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Hawaii Lodging Taxes Could Hit 20% As New Fees Loom

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Hawaii Lodging Taxes Could Hit 20% As New Fees Loom


Travelers to Hawaii may soon face higher lodging costs if Governor Josh Green’s latest legislative push succeeds. Proposed increases to the transient accommodations tax (TAT), alongside a new statewide green fee, aim to raise $500 million annually for climate change and wildfire mitigation—largely a cost to be borne by visitors.

The plan is said to be part of a broader response tied to the devastating August 2023 fires that destroyed Lahaina and claimed 102 lives. While versions of this idea have surfaced in past sessions even as the bills died in the legislature, this year’s push has gained some fresh urgency and traction.

What is the Hawaii accommodation tax, and what’s changing?

Hawaii’s current statewide TAT sits at 10.25%, with each county adding its own 3% surcharge. That brings the total accommodation tax to 13.25% before adding the 4.712% general excise tax. Altogether, lodging taxes have already approached 18%.

Senate Bill 1396 would increase the state TAT from 10.25% to 12% in 2026. With existing add-ons, total taxes on hotel rates could climb to nearly 20%.

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Governor Green initially proposed a 1.7% increase but scaled it back to 1% after industry opposition. He called the new proposal a compromise.

“People will still come,” Green was quoted in a recent interview. “People are still coming in giant droves. I’m meeting the hotel industry halfway.”

How Hawaii compares to other destinations.

Hawaii already ranks among the highest in the U.S. for lodging taxes. Las Vegas, for example, imposes hotel taxes between 13% and 14%, while New York City adds just over 14%. Some international destinations, like Paris or Rome, charge the equivalent of only a few dollars per night as a flat fee.

These comparisons help, in part, explain growing traveler frustration. For many, Hawaii’s cost—especially for lodging—is starting to resemble European rates, often without the perceived value. Cynthia, a reader, commented on a recent Beat of Hawaii article, “We’ve started looking at Portugal instead. Flights are longer, but once we’re there, we spend less. And we aren’t nickeled and dimed like we are in Hawaii.”

Industry pushback grows louder.

The visitor industry remains skeptical of continued tax hikes, particularly when tourism remains in recovery mode. Critics argue that taxing visitors while simultaneously investing in tourism promotion sends mixed signals.

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Some industry voices are now warning that visitors are growing wary—not just of pricing but also of the lack of clarity surrounding where the money goes. One hotel executive recently noted that without transparency and coordination, even well-intentioned measures could backfire. The concern isn’t just financial—it’s reputational.

Tom Yamachika of the Tax Foundation of Hawaii wrote: “We wonder if lawmakers aren’t thinking that the transient accommodations tax is like duct tape, in that it fixes everything.”

Several bills this session propose tapping into the same revenue stream. In addition to SB1396 and its near-identical counterpart HB1077, there is also still-active HB504, which suggests an unspecified TAT hike and an added $20-per-night charge for rooms booked through loyalty programs, such as when visitors use points or miles.

Industry groups warn that these combined efforts could overreach, creating a tax burden that deters repeat visitors and increases the appeal of competing destinations.

What is the green fee?

Governor Green’s original vision included a broad-based tourism climate fee, which is where the so-called green fee name came from. Variants of the idea include annual visitor climate licenses, per-entry charges to popular Hawaii state parks or beaches, or bundled fees tied to accommodations or even airfare.

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So far, no single version has advanced. However, it remains a legislative possibility and could emerge as a companion measure to the TAT increase.

Other destinations have implemented similar programs, including Bhutan’s Sustainable Development Fee, which is $100 per night. Different models may influence Hawaii lawmakers as they refine details, and Beat of Hawaii is currently visiting and exploring destinations envisioning similar fees.

Hawaii residents pay, too.

Because interstate commerce laws prevent states from taxing out-of-state visitors differently, kamaaina (residents) will also feel the impact of the higher TAT. Governor Green has suggested a potential tax credit to offset the cost for residents, but no concrete plan has been finalized.

For now, residents booking staycations, visiting family or doctors, or attending events that require overnight stays would face the same tax hike.

How this could impact travelers.

These changes add to an already complex cost structure for visitors. That includes resort fees, parking charges, taxes, environmental fees, and rising nightly rates, which all combine to create sticker shock—especially for first-timers.

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Fee fatigue is real. Between resort charges, cleaning fees, parking, and taxes—often layered and poorly explained—many travelers report a sense of distrust that wasn’t present in past years. That sentiment is beginning to show up in reduced stay lengths and shifting loyalty patterns.

These costs are leading some to modify Hawaii plans. Travel agencies report shorter stays, off-peak travel, and increased demand for budget options.

Will the legislation pass?

SB1396 is still alive but far from guaranteed to succeed. Similar bills failed to move forward in the past two legislative sessions. However, the Lahaina fire has shifted the political climate and placed renewed pressure on lawmakers to act.

Some argue that Hawaii’s dependence on tourism necessitates bold investment in climate resilience. Others worry that piling new taxes on visitors without transparency on how funds will be used risks undermining confidence and return travel.

The bill outlines two special funds—one for climate initiatives and one for economic revitalization—but offers few details about oversight or performance metrics.

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The bigger question for Hawaii tourism.

As Hawaii grapples with balancing sustainability and affordability, travelers and residents alike will feel the impact of these proposed changes. Whether visitors are willing to pay more for vacations in paradise—and whether lawmakers can ensure the funds are used effectively—will shape the future success of Hawaii tourism.

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Hawaii gets nearly $190 million for rural health care | Honolulu Star-Advertiser

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Hawaiian announces $600 million airport, wide-body upgrades | Honolulu Star-Advertiser

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Hawaiian announces 0 million airport, wide-body upgrades | Honolulu Star-Advertiser


COURTESY HAWAIIAN AIRLINES

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Hawaiian Airlines today announced an investment of more than $600 million over five years to improve airport passenger areas across the state and interior upgrades to widebody aircraft.

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Hawaiian Airlines CEO Diana Birkett Rakow told the Honolulu Star-Advertiser ahead of today’s announcement at Daniel K. Inouye International Airport that other improvements will include better apps, a better website that will make it easier for passengers to change flights, among other things that also include better integration with Alaska Airlines, which acquired Hawaiian in 2024, making it a subsidiary of Alaska Air Group.

“We have pushed a lot of change through the system for the last couple of months,” Rakow said. “We’re working on integrating our ticketing systems because right now we’re on two separate ticketing systems that don’t talk to each other.”

After late April, she said, booking on the shared Alaska Air and Hawaiian Air ticketing system “will be much more seamless.”

In announcing the renovations and changes, Hawaiian pledged “a significantly smoother guest experience … once Hawaiian Airlines and Alaska Airlines share the same passenger service system and Hawaiian Airlines joins the oneworld alliance, both scheduled for late April.”

Right now, Rakow acknowledged, “unfortunately there is some friction.”

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“There’s been so many changes and all of that friction is really painful,” she said. “We are committed to making sure we are addressing the issues. … We are certainly not perfect, but we are committed to working together. … Really, after April, it is going to improve significantly.”

Each island airport also will see renovated lobbies and gates designed to increase comfort, provide better seating and amenities such as improved power charging.

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Daniel K. Inouye International also will get a new 10,600-square-foot lounge at the entrance of the Mauka Concourse in Terminal 1.

And starting in 2028, Hawaiian’s wide-body Airbus A330s will get new seats, carpets, lighting, business class suites, a Bluetooth-enabled in-flight entertainment system with high-definition screens and free Starlink Wi-Fi.

Gov. Josh Green said in a statement ahead of today’s announcement that, “Hawaiian Airlines’ investment is exactly the kind of long-term commitment Hawaiʻi needs. Modern, welcoming airports improve the experience for residents and visitors alike, strengthen our economy and keep Hawaiʻi competitive as a global destination. We appreciate Hawaiian Airlines’ partnership in advancing workforce development, regenerative tourism, clean energy, and community programs that reflect the values of our islands.”

The New Year began with a .75% increase in Hawaii’s Transient Accommodations Tax that will help the state fight climate change.

Rakow said that Hawaiian is working to better inform inbound passengers about how to respect Hawaii’s culture and environment.

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Hawaiian said it will continue to support “programs promoting regenerative tourism, culture and conservation.”

The airline also said it will fund grants to nonprofit organizations “promoting cultural programs, environmental preservation, and perpetuation of native Hawaiian art and language through the Alaska Airlines | Hawaiian Airlines Foundation.”




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