Hawaii is one of the most popular spots in the United States for both international and domestic tourists. However, one of the biggest challenges that travelers face when planning a trip to the island state is the cost – Hawaii is one of the most expensive areas in the country, especially for visitors.
Here are 5 reasons that traveling to Hawaii is so expensive:
- Travel
- Food transportation
- Utility costs
- Demand
- Taxes
The rest of the article will take a deeper look at these reasons so that you know how to budget while planning your trip.
1. Travel
For people on a budget, one of the most cost-effective ways to travel is driving. This is especially the case if you own your own vehicle and are traveling with other people.
While driving takes longer and requires you to pay the cost of gas, this is often cheaper than paying for flight tickets, especially when you’re paying for multiple people. However, unlike most places in the United States, there is no direct land route to Hawaii.
Travelers to Hawaii have to either fly to their destination or travel by boat or ship. Of the two, air travel tends to be cheaper (and flying from the west coast is cheaper than flying from the east coast) unless you’re traveling via cargo ships. No matter whether you choose to travel by sea or by air, the cost is high and adds up quickly if you’re traveling with family.
2. Food Transportation
Once you get to Hawaii, you’ll also likely be surprised at the price of everything from meals to local travel. The reason for this is simple – as an island state, Hawaii is surrounded by sea. As mentioned, there are no land routes connecting it to the mainland USA.
This, in turn, means that most products you see in the state have to be transported by sea or air travel. While cargo shipping is cheaper than commercial sea travel, ships take time to reach their destination. Products that are flown in, on the other hand, reach the state faster – but are far more expensive to transport.
Additionally, Hawaii is under the Jones Act, a federal law requiring that goods shipped between two ports in the United States be transported on American ships. Ships are considered American if they are built, owned, and operated by citizens or permanent residents of the country.
This act means that shipping companies that meet the requirements can charge higher prices for their services, as businesses have few options if they are looking to ship products into Hawaii. For example, shipping a 40-foot (122-meter) container from Los Angeles to Shanghai costs approximately $1500-$1800. However, sending a container of the same size to Hawaii can cost nearly three times this amount.
This, in turn, results in products being more expensive when they reach the state and are sold to the end consumer.
These factors combine to mean that being a tourist in Hawaii is expensive. If you’re looking to eat out, you will need to budget $15-$20 per person for breakfast, $20-$25 per person for lunch, and anywhere between $50-$100 per person for dinner. We’ve written an article about how to save money on food when staying in a hotel to help you keep these costs down as much as possible.
As you can see, the prices add up, particularly if you are traveling for a longer holiday. One good alternative to consider is eating at local food trucks or shopping at local supermarkets and eating in instead of dining out. However, if you’re looking for an authentic tourist experience, you can expect to pay.
3. Utility Prices
Aside from commercial products and food, Hawaii’s location also means that items like oil must be shipped to the state from the mainland. This, in turn, means that electricity prices in the state are higher than in the rest of the United States.
Furthermore, the geographic location means that electricity providers cannot rely on nearby utility companies to draw power from in an emergency. They must thus maintain a reserve of power to handle such situations. Also, fixed prices (such as those involved with infrastructure maintenance) are among the highest in the United States and are growing rapidly.
Finally, the warm weather in the state means that tourists and homeowners alike tend to leave the HVAC systems on. This, in turn, further contributes to the high electric costs in Hawaii.
4. Demand
As one of the most popular tourist destinations in the world, Hawaii is in high demand among travelers. Indeed, travel to the state is so popular that tourism makes up more than one-fifth (21%) of the state’s economy.
Additionally, visitors to the state tend to stay for a while. Most people tend to stay for at least a week, with travel length increasing around major holidays like New Year’s Day and Christmas.
These factors combine to mean that accommodation in the state tends to be expensive. No matter whether you’re planning to stay in a resort or an Airbnb, businesses, and landlords know that they have a steady stream of tourists willing to pay higher prices.
If you’re planning to stay in a 2 or 3-star hotel, you can expect prices to start at approximately $100 per night for a double room. Prices increase depending on how luxurious the resort is, and some places charge over $1000 a night.
Airbnb rentals tend to be slightly cheaper – however, the difference in prices is not as much as you may expect. On average, you will need to budget about $70-$85 per night for an Airbnb.
If you’re looking for budget accommodations, consider looking at a condo rental. Not only are these cheaper than hotels and resorts, but they also tend to have an attached kitchen. This allows you to cook your own meals instead of forcing you to shell out high prices in restaurants.
5. Taxes
While high demand is undoubtedly one of the major reasons accommodation in Hawaii is expensive, the other reason is the additional taxes that hotels incur – and pass on to the consumer.
There are two major taxes in Hawaii of which visitors should be aware:
- Transient Accommodations Tax: This tax is charged on hotel rooms, apartments, etc., that are rented to a person who is not a permanent resident of the state for a period of fewer than 180 days. The tax rate is 10.25%.
- General Excise Tax: This is essentially Hawaii’s version of a sales tax. The base rate is 4%, with additional surcharges depending on the county. Businesses can pass this tax on to consumers, along with an added fee. For example, the surcharge for companies in Honolulu is 0.5%. However, they are allowed to charge consumers 4.712% GET instead of 4.5%.
Since most businesses pass on these taxes to consumers, you can expect the charges to add up. For example, in Honolulu, these two taxes alone combine for 14.962% of added expenses. This means that, for every $1000 you spend on hotel rooms, you will also be paying an additional $149.62 in taxes.
Additionally, taxes are usually added to the base rate of a room at an upscale resort or hotel. For example, you may book two rooms for 5 nights, spending $200 a night. This may initially seem like you will be spending $2000 ($200 per room for two rooms = $400 per night. $400 x 5 nights = $2000).
However, you will also have to budget for the taxes mentioned above. As mentioned, in Honolulu, you will be paying 14.962% in taxes on hotel rooms. For your stay, that would mean you will be paying 14.962% on $2000 – which equals $299.24.
This means, in total, you will have to pay $2299.24 for your hotel – a significantly larger amount than you may have budgeted for initially.
Furthermore, the General Excise Tax applies to most commercial businesses, not just resorts, and hotels. This means that this tax will be passed on to you every time you visit a restaurant, a grocery store, or shop for souvenirs. All in all, taxes help make Hawaii a relatively expensive location for tourists.
Now you know why would you still like to go? If so, we’ve created a series of articles and videos on Hawaii to help you save money and plan an incredible vacation.
Sources
- Forbes: Is It Cheaper To Fly or Drive For Your Next Vacation?
- USA Today: Compare Plane & Ship Travel
- AskingLot: How much does it cost to ship a 40-foot container to Hawaii?
- Hawaii.edu: Why are Hawai’i’s Electricity Prices So High?
- USA Today: What Are Food Prices Like in Hawaii?
- Hawaiian Electric: Average Price of Electricity
- To Hawaii: Hawaii Travel Trends
- Hawaii Government: An Introduction to the Transient Accommodations Tax
- State of Hawaii Department of Taxation: General Excise Tax (GET) Information
- Wikipedia: Tourism in Hawaii
- Go Visit Hawaii: Revealing the hidden fees of Hawaii’s hotels
- Quora: Why is it so expensive to vacation Hawaii?
- To Hawaii: Geography of Hawaii
- Journeying the Globe: Is Hawaii Expensive? (The Ultimate Travel Costs Guide)
- Smartrippers: How much does a trip to Hawaii cost? Price and estimated budget
- Real Hawaii: The Cost of Living in Hawaii in 2021
- Quora: Why is traveling to Hawaii so expensive, and how can we save money during this whole trip?
- Ecocult: Why It’s Actually Awesome That Hawaii Is So Ridiculously Expensive
- Investopedia: The Jones Act
- Washington Post: Hawaii’s $14 billion tourism industry back to pre-recession levels
