Why is Hawaii so Expensive? Here Are the Top 7 Reasons

Why is Hawaii so expensive?

Ah, Hawaii. Just a mention of the name is enough to stir the wanderlust and get you dreaming of those sun-soaked Pacific beaches and palm-topped coral coves, those pristine golf courses and wild national parks filled with volcanos. But why is Hawaii so expensive?

This guide has the answer. It runs through seven reasons why the Aloha State reigns as one of the priciest parts of the United States. The aim? Partly to help you come to terms with the hefty price tag that’s attached to aloha adventures; partly to see if there’s any way you can dodge the soaring costs and get a bargain in the home of hula and cocktails with an umbrella in.

Yep, we’ll try to touch on some ways you can mitigate the cost of hopping across to Hawaii this year as we work through all the reasons it’s a premium travel destination. That could be anything from switching your jaunt to another season, booking early flights, or staying in more out of the way locations. Anyhow, without further ado…why is Hawaii so expensive?

Because it’s super, super popular

Sunrise over beach in Hawaii
Photo by Envato Elements

Why is Hawaii so expensive? Because everyone wants to go there! That’s why! It’s no secret that high demand whacks up the cost of something. And in business so it is in travel, which makes Hawaii a real drain on the bank account if there ever was one.

In fact, a recent study by CNBC rated the island of Maui as the second priciest vacation destination in the country after New York, with an estimated price tag of $1,924 for two people for three nights.

There’s one very good way to mitigate the premium that comes because of Hawaii’s booming popularity: Travel in the low season. It’s no secret that the cost of going just about anywhere when it’s not peak time is usually just a fraction of what it is when the tourist months are in full flow. It’s the case in Cancun, in the Caribbean, and in Europe for the summer.

Hawaii’s low seasons come around twice. The first is the shoulder between the arrival of the winter escapees in December. That hits in early spring (March and April). The second is the fall months of September and October, post-summer rush and during the more humid and rainy periods on the isles.

Because it caters to the monied market

Sailboat in Hawaii
Photo by Envato Elements

This glorious archipelago bathed in the sub-tropical warmth of the south Pacific has become something of a byword for luxury vacationing in the US. It’s always listed among the top honeymoon spots in North America and is known as a jet-setter escape – Ben Stiller, Mark Zuckerberg, and Pierce Brosnan are all said to have second homes here!

The upshot? Hawaii is very much on the upscale end of the travel market. It flaunts whole towns that are specifically designed for top-end holidaying. They run the gamut from the uber-exclusive gated community of Loa Ridge (said to be one of the most expensive areas of real estate in America) to the golfing hub of Princeville over on Kauai.

That said, there’s still room to see Hawaii on a budget. Hit the road in a campervan and you can make the most of the islands’ wonderful beach-side campgrounds. Alternatively, steer clear of the A-list resort towns of Waikiki et al and choose lesser-known regions, such as the east coast of Big Island and the region around Hana on Kauai.

Because it’s kinda’ hard to get to

Small Hawaiian Island
Photo by Envato Elements

A trip to Hawaii ain’t like a trip to Florida. Nope. These palm-fringed isles are isolated a mega 2,370 miles out in the middle of the Pacific Ocean. And that’s from the West Coast of the US. If you’re traveling across for your R&R from New York or Boston, you’re going to have to make a trip that’s more in the region of 5,000 miles. Yikes!

That obviously adds extra costs when it comes to getting there in the first place. It means flights are basically mini long hauls. Airfare crank skywards because you’re needing to fund more fuel to get you to the land of Hula and mahi mahi. Plus, there’s all the extra outgoings that come with traveling long distances – from what checked luggage costs on longer flights to all those coffees in the airport you’ll need to keep you going en route to Honolulu.

Sometimes, just sometimes, there are ways around the high cost of flights. To be in the mix, you’ll need to book very early – at least 90 days prior to take off has been shown to be the prime period. And you’ll need to consider the budget, no-frills carriers; names like Southwest Airlines that do reduced seats and fire sales.

Because of high taxes

Pineapple drink in Hawaii
Photo by Envato Elements

Planning on living in Hawaii? Prepare to pay for the pleasure. Yep, this land out west has the dubious honor of the second-highest top rate of income taxation of any state in the union. It sits just shy of California’s whopping 13.3% at 11%. What’s more, the Golden State’s rate only applies to folks who earn over a million dollars. **Grabs the world’s smallest violin**.

And it’s not just personal incomes that are raided. The state has a hefty 4% sales tax (known as GET) applied to all goods and services, topped up to almost 5% when you add on local sales taxes. That tots up to a total sales tax burden of over 12% for locals, enough to put this one at 48th place on the list of states with the highest tax burdens of all.

Sadly, there’s not all that much you can do to avoid paying all the above. What’s that about only two things in life being certain again?

Because it costs loads to ship things here

Scenic landscape in Hawaii
Photo by Envato Elements

There’s one piece of US legislation that folk always return to when discussing the soaring cost of goods in Hawaii: The Jones Act. Back in 1920, the US government instituted a set of laws aimed at controlling the activities of the country’s merchant navy. Tucked away in Section 27 was a paragraph that decreed that any ship moving between two American ports must also be registered in the US, have a majority of US crew, and even be built in the United States.

Proponents thought that the act would bolster commerce and trade between the states, and give a much-needed boost to local shipbuilding communities. Detractors said it would lead to huge price rises in offshore territories such as Puerto Rico and – you guessed it! – Hawaii.

Fast forward a whole century and the Jones Act has certainly made a clear impact on the prices over in the Aloha State. Shipping costs for everything from baby’s nappies to chocolate is super high. That’s fed through into supermarket shelves, keeping the cost of goods way higher in Hawaii than it is on the mainland. 

Lack of local resources

Sacred pools in Hawaii
Photo by Envato Elements

It’s probably a good thing, but Hawaii isn’t known for its colossal gas or oil deposits, its rich mining veins, or even its manufacturing prowess. It’s too disconnected from the mainland USA to be transformed into a car marking powerhouse or a big gypsum quarry or something of the like. Plus, there are over 50 state parks in these parts, so you wouldn’t even be allowed to drill and dig if there was precious material lurking below ground.

That’s not always been the case. There was a major sugarcane boom here in the 1800s, spurred on by increased demand that came due to the California Gold Rush. Increases in labor costs eventually led to a decline in the sugar industry in Hawaii around the early 1990s. It was only after the mills were retired that the locals realized the extent of the environmental damage that had been done.

Today, the economy is almost completely reliant on tourism. It accounts for 25% of the GDP of the state and employs over a quarter of a million people either directly or indirectly. The upshot? You – as a traveler – will be the main source of income. To put it another way…getting dollars out of your wallet and into the tills of hotels and local shops is this territory’s day job!

Because it’s a small state

Waipio Valley view in Big island, Hawaii
Photo by Envato Elements

Homebyuer.com hesitated not a jot when they put the Aloha State at the very pinnacle of their most expensive states for housing in 2023. A CNBC piece summed it up: “Hawaii is the least affordable state to buy a house this year.” Simple as that. And it wasn’t even a tight-run thing. The territory had a median home price that was more than $110,000 dearer than the next state over, California.

Yep, the average price of a home in Hawaii now runs at a lottery-worthy, game-show-win-requiring $615,300. That’s after a 22% increase from 2020 to 2021 (what’s that about a global downturn?) and enough to warrant monthly mortgage repayment estimations in the region of $2,923. Wowza.

There are two key issues at play here. The first is land zoning. Much of Hawaii is protected by law, and around only 5% of the total land in the state can be used for residential homes. The second is our good old pal demand. Everyone from Hollywood celebs to pro surfers want to lay down roots here – who wouldn’t? That pushes up the cost of the houses that are on the market, usually far out of the ballpark of your causal purchaser.

Why is Hawaii so expensive? Our conclusion

Why is Hawaii so expensive? There’s no single reason why you’ll need to fork out more to visit the Aloha State than other parts of the USA. Part of it is down to just how far away these tropical islands are – over 3,000 miles from most of the country. Then there’s the fact that virtually everything that’s consumed in Hawaii needs to be imported, which cranks up the cost of supermarket goods and meals. Oh yep, and vacations between Waikiki and Maui’s perfect coves are pretty coveted things, so you’ll be jostling with big crowds of holidaymakers when you book those hotels and flights.

Joseph

For more than 11 years, Joe has worked as a freelance travel writer. His writing and explorations have brought him to various locations, including the colonial towns of Mexico, the bustling chowks of Mumbai, and the majestic Southern Alps of New Zealand. When he's not crafting his next epic blog post on the top Greek islands or French ski resorts, he can often be found engaging in his top two hobbies of surfing and hiking.

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