Ernie Weissman
The Hawaii Tourism Authority (HTA) is different from other state destination management organizations. In addition to managing tourism and conventions, the Legislature has tasked it with protecting Hawaiian culture, overseeing air traffic, providing crisis assistance to visitors and residents, creating a digital reservation system for statewide parks and natural areas, and growing jobs (the last two were added during this year’s legislative session).
In a state where tourism accounts for 40 percent of the state’s economy, the Legislature has more than a passing interest in the tourism agency’s funding and performance. At the same time as it holds the HTA accountable, the Legislature has been playing politics with funding, withholding funding for the past three years.
The HTA’s current budget of $63 million is less than it was when it was founded in 1998. Once touted as a model well-funded state tourism marketing organization (its budget was usually the largest or second largest), it has recently been outshone by California, Florida and Puerto Rico.
That job has been made even harder by Congress, in the name of fulfilling its oversight responsibilities, removing statutory provisions that allowed the HTA to make its own decisions and weakening its leadership.
The HTA board was authorized to conduct a thorough, independent review of its structure and governance, and Better Destinations, a Denver-based tourism consulting firm founded by Kathy Ritter, who previously led state tourism departments in Illinois and Colorado, was selected in December to conduct that review.
While the report itself is about 150 pages, the 36-page situation analysis, titled “Governance of Aloha: The Case for Reforming Hawaii’s Tourism Oversight,” summarizes conclusions drawn from interviews with more than 60 tourism stakeholders, 11 workshops, 619 responses from individuals with tourism interests, and 11 case studies from the U.S. and around the world. (Travel Weekly was permitted to observe a roundtable discussion Better Destinations held with travel advisors and suppliers following its Hawaii Leadership Forum in April.)
The main recommendations are both radical and reasonable: The organisation should receive predictable funding and be allowed independence; and It should transform into a not-for-profit organisation, a structure more typical of a DMO. Following the loss of credibility the HTA has suffered over the years, the report recommends that the organisation focus on increasing transparency, building trust, encouraging collaboration, strengthening governance and recognising the unique challenges of each island.
The recommendation that could go a long way toward restoring trust in the HTA is also its most politically charged, calling for the Legislature to cede one of its most lucrative yet hidden sources of power: The report calls for greater transparency in how revenues generated by the state’s Transient Accommodations Tax (TAT), which will bring in $1.1 billion in revenue in 2023, of which $846.3 million went to the state’s general fund and $275.2 million went to county general funds.
The governance review’s recommendations will need support from state lawmakers to move forward, who may be resistant to giving up even partial control over the TAT fund, which is worth more than $1 billion a year. But the lack of transparency in those spending has left residents confused about how tourism directly benefits them.
In my opinion, it is crucial to make a stronger connection between tourism revenues and resident benefits. While there may be no doubt that general fund resources are used to improve the lives of residents, due to the general nature of allocations, improvements paid for with tourism funds may not be recognized as such.
The survey finds that Hawaiians are not only resentful of some tourism activities, and even the HTA itself, because they fail to understand the positive economic impacts of tourism. As the long-running dispute over tourism promotion funding for both the incumbent HTA and the Native Hawaiian Advancement Council attests, many Native Hawaiians place as much, if not more, importance on educating tourists to understand and respect the islands’ unique culture than on the resulting economic benefits.
To accomplish all that is proposed, the study noted, HTA will need to foster (and in some cases build or repair) relationships with other state agencies and establish lasting collaborations in the form of a governance council that includes members from the public, private and nonprofit sectors.
Stewardship is at the heart of the recommendations, going so far as to say that the HTA should change its model from DMO to SMO (Surveillance Management Organization) and change its name to reflect the new direction. The study calls for the creation of a Hawaii Tourism Management Council to provide strategic oversight and foster collaboration between the state and the islands.
Tourism in Hawaii is down in 2024 and the overall operating environment is unfavorable. The state is still recovering from the Lahaina fires that affected not only Maui but the entire state. Additionally, a strong US dollar is making island vacations more expensive for international tourists.
I commend the Hawaii Department of Health and the state for having the courage to give the report’s authors the independence to draw their own conclusions. As a result, the report essentially calls for a complete overhaul of the governance and operations of the very organization that commissioned the study. Many of the proposed changes have been proposed in one form or another before, but the atmosphere in Hawaii is so politically charged that it was necessary to bring in a neutral party.
The ball is in the hands of the Governor, the HTA and the Legislature. The Governor told the Honolulu Star-Advertiser that the report will “provide a catalyst for corrective action on the way the HTA operates.”
The Star Advertiser supported most of the recommendations, with the notable exception that the HTA become a not-for-profit organisation.
“What’s being proposed is a bid to get the government to take control of the facility,” state Sen. Glenn Wakai, vice chairman of the Senate Energy, Economic Development and Tourism Committee, said, according to the Star-Advertiser. [in the report] It provides a level of continuity and proper governance that we don’t currently have.”
But state Rep. Sean Quinlan, chairman of the House Tourism Committee, said he was “very pleased” the study was done and that it “highlights a lot of the issues we have,” but added, “In many ways this plan is out of sync with today’s political realities. I’m not convinced we can move in this direction in the foreseeable future.”
If there is a discrepancy between “today’s political reality” and the unanimous will of residents and tourism-related parties, I think those who create that political reality have an obligation to listen more carefully.
