Published on
August 30, 2025
The Cruise Lines International Association (CLIA) has initiated legal action against the State of Hawaii over the latter’s Cruise Ship Passenger Fee and its Transient Accommodations Tax (TAT) extension. This suit, brought before The United States District Court for the District of Hawaii, contests the extension’s validity, claiming it further complicates the existing multi-layer of onboard fees and taxes paid by cruise passengers, many of whom are paying for the privilege of doing business within the State.
The Expansion of Hawaii’s Transient Accommodations Tax (TAT)
In January 2025, Hawaii expanded its TAT to include not just traditional land-based accommodations like hotels and resorts but also cruise ships. This tax extension, which will be effective in January 2026, also saw an increase in the overall TAT rate from 10.25% to 11%. The decision has drawn sharp criticism from the cruise industry, particularly from Norwegian Cruise Line Holdings, which operates the homeported Pride of America ship in Hawaii.
The Pride of America is a notable vessel in Hawaii’s cruise industry, and Norwegian Cruise Line Holdings has pointed out that passengers on this ship already contribute about $200 per person in port fees and taxes. The extension of the TAT, according to the cruise line, would increase the cost for each passenger by an additional $150, bringing the total tax and fee burden to an estimated $350 per person. For a family of four, this could mean an increase of approximately $1,400 in costs. Norwegian Cruise Line Holdings has expressed concerns that this added expense would discourage passengers from traveling to Hawaii, affecting the overall viability of cruise tourism in the state.
Constitutionality and Legal Concerns
CLIA has raised several legal concerns about the extension of the TAT. In its lawsuit, the association asserts that the tax extension is unconstitutional and violates federal law. According to CLIA, the new tax constitutes an additional financial burden on passengers, who are already subjected to substantial fees and taxes related to their cruise travel.
The cruise industry association argues that the extension of the TAT unfairly targets cruise tourism, which is a vital part of Hawaii’s economy. CLIA claims that the tax will disproportionately affect passengers, who are already contributing to Hawaii’s economy through other tourism-related taxes and spending. The association believes that by extending the TAT to cruise passengers, Hawaii risks undermining a key sector of its tourism industry and causing economic damage to the businesses and communities that rely on cruise tourism.
The lawsuit emphasizes that the introduction of such a tax would be damaging not only for cruise lines but also for local businesses that depend on the influx of cruise passengers for revenue. CLIA has made it clear that it will pursue all available legal avenues to challenge the extension of the TAT and protect the economic interests of the cruise industry.
Economic Contribution of Cruise Tourism in Hawaii
The cruise industry’s economic impact on Hawaii is significant, and CLIA has pointed to various statistics to underscore this. In 2023, cruise tourism generated $639 million in total economic activity in the state. This figure includes $116 million in tax revenue, which is crucial to Hawaii’s financial stability. Additionally, cruise-related businesses supported about 3,000 jobs and contributed $215 million in wages across the state.
CLIA has argued that the extension of the TAT to cruise passengers threatens to undermine this economic impact. The association claims that by imposing higher taxes on cruise passengers, Hawaii could discourage tourists from visiting, leading to decreased tourism-related spending. This, in turn, could harm local businesses that rely heavily on visitors arriving via cruise ships. The loss of revenue for these businesses could result in job losses, particularly in sectors such as hospitality, transportation, and retail.
Given these economic factors, CLIA believes that the decision to extend the TAT to cruise passengers lacks a solid justification and could ultimately harm Hawaii’s tourism economy. The association’s statement underscores that cruise tourism is a vital contributor to the state’s economy, supporting thousands of jobs and generating substantial tax revenue.
A Call for a Balanced Approach
In light of the potential negative effects of the TAT extension, CLIA is urging Hawaii’s policymakers to reconsider their decision. The association has called for a more balanced approach that takes into account the economic contributions of cruise tourism and the potential harm the new tax could cause. CLIA advocates for a solution that would support sustainable economic growth while ensuring that the needs of local communities are met.
CLIA has emphasized the importance of maintaining a cooperative relationship between the cruise industry and Hawaii. The association has expressed its commitment to working closely with state officials to develop a fair, legal framework that promotes both the economic well-being of Hawaii and the interests of cruise operators. According to CLIA, the goal should be to find a solution that benefits everyone, from local businesses to tourists and cruise operators.
The Future of Cruise Tourism in Hawaii
The cruise sector has historically played an important role in the tourism economy of Hawaii, and the implications of this legal dispute could significantly impact cruise tourism in the state. Hawaii’s financial priorities and the tourism sector are in need of balance, and policies like the TAT extension are bound to have selective repercussions.
At this moment, CLIA’s lawsuit exemplifies the cruise industry’s efforts to make cruise tourism a sustainable and economically advantageous sector of Hawaii’s economy. The industry is optimistic that a balance can be struck between local interests and the tourism industry through legal means.
