Vacation rentals outside of resort zones create an economic race to the bottom.

Vacation rentals include bed-and-breakfast homes (B&Bs), where the owner is present; and transient vacation units (TVUs), where the owner lives elsewhere. Together they are known as short-term rentals (STRs), where stays are less than 30 days. All of these have a negative effect on the state’s economy.

It may seem logical that accommodating tourists in residential and apartment areas through STRs would bring additional spending into the state.

In Star-Advertiser articles, vacation rental internet hosting platforms and their economists have emphasized the spending that STR visitors represent; they estimate that these tourists spend $1.2 billion on lodging and $1.9 billion on food, entertainment, etc., annually. One lodging association officer reported that the spending has created 12,000 jobs in the state.

This infers that much of this economic value would be lost if STRs were prohibited in residential and apartment areas. However, the inference that STR tourists will stop coming if they have to stay in a hotel is not substantiated.

Would all of their spending really go elsewhere? It is highly unlikely that tourists would find many alternative resort areas with comparable climate, historical, natural and cultural features.

STRs can be viewed more appropriately as alternative lodging that creates competition for traditional hotels. There are significant economic opportunities lost by permitting STRs in our neighborhoods. It is obvious that thousands of tourists paying, say, $100 a night for STR lodging provide less economic benefit than those paying $200 or $300 in a hotel.

One analyst did find 64 STRs charging over $850 per night, but most charge much less — including one for $25 per night in the back of a truck near Kapiolani Park, and an old bus on Oahu’s North Shore.

Some point out that a significant amount of hotel profit goes to out-of-state corporations, but the Hawaii Tourism Authority (HTA) reported that 75 percent of STRs are owned by off-shore people and corporations, some that own multiple units.

The Star-Advertiser last month quoted a hosting platform consultant as saying STRs “ … are playing an increasingly vital role … as more guests travel to the islands, and hotel occupancy rates … are near max capacity” (“Many Hawaii residents chafe at tourism’s growth,” Feb. 4).

Yet few hotels are being built, arguably because of competition from STRs. The HTA reported that the number of known STRs increased 3 percent in 2017, while the number of hotel rooms fell 2 percent. Hotel-zoned land and supporting infrastructure sit idle in areas such as Kapolei while neighborhoods are illegally used for mini-hotels.

Opportunities lost include construction jobs for new hotels, and jobs for hotel workers that include benefits such as sick leave, vacation and retirement. Additionally, hotels provide a much more reliable source for collection of general excise tax, transient accommodations tax, plus income and property taxes. On Oahu, the hotel property tax rate is $12.90 per $1,000 assessed valuation, while most STRs pay only the $3.50 residential rate.

The state Department of Commerce and Consumer affairs reported that, during the 2008-2016 period of rapid STR growth, spending per tourist, adjusted for inflation, actually declined from $2,181 to $1,826 so that, during that period, we received less in tourist spending from nearly 9 million tourists than we received from 7.6 million.

These represent cumulative losses year after year, and if continued, our economy will truly be irreversibly on a race to the bottom.

Chuck Prentiss, Ph.D., is former executive secretary of the Honolulu Planning Commission.