A contractor hired by the Hawaii Tourism Authority is recommending a tourism governance system to replace the authority established by the state Legislature more than a quarter-century ago.
The overall governance structure of the HTA has been debated in previous legislative sessions, and various bills have been introduced in recent years to address whether the HTA structure outlined in Hawaii’s Revised Code (Chapter 201B) is the best approach to managing our largest economic driver, tourism, but without progress.
Last year, as legislation was looming to abolish the HTA, the agency decided to fund a third-party governance review. After a competitive bid, Better Destinations LLC, founded by Kathy Ritter, was awarded the $294,400 contract, which began in January.
It is recommended that the HTA be restructured into a new name, Destination Stewardship Organisation, known as DSO.
The World Council on Sustainable Tourism describes destination management on its website as “a process in which local communities, government agencies (and non-governmental organizations) and the tourism industry take a multi-stakeholder approach to maintaining the cultural, environmental, economic and aesthetic integrity of a country, region or town.” In other words, it’s about ensuring that a destination maintains and enhances the unique characteristics that make it attractive for beneficial tourism.
Other key recommendations from Better Destination include:
— Establish a new position in the Governor’s Office called Administrative Liaison.
— Organize the DSO as a nonprofit organization.
— Develop a productive partnership between DSO and the Hawaii Tourism and Convention Authority.
— Establish the Hawaii Tourism Destination Stewardship Council to provide strategic oversight.
— Establish an Island Tourism Destination Management Council to enhance meaningful collaboration between states and islands.
— Fund your DSO with a predictable revenue stream.
— Center the DSO’s organizational structure on the management of Hawaii’s tourism industry.
— Increase understanding of the value of Hawaii’s tourism industry by increasing transparency in county and state hotel accommodation tax (TAT) allocations.
— Giving leadership to new state agencies.
— Establishing a Blue Ribbon Commission on Hawaii Tourism Governance to spearhead the transition, which is expected to take at least two years.
The new model, called “Aloha Governance,” is described as “a regenerative, ‘community first’ mindset that not only delivers a healthy tourism economy, but also addresses local priorities and enhances unique assets through ongoing collaboration.”
Ritter and his team of experts included Place Generation co-founders Elke Dens and Frank Kuipers, SMARInsights executive vice president Dennis Miller, and Karey Kapoi, owner of Karey Kapoi.
“This is a big challenge (for HTA and Hawaii) and I don’t think it’s going to be solved nicely with just small fixes,” Dens said.
The recommendations, which were submitted to the HTA Board on 27 June, have now been sent to the HTA Governance Investigations Permit Interaction Group, and the HTA will take the group’s recommendations into account when deciding how to respond to the investigation.
“This governance study is not radical in the sense that all the different goals, like destination management, have been identified in the past,” said Daniel Naho’opii, HTA’s interim president and CEO. “The way we do marketing is one that integrates both the product and the destination. It’s a little bit different in approach and structure.”
“Most importantly, this is an independent study that has not been influenced by lawmakers, staff or board members, so we need to review it and understand the implications going forward and test the cases that they are recommending,” Naho’opii said. “There is still a lot of work to be done.”
The will of the legislature
While the HTA emerged from this year’s legislative session with a $63 million regular lump sum budget, it’s unclear whether it feels the same sense of urgency as it did when the process began — no small accomplishment for an agency that has endured cuts, reorganizations and threats of defunding over the past few sessions.
Moving forward with the governance study’s recommendations would also require support from state lawmakers, who may be resistant to relinquishing even partial control over the state’s tourism industry, a cash cow that generates about $1 billion a year in TAT revenue. In addition to earmarking $63 million in state TAT revenue for the HTA’s operating budget, lawmakers last session allocated $11 million for the Hawaii Convention Center’s operating fund.
Still, some of the recommendations by Ritter’s team are consistent with the passage of Senate Bill 3364, which amends the HTA’s powers and duties and aligns its statutory mission with regenerative tourism and destination stewardship efforts.
“(The HTA’s request for proposals) outlined nine actions as a scope of work. The last of the nine actions was to determine whether an alternative governance system was needed, and we answered that question ‘yes’ based on everything we’ve heard and where HTA is now,” Ritter told the HTA board at its June 27 meeting.
“Despite much progress made this past legislative session, our first budget approved by the Legislature in three years, we also lost the last of the exemptions given to the HTA when it was created in 1998,” Ritter said, referring to a provision in SB 3364 that eliminated the HTA’s exemption from administrative oversight of boards and commissions.
While repealing the exemption could be a sign of legislative intent, it could complicate the division of power between the state’s Department of Business, Economic Development and Tourism and the HTA, which is administratively attached to the DBEDT. Naho’opii told the Honolulu Star-Advertiser that repealing the exemption “indicates that the Legislature is looking to change or amend 201B, which is our law. If the Legislature has already changed some parts, they may want to change other parts.”
Stakeholder trust
The governance survey, published on HawaiiTourismGovernance.com, has attracted attention from many stakeholders, many of whom have participated in the process.
Ritter said the situation analysis section includes extensive desktop research, benchmark case studies, 69 in-depth interviews, co-creation labs and stakeholder survey results from SMARInsights.
According to Miller’s presentation of preliminary findings to the HTA’s board in May, the agency received negative ratings from 43 percent of stakeholders surveyed.
Concerns about “excessive tourism and the strain on infrastructure and local resources” were one of the main negative perceptions of HTA noted in the survey, alongside “the impact on residents’ quality of life” and “concerns about over-reliance on tourism.”
The survey garnered positive feedback in the areas of economic growth and tourism promotion, meeting the needs of industry and local communities, conserving natural resources and the environment, cultural education and preservation, and working towards regenerative and sustainable tourism.
Research Considerations
Despite the mixed findings, stakeholders appear to be examining the governance inquiry’s recommendations with an open mind, with an eye toward change.
“The report seems quite far-reaching and there are clearly some concerns. The idea behind this whole process is that it will provide a basis for serious further discussion and I think it has done a great job in that regard,” said Paul Brewbaker, president of TZ Economics.
“There will be disagreements on the finer details as you go down the food chain,” he says, “but I think the basic concept of a DSO – that destination management and destination marketing, the two functions already enshrined in law, are on equal footing, so to speak – is the overarching goal for many observers.”
Rep. Sean Quinlan (D-Waialua-Haleiwa-Punalu’u), chairman of the House Tourism Committee, said the study was much needed and he was “very pleased” the study was done, which thoroughly examines “everything we do.”
“As our current market changes and society changes, tourism must change with it. Tourism highlights a lot of the problems we have, and I think these problems are solvable, but we have a lot of work ahead of us. In many ways, the plan they outlined doesn’t line up with the political realities in Hawaii today,” Quinlan said. “A lot of the proposals are interesting, but I’m not convinced we can move in that direction anytime soon.”
“We should have nonprofits driving the bus like the California Tourism Board, the Florida Tourism Board and the Puerto Rico Tourism Board, with less legislative interference. There needs to be more logic in the revenue targets and marketing dollars tied to visitor spending. They need to operate independently, based on logic and common sense,” said Keith Vieira, a former HTA board member and president of hospitality consulting firm KV & Associates.
