The 5 Categories of Legally-Approved Short-Term Rentals in Waikiki (And What They Mean for Investors)
By Shannon Smith, Team Hawaii at Hawaiʻi Modern Realty | Short-Term Rental Specialists | TeamHawaii.RealEstate
Not all short-term rentals in Waikiki are created equal. In fact, the City and County of Honolulu recognizes five distinct categories of legal STR operation within Waikiki alone — each with its own rules, requirements, and implications for buyers and investors. Understanding which category a property falls into is one of the most important due diligence steps in evaluating a Waikiki condo purchase.
Here’s a breakdown of what our team calls the “Five Categories” — and why each one matters.
Category A: Resort Mixed-Use Zoning with Hotel Operation (~3,004 Units)
These are properties located in resort-zoned parcels that also operate under a hotel structure. This is the most straightforward category — short-term rentals are fully permitted by right. Properties in this group include some of Waikiki’s most recognized addresses, such as the Ritz-Carlton Residences, Waikiki Shore, and the Ilikai Apartment Building — the latter being the largest single STR building in Waikiki with over 1,000 units.
For buyers, Category A properties offer the clearest path to legal STR operation. Hotel management infrastructure is typically in place, which can also simplify rental management.
Category B: Resort Mixed-Use Zoning without Hotel Operation (~1,182 Units)
These parcels are also zoned Resort Mixed-Use, but they don’t operate under a formal hotel structure. Short-term rentals are still permitted, but buyers should understand that the absence of hotel management may mean more hands-on involvement in rental operations.
Buildings in this category include properties along the Kuhio corridor and other areas of Waikiki where condo-ownership is the norm but vacation rental use is legally established.
Category C: Apartment-Zoned with Nonconforming Hotel Operation (~1,716 Units)
Here’s where it starts to get interesting. These buildings are technically zoned Apartment — not Resort — but they have historically operated as hotels. Because of this, they are classified as nonconforming hotel uses and are exempt from NUC requirements.
A handful of well-known buildings in Waikiki fall into this category — operating legally for short-term rentals despite being apartment-zoned, because of their longstanding hotel operations. Knowing which buildings these are is the kind of insider knowledge that separates savvy investors from those who learn the hard way.
Category D: Apartment-Zoned, Carved Out Under Bill 41 (~1,312 Units, 488 with NUCs)
In 2022, the City passed Ordinance 22-7 (known as Bill 41), which specifically designated certain apartment-zoned buildings as eligible STR properties. Two prominent Waikiki buildings were carved out under this legislation, with over 1,300 units eligible — though 488 of those require an active NUC to operate legally.
This is a nuanced category that requires careful title review. Not every unit in a designated building is automatically STR-legal — individual unit NUC status must be verified.
Category E: Apartment-Zoned, NUC Required (~172 Units)
The smallest and most exclusive category. These are individual units in apartment-zoned buildings where no hotel operation exists — and STR is only permitted for units that hold an active Nonconforming Use Certificate. Since no new NUCs are being issued, these units are increasingly rare and command a premium.
This category includes a small number of specific units across several buildings, including Royal Kuhio (62 units), Waikiki Marina (39 units), Four Paddle (18 units), and several other buildings where just one or two specific units hold NUCs.
Why the Category Matters
Each category carries different risk profiles, management requirements, and long-term value implications. A property in Category A offers maximum flexibility; a Category E property offers scarcity value but also significant compliance risk if the NUC lapses. And if a property doesn’t fit cleanly into any of these categories — it likely cannot legally operate as an STR at all.
Our agents know this classification system cold. Before you buy or sell any Waikiki condo with STR potential, talk to us. We’ll walk you through exactly where the property stands.
Team Hawaii at HAWAIʻi MODERN REALTY. TeamHawaii.RealEstate
