Vrbo, Airbnb make deal with Kauai to crack down on illegal short-term rentals

Short-term rental platforms Vrbo and Airbnb have agreed to help Kauai enforce short-term rental regulations by preventing illegal vacation rentals from advertising on their sites.

Under the agreement, Vrbo and Airbnb will require Kauai hosts to submit government-issued Tax Map Key (TMK) numbers, which identify the location of a property, in order to be listed on the sites. The platforms will share listings information with the county for verification that rentals are located in approved areas.

Expedia Group, which owns Vrbo and HomeAway, announced its agreement with the county on June 25 — the first such agreement between a short-term rental platform and government in Hawaii. Airbnb announced its own agreement June 29. Both agreements will be rolled out over the next two to four months.

The Kauai agreements are the latest example of cooperation between short-term rental platforms and government agencies after years of legal battles around regulation. In New York City, for example, Airbnb recently agreed to settle a contentious lawsuit against the city. Under the settlement, short-term rental platforms will be required to submit data about their listings in order to help the city enforce the law against illegal vacation rentals.

Under Expedia Group’s agreement with Kauai, existing hosts will have 60 days after the agreement goes into effect to provide a TMK number. Those who don’t provide one will be taken off the site.

On Kauai, it’s illegal to operate short-term rentals outside of designated resort areas without a permit. Those who violate the law can face fines of $10,000 per day.

All Hawaii vacation rental hosts must also comply with tax regulations. Short-term rental income in Hawaii is subject to transient accommodations tax (TAT) as well as general excise tax (GET). Vacation rental operators can pass these taxes on to guests, but hosts must register with the state, collect and pay the taxes, and file regular tax returns. 

While short-term rental platforms such as HomeAway/Vrbo and Airbnb collect taxes on behalf of their hosts in many states, they’re not allowed to do so in Hawaii. That means hosts must comply with lodging tax requirements on their own. MyLodgeTax automates lodging taxes for Hawaii vacation rental operators to simplify compliance.

Kauai vacation rentals only recently resumed operations after being shut down due to the COVID-19 pandemic. They joined Maui and the Big Island in reopening to guests who are not subject to the state of Hawaii’s COVID-19 quarantine. Oahu vacation rentals have not yet been allowed to reopen. 

Hawaii Governor David Ige recently announced that out-of-state travelers who submit proof of a negative COVID-19 test will be allowed to visit the islands without a quarantine period, beginning August 1.