At the 1 Hotel Hanalei Bay, where the cheapest rooms go for about $1,200 a night, wealthy tourists, including Kourtney Kardashian and Addison Rae, enjoy access to $865 anti-aging facials and personalized nutrition plans while many of the housekeepers and chefs who cater to them can’t find a place to live.

Some of the hospitality staff live in guest rooms at the hotel, which recently underwent a $300 million renovation. Others live in a seven-bedroom, four-bathroom duplex purchased for $2.3 million by an entity under the hotel’s parent company, Miami-based developer Starwood Capital Group, which has at least $115 billion in assets.

A half-dozen prefabricated container homes at an equipment baseyard a couple miles from the resort represent the Princeville hotel’s newest initiative to address an islandwide workforce housing shortage that has undermined its ability to hire and hold on to workers — a problem not lost on the luxury hotel’s own guests. 

As a recent three-star Yelp review of 1 Hotel Hanalei Bay put it: “Beautiful property, severely understaffed.”

Hawai‘i has a well-documented affordability problem, and it doesn’t only affect hotel workers. The average renter in Hawaiʻi earns roughly $16 an hour, almost $10 short of what it takes to afford a one-bedroom rental home, according to the National Low Income Housing Coalition.

To overcome the problem, some businesses are becoming landlords, spending big bucks to develop affordable housing options for their workers. But rarely is this an option for businesses other than wealthy corporations.

The 960-square-foot container homes built by the 1 Hotel off Hanalei Plantation Road provide housing to the temporary foreign workers that the resort has come to rely on despite its efforts to drum up local employment prospects with jobs fairs and a $5,000 sign-on bonus. The foreign employees come from Indonesia, Thailand and other countries on short-term work visas. A shuttle transfers them between the hotel and the prefab containers.

In the neighboring town of Kīlauea, a duplex purchased by the hotel for employee housing in September broke a record for the highest residential sale in Kīlauea town, a working class community where people often crowd into multigenerational homes or otherwise crowded conditions, said real estate broker Suzi Gillette, who represented the seller. It was an all-cash transaction.

“Is this trendy? No, I don’t think it’s trendy — it’s desperation,” Gillette said. “It’s desperation for housing and if an employer can afford to buy housing, they do. But very, very few do because very, very few can. I mean, who can afford a $2 million house for their employees? That’s not chump change.”

The 34-year-old house, she said, accommodates the 1 Hotel’s upper management.

The hotel, which bills itself as an eco-luxury retreat, did not respond to requests for comment for this story.

Kauaʻi Housing Market Up 20%

Kauaʻi’s deepening housing crisis started gradually and then shot to new heights when the coronavirus pandemic supercharged a statewide real estate frenzy. 

Even before Covid, many longtime island residents were being driven away from the islands by the lack of job prospects and a scarcity of workforce housing.

Housing prices continue to spiral beyond the means of most working class residents. Last year the island’s housing market surged more than 20%.

“Entry-level employees, mid-level employees, even some upper management employees are difficult to find here and going to the mainland to find them is not an option because folks can’t find a place to live on the island once they make it out here,” said Kauaʻi Chamber of Commerce President Mark Perriello.

Grocery stores, the Kauaʻi Police Department, banks and schools struggle to hire and hold onto employees due to the housing crisis. So do construction companies, some of which shell out top dollar for luxury vacation rentals to house workers who commute by airplane from Oʻahu.

“A good friend of mine works in construction and the company that he works for puts them up at an $8,000-a-month rental right above Secret Beach because that’s all they can find,” Perriello said. “And so they have a few of them packed in there, and that’s the price they’re willing to pay to do work here on Kauaʻi. But I don’t know how sustainable that is for the future.”

Wilcox Medical Center, Kauaʻi’s largest hospital, recently turned to automated checkout technology powered by artificial intelligence to allow the cafeteria to stay open later and make checkout lines faster. The cafeteria has also leaned on the technology during staffing shortages.

Mark’s Place, an iconic counter-serve joint serving plate lunches and bento boxes in Puhi, reduced its hours to 10:30 a.m. to 2:30 p.m. on weekdays. The restaurant is closed on weekends. Kalaheo Cafe & Coffee Co., another Garden Isle institution, closes after Sunday brunch and doesn’t reopen until Wednesday.

The phenomenon has also reached some of Kauaʻi’s most celebrated beaches, which have closed due to lifeguard staffing shortages. 

Business Community Looks To Lawmakers For Solutions

There is an emerging consensus that government intervention is needed. 

The Kauaʻi Chamber of Commerce refocused its longstanding top policy priority in 2023 from increasing the island’s qualified workforce to something more urgent: Helping businesses succeed despite a labor shortage so severe it threatens their very existence. 

“I don’t know when all these workers that have disappeared will come back, if ever,” said Perriello, who is lobbying the Hawaiʻi Legislature to fund automation technology, such as hotel concierge and room service robots, to help local companies keep up with customer demand. “We really need real-time solutions for businesses.”

Kaua‘i Rep. Luke Evslin, chair of the House Housing Committee, said the affordable living squeeze on Kauaʻi is intensifying, with local housing stock dropping as the number of vacant units and vacation rentals climbs. A median-priced home on the island now costs $1.4 million.

The county is aggressively building income-restricted units for people living in poverty, he said, but many in the island’s working class earn too much to qualify for those units but not enough to buy a home at today’s astronomical prices. 

Dozens of bills introduced by Evslin at the Legislature this session seek to tame the runaway housing market for people whose paychecks disqualify them for most forms of public housing assistance. Some of the legislation would encourage high-density housing in Līhuʻe, Kauaʻi’s center of industry and government, which Evslin said is key to solving the housing crisis while retaining the island’s rural charm. Another bill would address the proliferation of second homes and vacation rentals.

“I think some corporation buying a multimillion-dollar home to house workers is a much better use of that home than being a vacation rental or just being somebody’s vacation home,” Evslin said of the 1 Hotel’s recent real estate grab in Kīlauea.

The county is planning a 200- to 300-unit workforce housing community in Kīlauea — a 15-minute drive from the 1 Hotel. That project is still in the planning phase.