Hawaii’s idyllic shores are set to become pricier for cruise passengers, as the state introduces a new 11% Transient Accommodations Tax (TAT) on cruise fares, effective from January 2026. This tax, previously applicable only to hotels and short-term rentals, will now extend to cruise ships, calculated based on the number of nights spent in Hawaiian ports. For instance, a 14-night cruise with three nights docked in Hawaii would see the tax applied solely to those three nights.
The legislation, Senate Bill 1396, aims to generate approximately $100 million annually to fund environmental conservation, climate change mitigation, and sustainable tourism initiatives. Governor Josh Green has expressed strong support for the bill, stating, “This legislation… represents a generational commitment to protect our ‘āina [land]. Hawaii is truly setting a new standard to address the climate crisis.”
However, the cruise industry, particularly Norwegian Cruise Line (NCL), has voiced strong opposition. Daniel Farkas, NCL’s Executive Vice President and General Counsel, argues that the tax is unconstitutional, stating, “It has to do with uniformity as to when a vessel pulls into port. It’s simply so that everyone is treated equally.” Farkas warns that the added cost could make cruises unaffordable for families, estimating an additional $500 for a family of five, and suggests that NCL might reconsider its operations in Hawaii. “It picks up and moves. It’s got propellers, it’s got rudders, and we can move it wherever we want,” he remarked.
NCL’s Pride of America, the only U.S.-flagged cruise ship offering year-round Hawaiian itineraries, would be directly impacted. The cruise line has indicated potential legal action, urging the state to reconsider the tax to avoid “costly and time-consuming litigation.”
State Representative Adrian Tam, a proponent of the bill, counters the industry’s objections, asserting that cruise lines should contribute their fair share to the state’s environmental efforts. “They are benefiting from Hawaii’s natural beauty,” he stated.
As Hawaii navigates the balance between tourism revenue and environmental preservation, the cruise tax debate underscores the complexities of sustainable tourism in the Aloha State.
Featured Image: NCL Pride of America. Courtesy of Norwegian Cruise Lines.
