Vacation rental occupancy across the state was down about a third in August, while hotel supply was almost at the pre­-pandemic level that it was two years ago.

While many hotel properties closed or reduced operations starting in April 2020 due to the COVID-19 pandemic, most had reopened by October for the start of the state’s Hawaii Safe Travels traveler screening program. That wasn’t necessarily the case for vacation rentals, which also faced additional outside pressure from enforcement efforts, especially on Oahu.

A theory behind the deeper supply drop for vacation rentals is that more of them are still offline following COVID-19 and government-related disruptions in 2020. As they struggled to run their businesses, some vacation rental owners removed noncompliant listings, converted the units to longer-term rentals or sold them.

In August, statewide vacation rental supply fell to 616,912, a 32.7% decline from August 2019, according to a Hawaii Tourism Authority report released Thursday that was produced by Transparent Intelligence, which analyzes short-term rental markets.

August vacation rental demand dropped to 459,152 units, a 32.6% decline from August 2019. In comparison, Tennessee­-based STR reported that hotel room demand over the same period declined 13.4% to more than 1.2 million.

Statewide vacation rental occupancy in August was 74.4%, up 0.1 percentage point from August 2019. Vacation rental occupancy statewide in August was on par with the same month in 2019, a record-­setting year before the pandemic shut down the industry for much of 2020.

It also outpaced hotels, but vacation rental owners in August had far fewer units available to fill. It’s important to note that vacation rental units are not necessarily available year-round, and might accommodate more guests than hotel rooms.

STR reported that statewide hotel occupancy in August was 73.4%. That occupancy was based on August hotel supply falling to 1.7 million room nights, which represented a 0.8% contraction from August 2019.

Like hotels, vacation rentals continued to see improvement in average daily rate in August. Vacation rental ADR in August increased to nearly $254, a 24.2% increase from August 2019. Similarly, the daily hotel rate increased 22.5% to $355.24.

Hawaii tourism and government policymakers are monitoring these patterns. Managing vacation rental growth has long been a major concern for government officials, who have to balance tourism and community interests. Demand for vacation rentals has brought more businesses and jobs to these neighborhoods, but some say it also has increased traffic, strained infrastructure and tightened rental housing supply.

But the supply of short-term vacation rentals, particularly illegal ones, has become a topic of greater debate since the Hawaii Tourism Authority made destination management a greater focus than marketing.

HTA Chief Brand Officer Kalani Kaanaana pointed out at a Sept. 2 HTA meeting that visitor arrivals began outstripping the supply of traditional lodging units from 2014 to 2020.

“It’s important to understand where the additional capacity came from in lodging,” Kaanaana said.

Oahu, where government policy changes are in play to crack down on illegal rentals, saw the greatest drop in vacation rental supply of any island in August.

The Honolulu Planning Commission is still updating regulations for Oahu vacation rentals. Earlier this month the commission postponed to Sept. 29 a decision on a measure that would change the restriction of a short-term rental to 180 days from less than 30 days. The proposed regulations also would allow the current 808 legal bed-and-breakfast and transient vacation units to continue operating, but would not allow any new short-term rental properties in residential areas. New permits would be allowed only in resort areas such as Kuilima, Ko Olina, Waikiki and Makaha, and bed-and-breakfast homes and transient vacation units would pay more in property taxes than the residential rate.

Honolulu DPP Director Dean Uchida told the HTA board earlier this month that the department’s goal was to “give communities their neighborhoods back.”

Based on traditional lodging, Uchida said, visitor arrivals should have peaked at 7.5 million to 8 million, so “where are these other 2 million or so visitors coming from?”

“We’re pulling back on residential,” he said. “The basic intent is to try to put the units where the infrastructure is in place that can support (them).”

Oahu’s August supply of 158,742 available unit nights was 42.3% lower than it was in August 2019. Unit demand in August on Oahu was 113,492 unit nights, a 48% decline from August 2019. Occupancy was 71.5%, a 7.9- percentage­-point drop from the same month in 2019. ADR rose 17% to $205.

Maui’s vacation rental supply in August was the largest of the four counties at 230,981 available nights, but that was down 24.3% from the same month in 2019. Unit demand fell 26.1% from August 2019 to 174,585. Occupancy was 75.6%, a 1.8-percentage- point drop from August 2019. ADR hit $282, which was 20.9% higher than August 2019.

Hawaii island vacation rental supply was 136,277 available unit nights, down 33.4% from August 2019. Demand was 103,896 unit nights, a 21.2% drop from August 2019. Occupancy rose to 76.2%, up 11.8 percentage points from August 2019. During the same period, ADR increased 32.7% to $211.

Kauai’s vacation rental supply fell 31.3% to 90,912 available unit units, the lowest among the counties. Unit demand was 67,179 unit nights, down 29.3% from August 2019, Occupancy was 73.9%, up 2.1 percentage points from August 2019. ADR was $328, an increase of 25.4% from the same month in 2019.