Norwegian Cruise Lines (NCL) has taken the unusual step of imposing Hawaii's transient accommodations tax (TAT) and environmental "green fee" on its passengers, even while a federal court has issued an injunction barring local tax collectors from enforcing these fees on cruise stays. This move occurs amid ongoing legal challenges by the cruise sector against Hawaii's newly enacted green fee law, which mandates that cruise ships pay taxes analogous to those levied on hotels and vacation rentals.
The injunction was handed down by federal appellate judges on December 31, mere hours before the tax measures were scheduled to become effective. Norwegian representatives indicate that, should the cruise industry ultimately succeed in overturning the tax in court, affected passengers will receive refunds for the fees collected.
As of this writing, it remains unclear whether other cruise lines operating in Hawaii have commenced charging these taxes amid the injunction. Major industry stakeholders have not provided definitive guidance, and only a limited number of cruise lines have responded to inquiries regarding their positions.
Representatives from Oceania Cruises stated that their forthcoming Hawaii cruises scheduled for October do not currently include these taxes. Meanwhile, queries directed at Royal Caribbean were deferred to the Cruise Line Industry Association (CLIA), which addresses the issue at an industry level.
However, the association has emphasized that decisions related to implementing charges during ongoing litigation are business judgments unique to each cruise line, stating, "Decisions about how to handle potential charges during ongoing litigation are individual commercial decisions made by each cruise line." This stance suggests variability in how different operators may be approaching the tax question.
Impact on Passengers
Don Yonce, a resident of Dallas, is presently sailing on Norwegian's "Pride of America" in Hawaiian waters. He reports having received an email in October indicating that his family's suite booking would incur Hawaii’s 14% combined state and county transient accommodations tax proportional to the duration of port stays. The initial communication estimated a tax charge of approximately $1,035 based on the week’s suite cost.
Dismayed by an invoice received mid-voyage including these taxes, Yonce remarked, "We were under the impression that the injunction stopped this." He relayed that onboard guest service managers acknowledged the existing injunction preventing state tax authorities from collecting the fees. However, these representatives also stated that "corporate instructed them to charge it regardless." Yonce noted that many passengers voiced similar dissatisfaction upon learning of the additional levies.
The Cruise Line Industry Association has argued in a legal complaint that the TAT's imposition on cruise ships would significantly raise the expenses of Hawaii-bound cruises. They also warn that the tax could adversely affect both cruise operators and local businesses that rely on cruise-related tourism.
Yonce criticized Norwegian’s approach, noting the inconsistency inherent in simultaneously contesting the tax’s validity due to its alleged harmful impact while proceeding to collect it. "You can't have it both ways," he commented.
Policy Context and Legal Proceedings
Hawaii's government anticipates that the recent 0.75 percentage point increase in the TAT, which introduced the nation’s first green fee tied explicitly to environmental protection, will generate approximately $100 million annually. These funds aim to mitigate the environmental pressures associated with overtourism, including wildfire risks and climate change effects.
Governor Josh Green has indicated that the cruise industry's contribution to this tax revenue comprises about 10% of the total green fee intake. The legal contest led by the cruise industry is progressing in federal court, with the subsequent hearing, a scheduling conference, scheduled for January 26.
In reflecting on his experience, Yonce indicated that his decision to discontinue cruising with Norwegian stems less from the tax itself than from how the company is managing its collection amidst ongoing judicial deliberations.