Vacation Rental Market Analysis: Hawaii

The Evolve Team
The Evolve Team
May 10, 2024

Hawaii is truly a magical vacation destination. From snorkeling and sailing to beachside relaxation, there’s an adventure for everyone in this tropical paradise. 

Owning a vacation rental in Hawaii can feel magical too, as properties of all shapes and sizes can house the millions of tourists who visit annually. 

Since each island has its own flair, below is a breakdown of the unique features and benefits for the best places to invest in Hawaii — Kauai and the Big Island’s Kona Coast — to help you decide where your investment dollars should go. 

We’ve also created free, downloadable vacation rental market analyses for each area, so you can take a closer look at your investment opportunities. These reports include:

  • Rental income potential by property size
  • Average occupancy by property size
  • Average daily rate by property size
  • Average days booked in advance
  • Average length of stay
  • Vacation rental inventory by property size
  • Occupancy rate by month

The findings in these analyses are based on Evolve’s Hawaii market averages over the last year, and provide a general baseline for performance potential. They’re designed to help inform smart decisions when buying a vacation rental in Hawaii.

Download Our Hawaii Vacation Rental Investment Analyses

Note: This article was modified on August 16th, 2023, removing Maui as a result of Maui wildfire impacts.

In This Article:

What the Best Hawaii Vacation Rental Markets Have in Common

What to Know About Owning a Vacation Rental in Kauai 

What to Know About Owning a Vacation Rental on the Big Island

What the Best Hawaii Vacation Rental Markets Have in Common

While Kauai and the Big Island each have unique draws, many pros and cons of a Hawaii investment property stand true in both popular destinations. Consider these key factors no matter which market you decide to zero in on.

Demand Is Strong Most of the Year

With warm weather year-round, Hawaii sees solid demand throughout the calendar. Travel tends to peak in late winter as vacationers escape to this beachy paradise from colder climates.

But interest continues through the spring, summer, and fall as well — which can translate to consistent bookings and rental income. This makes it especially important to get a new vacation rental five-star ready before opening your calendar to guests. Be sure to establish efficient-but-thorough cleaning and maintenance practices, too, so you’re always prepared for the next stay.

Some Amenities Are Attention-Grabbers

Between Hawaii’s heat and high humidity, our real estate experts say air conditioning is a hot commodity on any island. Pools are also a major perk, as are outdoor spaces with large decks so guests can embrace the surrounding natural beauty without leaving home. 

When it is time to explore, your vacation rental’s location should make that easy. Nearby beach access or true waterfront status are highly sought-after in Hawaii, and beach-friendly amenities (like umbrellas and snorkeling gear) can go a long way toward getting five-star reviews from guests. Consider proximity to local attractions as well (like Hawaiʻi Volcanoes National Park on the Big Island, or Kauai’s Hāʻena State Park). This gives your rental a stronger chance of becoming a highly-bookable home base for adventure.

Also, no matter what property type you go for (say, a quaint inland cottage or a tried-and-true beach house), Hawaii travelers love resort-style vibes. It’s wise to upgrade spaces with luxe touches like smart TVs and WiFi, and to bring local charm to your indoor decor so guests can have a more authentic vacation. You can also provide welcome gifts, along with kid-friendly amenities to up the ante on your top-notch service.

Vacation Rental Regulations Are Common

Our experts say short-term rental regulations have intensified across many of the Hawaiian islands over the last few years. So it’s important to research market-specific restrictions and work with local agents who specialize in vacation rental to prepare for the process.

The Big Island, for instance, restricts rentals in certain zones. Meanwhile, Kauai puts parameters on lengths of stay and requires at least three or even four permits to operate. 

Honolulu has a full ban in place on all new short-term rentals. This is why — despite common interest in Honolulu investment properties — we’re not recommending a vacation rental investment on the island of Oahu. 

Though regulations can introduce more legwork upfront, a Hawaii investment property — particularly on the islands of Kauai and Big Island — can be worth the effort with the right due diligence and vacation rental experts on your side.

What to Know About Owning a Vacation Rental in Kauai

Waterfall and natural pool surrounded by lush green vegetation in Kauai, HI, a great place to own a Hawaii investment property

Kauai is an adventurer’s paradise. With a bit less tourism infrastructure than other Hawaiian islands, the Garden Isle feels more untouched and rugged. This makes it ideal for travelers wanting to go off the beaten path and escape crowds. 

The island has also had some serious silver screen time in the Jurassic Park series, so it’s easy to see how Kauai offers an almost other-worldly experience. 

When considering a Hawaii investment property in Kauai, note that there’s a two-person limit on every vacation rental bedroom. As a result, you won’t be able to maximize your guest capacity with things like multiple bunk beds or futons here. It can also take up to 180 days to get vacation rental licenses approved, so it may not be a fast turnaround from your date of purchase to when you start earning vacation rental revenue.

How Much Money Can You Earn with a Kauai Vacation Rental?

Kauai’s average home price currently sits around $970,000. Though expensive, Kauai has the highest ceiling for annual income of any Hawaiian market. That means owning a vacation rental here can be especially lucrative in the long-term. 

While five-bedroom homes tend to see the most annual revenue, two-bedroom properties take a fairly significant lead in year-round occupancy (with one-bedroom properties following close behind). These smaller homes also make up the vast majority of local availability inventory, giving investors more options with profit potential.

The island is small enough that proximity to great sites isn’t an issue — you’re likely to be a stone’s throw away from a hotspot like Hāʻena State Park or one of Kauai’s nine forest reserves no matter where you buy. But keep in mind that beach-view homes are always a bonus in such a beautiful place. Movie buffs also love Kauai’s connection to the Jurassic Park series, so searching for properties near classic film locations can help you capitalize on that interest and maximize earnings.

Download Our Kauai Vacation Rental Market Analysis

What to Know About Owning a Vacation Rental on the Big Island

An ocean view at sunset with palm trees silhouetted on a beach on the Kona Coast, a top location for a Hawaii investment property

With stark volcanic cliffs and black sand beaches, the Big Island is sure to inspire awe. Perhaps the most well-known in Hawaii’s island chain, there’s one region along its western shore that follows suit as its most popular vacation spot: the Kona Coast.

Naturally, that makes the Kona Coast the prime Big Island location for a Hawaii investment property. It sees a small demand slump in early fall that other islands don’t, but it has a high peak for occupancy rates — second only to Kauai. That can mean major cash flow opportunities for owners in busy seasons, with an end-of-summer breathing period that’s perfect for getting your own getaway on the books. 

This island’s caveat: short-term rentals on the Kona Coast are restricted to hotel, resort, commercial, and multi-family commercial zones. It’s important to reach out to the county before buying a Big Island vacation rental to double-check which zone your potential property sits in, and that it complies with local regulations.

How Much Money Can You Earn with a Kona Coast Vacation Rental?

Kona Coast home prices average around $860,000, making the area more affordable than its Kauai neighbor and a strong contender for the best place to invest in Hawaii.

Bigger properties tend to see the highest daily rates here, with four- and five-bedroom homes earning the most annual revenue on average. 

Like Kauai, however, you don’t need to invest in huge homes on the Big Island’s Kona Coast to be successful. One- to three-bedroom homes all tend to see a higher average number of nights booked in the calendar year than their four-bedroom counterparts, and a three-bedroom Evolve home was also our top performer in the last 12 months. This really just highlights the broader traveler appeal of this Hawaiian market. 

Since the Big Island’s unique terrain is what sets it apart, our experts say proximity to local attractions can have a massive impact on Kona Coast rental success. Look for homes near the recently-expanded Hawaiʻi Volcanoes National Park, or by the black sands of Punaluʻu Beach. Coffee is also a big part of Kona’s culture, so offering an easy commute to the best places to enjoy it (and outlining those recommendations in your welcome book) can make guests buzz. 

Download Our Kona Coast Vacation Rental Market Analysis

Get Our Hawaii Vacation Rental Market Analyses

As a dream destination for travelers of all types, a Hawaii investment property can be really ideal for investors in search of massive demand in unmatched island landscapes. 

To get a closer look at the best places to invest in Hawaii, download our complete Vacation Rental Market Analyses for Kauai and the Big Island’s Kona Coast today. 

Each report includes helpful insights like:

  • Average daily rate by property size 
  • Expected seasonality in vacation rental demand
  • Average length of stay in high and low seasons
  • Inventory breakdown based on property size

Use our reports to equip yourself with the tools and knowledge needed for vacation rental investment success, and make your entry into the market a total breeze.

Get Your Vacation Rental Market Analysis

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