase-out of approximately 7,069 vacation rentals on the Minatoya List (6,823 units on Maui and 246 on Molokai). The phase-out targets properties in apartment-zoned districts:

• West Maui (Lahaina, Ka’anapali): Phase-out by end of 2028
• All other Maui areas (South Maui, Central Maui): Phase-out by end of 2030

This law is unprecedented in scope. If fully enforced, it would eliminate the majority of Maui’s vacation rental inventory. Legal challenges are expected, and the timeline could shift — but the direction is clear. Maui County is prioritizing long-term housing over tourism accommodation.

For operators still in the market, Short-Term Rental Home (STRH) permits are required and capped by planning district. Processing times are long and approvals are not guaranteed. Maui County’s planning department handles applications, and you should expect scrutiny on zoning compliance, neighbor notification, and property inspections.

Despite the regulatory headwinds, Maui STRs that remain legal command premium rates. The average daily rate sits around $350 with occupancy near 78%, translating to roughly $94,000 in annual revenue. But entering this market now carries significant regulatory risk. Anyone considering Maui needs to consult a local attorney before signing a lease or making an offer.

Big Island (Hawaii County) — New Registration System, Growing Market

The Big Island has historically been the most permissive of Hawaii’s four counties for vacation rentals. That is changing. Ordinance 25-50 (formerly Bill 47) establishes Hawaii County’s first formal registration system for short-term vacation rentals, with a delayed implementation date of July 1, 2026.

Key details of the new system:

• Registration fees: $250 for hosted rentals (owner lives on-site), $500 for unhosted rentals
• Annual renewal required
• Penalties for non-compliance: $1,000 to $10,000 per day
• Requirements: Tax map number, contact information, site drawings, proof of safety compliance, and proof of tax registration

The county is still building out its enforcement system, which is why implementation was pushed from December 2025 to July 2026. Operators on the Big Island should register proactively once the system goes live. The Hawaii County Planning Department posts updates on the registration timeline.

Revenue-wise, the Big Island is solid. Waikoloa Village properties peak at around $437 ADR during high season with occupancy near 65%. Kona-side properties tend to perform strongest due to better weather and proximity to resorts. The Big Island offers more breathing room than Oahu or Maui — but smart operators will get ahead of the registration requirements rather than waiting for enforcement to ramp up.

Kauai — TVR Permits, Strict Caps, and Premium Pricing

Kauai takes a simple, hard-line approach: vacation rentals are only allowed in Visitor Destination Areas (VDAs) — primarily Princeville, parts of Poipu, sections of Kapaa, and a small area of Waimea. Properties outside VDAs can only operate with a Non-Conforming Use (NCU) permit issued before March 30, 2009. No new NCUs are being granted.

TVR permit renewal is annual, with fees around $750. Here is the critical detail: Kauai does not send renewal reminders. If you miss the renewal deadline by even one business day, you permanently forfeit your TVR license. No exceptions. No grace period. This is the strictest renewal policy in the state.

The county actively monitors platforms like Airbnb and VRBO for unlicensed listings. Fines for operating without a permit are substantial, and the planning department has a history of aggressive enforcement. Contact the Kauai Planning Department at (808) 241-4050 for permit status questions. Our in-depth resource covers exactly how to making money on Airbnb without owning a home.

The tight supply drives premium pricing. Kapaa-area STRs peak at around $431 ADR with high-season occupancy near 72%. Poipu and Princeville properties often command even higher rates. If you can secure a property with a valid TVR or NCU permit in a VDA zone, the revenue potential is excellent — but inventory is extremely limited.

Tax Obligations for Hawaii STR Hosts

Hawaii’s tax stack for short-term rental operators is one of the heaviest in the country. You are dealing with three separate tax layers that combine to a total effective rate north of 18% on gross rental income.

Transient Accommodations Tax (TAT)

The state TAT applies to all rentals of fewer than 180 consecutive days. The rate was 10.25% through the end of 2025. As of January 1, 2026, the TAT rate increased to 11%, with the additional revenue dedicated to a new environmental fund (sometimes called the “green fee”). You must register with the Hawaii Department of Taxation, obtain a TAT license, and file returns monthly or quarterly depending on your volume.

County TAT Surcharge (3%)

All four counties — Honolulu, Maui, Hawaii, and Kauai — levy the maximum allowable county TAT surcharge of 3%. This is collected alongside the state TAT and remitted separately to the county. Combined with the state rate, your total TAT burden is 14% of gross rental proceeds as of 2026.

General Excise Tax (GET)

Hawaii does not have a traditional sales tax. Instead, it has the General Excise Tax, which applies to all business income — including STR revenue. The base GET rate is 4%, with an additional 0.5% county surcharge in all four counties, bringing the effective GET rate to 4.5%. Unlike sales tax, GET is technically imposed on the business (you), not the consumer — though most operators pass it through to guests.

Total Tax Burden Summary

That 18.5% comes straight off the top of your gross revenue. Factor this into every pro forma you build. Platforms like Airbnb collect and remit TAT and GET on behalf of hosts in Hawaii, but you are ultimately responsible for confirming compliance. Register for both a TAT license and a GET license through the Hawaii Department of Taxation. Property taxes are a separate obligation — and many counties now classify STR properties in a higher tax bracket than standard residential, further increasing your carrying costs.

Revenue Benchmarks by Island

Revenue varies significantly across islands based on supply constraints, ADR, occupancy, and seasonality. Here is a snapshot of current performance data:

A few patterns stand out. Oahu has the highest occupancy but the lowest ADR — volume-driven. Maui commands the strongest overall revenue but faces massive regulatory risk. The Big Island and Kauai offer high ADR with more moderate occupancy, which means your revenue is more sensitive to seasonal swings. For rental arbitrage operators, the key metric is net margin after taxes, permits, and operating costs — not just gross revenue.

Startup Costs and Property Considerations

Getting into Hawaii’s STR market requires more upfront capital than most mainland markets. Here is a realistic cost breakdown for an arbitrage operator:

• Lease deposit: $3,000 – $7,000 (first month + security deposit, higher on neighbor islands)
• Furnishing and setup: $8,000 – $25,000 depending on unit size and quality expectations (Hawaii guests expect resort-level amenities)
• Permits and licenses: $250 – $2,000 annually depending on county and permit type
• Insurance: $1,500 – $4,000/year for proper STR coverage including liability
• Tax registration: Free to register, but budget for first-quarter tax payments (~18.5% of projected revenue)
• Professional photography: $300 – $800 (non-negotiable in a competitive tropical market)

Total realistic startup budget for arbitrage: $15,000 – $35,000 per unit. That is higher than a Denver or Nashville launch, but the revenue ceiling is also significantly higher. If you are purchasing rather than leasing, expect entry-level condos starting around $300,000 on the Big Island and north of $500,000 on Oahu and Maui.

Property selection matters enormously. Proximity to beaches, walkability, ocean views, and resort amenities all drive ADR premiums. A condo in Waikoloa with a golf course view will outperform a similar unit in a non-resort area by 30-40% on nightly rate. Understand your startup costs before committing to a lease.

Seasonal Demand Patterns in Hawaii

Hawaii has more consistent year-round demand than most STR markets, but there are still clear peaks and valleys:

• Peak season (December – March): Winter mainland travelers and whale-watching season drive the highest occupancy and ADR. December and January are typically the strongest months. Book your cleaning crews early — turnover is constant.
• Summer peak (June – August): Family travel drives a second major demand spike. This is the highest-volume arrival period overall, though ADR may be slightly lower than winter peak.
• Shoulder seasons (April – May, September – November): Occupancy dips 10-20% depending on island. This is when pricing strategy matters most — dropping rates too aggressively erodes annual revenue, but holding firm risks empty nights.

Unlike ski markets that go near-dormant in the off-season, Hawaii rarely drops below 50% occupancy even in the slowest months. The year-round warmth and consistent airlift from the West Coast provide a baseline that most mainland markets cannot match. That stability is a major advantage for operators running financial projections — your worst-case month is still generating revenue.

Common Compliance Pitfalls

Hawaii’s enforcement has teeth. Here are the mistakes that trip up operators most often:

• Operating without a permit: All four counties actively scan Airbnb and VRBO for unlicensed listings. Fines range from $1,000 to $10,000 per day on the Big Island; Oahu and Maui penalties are similarly severe.
• Missing permit renewal deadlines: On Kauai and Oahu, missing your renewal window means permanent loss of your permit. Not “pay a late fee” — gone forever. Calendar these dates.
• Incorrect tax registration: You need both a TAT license and a GET license. Operating with only one triggers penalties and back-tax assessments.
• Advertising violations: On Oahu, advertising a stay shorter than 90 days in a non-exempt property is itself a violation — even if no booking occurs.
• Assuming platform compliance covers you: Airbnb collects and remits TAT/GET in Hawaii, but the legal responsibility remains with the host. If there is a discrepancy, the state comes after you, not Airbnb.
• Ignoring neighbor complaints: Hawaiian communities are tight-knit. Noise complaints, parking issues, and trash problems can trigger county investigations. Establish clear house rules and enforce them.

Before launching in any Hawaii market, review the legal guide by state and consult a local attorney who specializes in STR law. The cost of legal advice upfront is a fraction of what a compliance violation will cost you.

Insurance, Legal Structure, and Property Management

Running an STR in Hawaii without proper insurance is reckless. Standard homeowner’s or renter’s insurance policies exclude commercial short-term rental activity. You need a dedicated STR insurance policy that covers liability for guest injuries, property damage from guests, loss of rental income, and natural disaster coverage appropriate for Hawaii (flooding, volcanic activity on the Big Island, hurricane exposure).

Expect to pay $1,500 – $4,000 per year for a comprehensive STR policy in Hawaii. Carriers like Proper Insurance, CBIZ, and Safely specialize in vacation rental coverage. Airbnb’s AirCover provides some protection, but it is not a substitute for your own policy — it has exclusions, slow claims processing, and no coverage for your personal belongings or liability beyond guest stays.

For legal structure, form an LLC before operating. Hawaii LLC filing costs $50 with the Department of Commerce and Consumer Affairs, plus a $15 annual report fee. An LLC separates your personal assets from the business, provides pass-through taxation, and is required by many insurance carriers for commercial STR policies. Open a dedicated business bank account and track all income and expenses separately.

Property management is a real consideration in Hawaii, especially if you are operating from the mainland. Local property managers typically charge 20-30% of gross revenue — higher than the 10-15% you see on the mainland. The premium reflects island logistics: cleaning crews are expensive, maintenance contractors have limited availability, and supply shipping for replacements and restocking takes longer. If you plan to self-manage remotely, you will still need a reliable local contact for emergencies, lockouts, and in-person guest issues.

How Hawaii Compares to Other High-Tourism STR States

Hawaii is often compared to Florida, California, and Arizona as a high-tourism STR market. Here is how they stack up on the key factors that affect operator profitability:

Hawaii’s advantage is consistent demand and premium ADR. The disadvantage is the heaviest tax burden in the country combined with aggressive regulatory tightening. Florida offers similar tourism demand with lower taxes and less restrictive permitting in most markets. California has high ADR potential but similar regulatory headwinds. For operators who can navigate the compliance requirements, Hawaii’s limited legal supply creates pricing power that other states cannot match — fewer legal rentals competing for the same tourist demand.

The 10XBNB system teaches operators how to evaluate these tradeoffs systematically. Understanding market-by-market dynamics is what separates profitable operators from those who pick a location based on vacation vibes and end up underwater on costs. Get the data right first.

Frequently Asked Questions

Can you still do Airbnb in Hawaii in 2026?

Yes, but only in specific areas with proper permits. On Oahu, short-term stays under 90 days are limited to resort zones and NUC-holding properties. Maui is phasing out thousands of units but still has legally operating STRs. The Big Island requires registration starting July 2026. Kauai restricts STRs to Visitor Destination Areas. The market is shrinking, which means compliant operators face less competition and stronger pricing power.

How much does it cost to get an STR permit in Hawaii?

It varies by county. Big Island registration fees are $250 (hosted) to $500 (unhosted). Kauai TVR permits run about $750 per year. Maui STRH permits and Oahu NUC renewals have their own fee structures. In all cases, budget $250 – $2,000 annually for permits alone, plus the cost of required inspections, site plans, and tax registrations.

What is the total tax rate on Hawaii short-term rentals?

As of 2026, the combined tax burden is approximately 18.5% of gross rental income. That includes the state TAT at 11%, the county TAT surcharge at 3%, and the GET at 4.5%. This does not include property taxes, which are assessed separately and often at a higher rate for STR-classified properties.

Is rental arbitrage legal in Hawaii?

Rental arbitrage — leasing a property and subletting it as an STR — is legal in Hawaii provided you have the landlord’s written consent, the property is in a zone that allows short-term rentals, and you hold the required county permits and state tax licenses. The challenge is finding landlords willing to allow it and properties in eligible zones, particularly on Oahu and Maui where restrictions have tightened significantly.

Which Hawaiian island is best for STR investing right now?

The Big Island currently offers the best balance of regulatory accessibility and revenue potential. Registration requirements are straightforward (launching July 2026), ADRs are strong ($400+ in resort areas), and the regulatory environment is less hostile than Oahu or Maui. Kauai is excellent if you can find a property with an existing TVR permit, but new entrants face very limited options. Evaluate your risk tolerance and capital before choosing an island — what matters most is entering a market where you can operate legally and profitably long-term.

See real student results from hosts who have built profitable short-term rental businesses in Hawaii and across the country with the 10XBNB system.