Honolulu Can Fine Airbnb, Vrbo for Illegal Vacation Rentals. It Never Has
Faced with thousands of illegal short-term rentals that drew complaints from neighbors and limited housing options for residents, the Honolulu City Council decided in 2019 to target not only the operators of those rentals, but the websites that brought them customers.
Under the city’s law, Airbnb and other short-term rental platforms, as well as operators of rental units, are required to register with the city. Booking platforms must tell the city which properties have been rented, allowing the city to check if those units are legal. Companies can be fined up to $10,000 a day, per unit, if they receive a fee to book an unregistered short-term rental.
But in the four and a half years since the law took effect, Honolulu’s Department of Planning and Permitting has never cited Airbnb, Vrbo or any other rental platform for doing business with illegal rentals, city officials told Civil Beat.
Meanwhile, the number of illegal rentals dwarfs legal ones. Inside Airbnb, an organization that works to combat the negative effects of short-term rentals, says the site has about 7,900 listings on Oʻahu. The city says there are just 2,100 legal short-term rentals here.
Dawn Takeuchi Apuna, director of Honolulu’s Department of Planning and Permitting, said the city focuses on people operating illegal rentals, not the websites that handle bookings. “The operator that’s posting really is the problem,” she said.
The city’s own data shows how fruitless that approach has been. Between 2022 and mid-April, the city issued about 2,200 notices of violation to owners or operators. As of January, it had collected just 2% of the almost $90 million in fines it levied.
Council member Tyler Dos Santos-Tam said he wants the city to crack down on illegal rentals. “Frankly, I think that a scenario where the platforms are on the hook would certainly lead to a lot more compliance,” he said.
Holding Platforms Responsible For Illegal Rentals
Airbnb, Vrbo and other platforms have opened up entire neighborhoods to travelers looking for more of a local feel, and more space, than they would typically get in a hotel.
Though that’s attractive to tourists and a boon for hosts, elected leaders in popular vacation destinations such as New Orleans, New York City and Honolulu have faced complaints about the collateral damage.
“Neighborhoods may be negatively impacted by the presence of short-term rentals, including escalating real property values, increased noise, illegal parking, and increased traffic,” Honolulu’s short-term rental law says. “There is a concern that homes are being purchased as income-producing investments” rather than homes.
The council estimated that there were 8,000 to 10,000 short-term rentals on Oʻahu in 2019, “far exceeding the number of permitted units.”
Honolulu’s law was meant as a compromise between short-term operators, some of whom say they need the extra income to make ends meet, and their critics.
The law allows rentals of under 30 days in resort zones and some nearby areas as long as those properties are registered with the city as “transient vacation units.” In addition, the city allows about 800 properties around the island that have operated as short-term rentals or owner-occupied bed and breakfasts since the late 1980s.
The law requires companies such as Airbnb and Vrbo to provide the city with data on bookings. And every listing on those sites must include a tax map ID and a registration number.
Other heavily touristed cities have taken a similar approach. In San Francisco, platforms that don’t take “reasonable care” to prevent illegal rentals from appearing on their sites can be fined up to $484 for an initial violation and up to $968 for each subsequent violation. In New York, platforms can be fined up to $1,500 for every transaction involving an illegal listing. Come June, platforms operating in New Orleans can be fined up to $1,000 per day for every short-term rental they facilitate.
The Hawaiʻi Appleseed Center for Law and Justice applauded Honolulu for holding rental companies accountable.
“Rather than stand watch outside a suspected illegal STR (short-term rental) and wait for a guest to walk through the front door, officials can simply scroll through online listings, identify unregistered units, and issue citations directly to the corporate entities promoting them,” Appleseed’s spokesperson Will Caron wrote in a 2019 press release.
But Appleseed’s opinion has changed. Arjuna Heim, who became the organization’s director of housing policy after the council passed the short-term rental law, said she doesn’t think the city has the wherewithal to go after behemoths like Airbnb.
“It’s hard for a small state like Hawaiʻi – let alone a single county – to fight a hosting platform that has really smart lawyers and is international,” she said.
City Hasn’t Followed Through On Law
Takeuchi Apuna acknowledged that it’s challenging to combat illegal vacation rentals. But she contended that the law holding platforms accountable wouldn’t help much.
To find illegal listings, the permitting department uses software to track registrations and scan booking websites. When it finds one, the department asks the operator to remove it. If that doesn’t work, the department asks the booking platform to do so.
Yet the city has asked companies such as Airbnb to remove listings only about a dozen times, starting last year. The removal requests include a listing at 2154 Auli’i Street that has racked up almost a million dollars in fines since 2021; the city is now on track to try to seize the property to collect those fines.
Takeuchi Apuna said that with dozens of platforms available, including some catering to niche travelers, a scofflaw can simply list a rental somewhere else if a platform removes their listing. Despite having the power to penalize platforms, she said, “We believe that we will be more effective if we partner with them rather than enforce against them.”
Takeuchi Apuna said the city has been slow to crack down on short-term rentals because there are just two full-time short-term rental investigators and because the department has had to improve the software that matches rental listings and registered units. The department also had to rewrite its rules on short-term rentals after the City Council streamlined registration last year.
But the 2019 law was written to make the department’s job easier.
It requires companies such as Airbnb to submit monthly reports listing all bookings. Those reports must include the name of the person responsible for each rental, the address, the transient accommodation tax identification number, and details for each stay, including how much guests paid.
Those reports would enable city employees to see if the properties that had been booked are registered. But the rental platforms have never sent them. “Working together, we haven’t been requiring that they provide those reports,” Takeuchi Apuna said.
A spokesperson for Airbnb did not answer a question about whether the company has provided reports, instead providing a statement from Airbnb Senior Policy Manager for Hawaiʻi Janel Cozzens that says the company works with the city and complies with all applicable local laws.
Dos Santos-Tam said he asked the permitting department for the monthly reports last year and learned that it doesn’t have them. He said he didn’t pursue it at the time.
“But I would hope that we start asking the platforms for these reports,” he said. “I think the data that it would contain would be really helpful for further enforcement.”
It may be challenging for the city to get those reports. They’re required for any booking platform that has registered with the city. No company has ever registered, Takeuchi Apuna said.
A few Kailua residents who testified in support of a 2022 update to the city’s short-term rental law were surprised to learn the permitting department isn’t using all of the tools available to tamp down on illegal rentals.
James Gebhard said the number of illegal short-term rentals in his neighborhood seems to have declined during the past 10 years, and the remaining ones aren’t as raucous. Still, he said the city should go after booking platforms.
“I think they’re overlooking their duties if they don’t do that,” he said.
Airbnb Fights Back
In a Cornell Law Review article published in December, business law professors Keri K. White and Jennifer Cordon Thor wrote that there’s evidence that short-term rentals contribute to rising housing costs. They argued that municipalities must get the platforms’ help to keep illegal listings off their sites.
Airbnb contests the idea that its listings contribute to housing unaffordability, instead blaming slow construction of new housing. Last week, the company published a blog post showing that New York City’s median rent continued to rise in the two years after it passed Local Law 18, which severely restricted short-term rentals.
In addition to targeting booking websites, New York City’s law says owners must be present onsite when renting for fewer than 30 days and that they can’t host more than two guests at a time.
“Local Law 18 hasn’t improved housing availability or affordability – but it has driven up prices for residents and visitors, hurt small businesses and local resident hosts, and handed more power to hotels,” the company said.
The company has fought back against New York and other cities that have held it accountable for illegal rentals.
In a lawsuit filed against New York City, Airbnb argued that the law would effectively end short-term rentals in the city. Airbnb listings in the city dropped by about 90% the year after the law passed, according to the company.
A judge dismissed the case and said the city’s rules were not overly burdensome.
Airbnb has sued other cities too, including Santa Monica, California, and New Orleans, contending their laws put the company in the position of enforcing city regulations.
Heim, of the Appleseed Initiative, cautioned that booking platforms may be protected by the same federal law that absolves Meta of liability for content posted on Facebook. That’s an open question, though a federal judge in California ruled in Santa Monica’s case that short-term rental companies can be held liable for transactions involving illegal rentals. Litigation is ongoing in New Orleans.
Airbnb has not sued Honolulu over its short-term rental law. The company didn’t answer a question about whether it has considered it.
A group of short-term rental owners, however, successfully sued the city over its 2022 law that said any property rented for less than 90 days must be registered as a short-term rental. The prior threshold was 30 days.
That ruling spurred legislators to change Hawaiʻi law to say short-term rentals don’t count as a residential use and that counties can use their zoning power to phase them out altogether.
Maui County has been considering that option for almost a year. Dos Santos-Tam said Honolulu should consider it, too.
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This story was originally published by Honolulu Civil Beat and distributed through a partnership with The Associated Press.