Seeking events that draw visitors is serious business
POSTED: 1:30 a.m. HST, Jan 2, 2011
The power of sports amazes Michael Story sometimes. "Look at the World Cup," he says, "where you can have a country like Ghana, a country that's in civil war, and in order to get a team to the World Cup, this third-world country will lay down its weapons and come together to assemble a team. And they'll put a team together, and this team will be good enough that it goes on to beat the United States. ...
"It's stories like that that show you the importance of sports ... how people will cling to sports, whether it's participatory or whether they're just spectators. That's why you see such a push from organizations like the United Nations to incorporate sports into their body of work. It does bring people together."
As the Hawaii Tourism Authority's tourism brand manager, a big part of Story's job is to develop a marketing strategy to tap into spectator sports that bring more visitors to the islands. Every year, HTA dedicates between $7 million and $8 million to the effort.
The bulk of HTA's investment dollars — $4 million to the National Football League and $1.7 million to the PGA Tour — will be spent this month on marketing efforts in high-profile television events that showcase Hawaii during the dead of winter in North America.
But Story says it is just as important to help support and preserve traditional island sports such as surfing and outrigger canoe paddling that aren't necessarily moneymakers.
"These are things that may not have massive economic impact or massive television exposure but are so important to us as a destination from a cultural perspective," he says. "Surfing, paddling, open-water swimming, Na Wahine O Ke Kai, the Molokai Hoe ... these are significant things to us.
"These are the things that not only make us what we are, they are a big part of the culture that people want to come here for."
Funding and marketing sporting events in Hawaii is no game. For the Hawaii Tourism Authority, it means investing between $7 million and $8 million yearly in a portfolio of varied competitions that hopefully pays off by bringing more visitors to the islands.
Michael Story, HTA's tourism brand manager, says the agency believes the events it sponsors return more than $100 million in economic impact a year — even though such conclusions are admittedly difficult to quantify and often open to dispute.
In the end, it is all about attracting tourists, of course. Sometimes, the deal hinges on the number of viewers you can reach through television. Sometimes, it is about the number of people a specific event can draw to Hawaii.
But just as often, Story says, it is about helping to support and preserve traditional island sports such as surfing and outrigger canoe paddling that aren't necessarily moneymakers but are at the heart of the culture that makes this place unique and desirable.
"Sports brings people together," he says. "There are quality-of-life aspects that sports brings to the table that are very hard to quantify but that you know are there. We play a small role, but as a global destination, we play an important role — and that is as a platform where people can gather to participate in sports and also to enjoy such a beautiful destination. That's what sports tourism is about."
With a University of Hawaii Economic Research Organization report indicating a surprisingly strong outlook for a tourism industry rebound in 2011, Story has high hopes for the state's sports marketing efforts.
While Hawaii could never host an event on the scale of a Super Bowl, World Cup or Olympics because of a lack of facilities, Story believes it can still be a perfectly located stage for smaller competitions with international appeal. He says HTA is wrapping up negotiations to support more than 20 events in the coming year and is already laying the groundwork for what could be major state-initiated sports projects in 2012.
HTA's annual budget comes from the transient accommodations tax, the so-called TAT, and can fluctuate from year to year. Last year it was $64.9 million; this year it is $72.8 million.
Every year, HTA dedicates about 10 percent of its budget — $7.1 million this year — toward supporting spectator sports that the authority hopes could become vehicles for economic growth.
Two of the most significant sports tourism events in Hawaii are the Honolulu Marathon and the Pro Bowl — and as case studies, they represent the extremes of the state's sports marketing push.
A report prepared for the Honolulu Marathon by Hawaii Pacific University's Travel Industry Management program says 21,885 of the 28,635 registered runners in the 2010 race were visitors, and that 17,905 of them were from Japan. The study says the marathon generated more than
$100 million in economic impact, based on estimates of visitor spending per day.
As for the 2009 Pro Bowl, HTA says the event attracted 24,230 visitors — of which 18,487 came to Hawaii specifically for the game — resulting in $28.6 million in spending and $2.9 million in state taxes.
Here's the thing: While HTA sings the marathon's praises, it doesn't provide any direct support for the race.
That's because the Honolulu Marathon, now one of the largest marathons in the country, is the ultimate sports marketing event. It is distinctly Hawaii, with worldwide recognition and appeal, and above all, self-sustaining. Plus, it isn't about to pack up and go away any time soon, if at all.
In the meantime, HTA will pay the National Football League $4 million a year — more than half its sports marketing budget — for the right to host the next two Pro Bowls at Aloha Stadium, plus $145,000 this year and $152,500 next year for game-day stadium operating costs.
That might seem to be a classic case of the rich getting richer, but the reality is that anything bearing the NFL logo is pure gold these days — even an all-star exhibition of absolutely no consequence — and pay to play is the name of this game.
When HTA balked at the pricetag in 2009, the NFL picked up its football and went to Miami in 2010, ending a 30-year relationship with the islands. The move drew outrage from Hawaii fans who had embraced and breathed life into a moribund game, politicians who called HTA shortsighted, and NFL players who had come to love the laid-back postseason in the islands. "We really heard it from just about everybody," Story says.
For its $4-plus million, Hawaii will get three hours of NFL-branded air time — including two 30-second marketing spots — on Jan. 30, during the dead of winter in North America. By NFL standards, that's a bargain. Consider that a 30-second commercial in Super Bowl XLV will cost about $3 million. Pepsi already has plans for at least six spots, and Coca-Cola and Anheuser-Busch typically produce multiple ads.
"The question is, how do you define a 'big' event?" Story asks. "Is 'big' going to be media exposure around the world? Or is it going to be the number of people you bring in to watch a specific event?
"The Honolulu Marathon brings tens of thousands of people to our island for a massive economic impact. It's a great event ... so well known and so well run. That's a massive economic impact, but not necessarily large television exposure.
"On the other end of the spectrum are probably the golf events (this year, it will be the Hyundai Tournament of Champions on Maui, Sony Open in Hawaii on Oahu, Mitsubishi Electric Championship on the Big Island and the Wendy's Skins Game on Maui, for which HTA will pay the PGA Tour an estimated $1.7 million).
"They may not bring tens of thousands of visitors at any one time, but you have over 20 hours of coverage during a time of the year when it's very cold on the mainland, and that certainly has its benefits. You can't quantify how many people will travel here to play golf during the year because of what they've seen on TV. But the golf industry did a study in 2008 that showed golf was over a $1 billion industry here.
"So there is always this ebb and flow of different types of impacts from different types of events."
HTA has two other substantial investments — $275,000 to ESPN for marketing spots during the Sheraton Hawaii Bowl and the Hawaiian Airlines Diamond Head Classic basketball tournament, and $200,000 to the Ford Ironman World Championships, which have been an economic boon for Kailua-Kona for 30 years.
What's left goes to events such as the Xterra World Championships, Xterra Trail Run World Championships, EA Sport Maui Invitational basketball tournament and the Quiksilver in Memory of Eddie Aikau surf meet.
The agency also provides indirect support to island ocean sports such as Na Wahine O Ke Kai, the Molokai Hoe, the Stand Up World Tour Finals and the Waikiki Roughwater Swim, "because events like these are significant in their realm — arguably the world championships of their events — and so significant to our culture and community and important for our destination," Story says.
HTA also is involved in the language translation and rebroadcast of University of Hawaii football games to a sports channel in Japan and provides a base at the Hawaii Convention Center for U.S. Olympic canoe and kayak athletes training in the islands.
"All of these things are legitimate, but you can't quantify all of them and say, 'Look at what we did ... look at what our (return on investment) was,' " Story says. "Sometimes there's nothing concrete about it. So you just do the best you can to measure it."
Under a formula used by the state Department of Business, Economic Development and Tourism, HTA arrives at most of its estimates by compiling figures from such factors as airline arrivals, hotel occupancy, event participation, tickets sold and out-of-state credit card sales.
In some cases, such as a Hawaii football game, hotels may have promotional codes for people coming from the mainland for the contest and UH will have an accounting of tickets sold by the visiting team, so figuring an economic impact is fairly easy and accurate.
But with events during the winter such as surf meets on the North Shore, where thousands of people are flocking to the beaches to see the big waves and Haleiwa is pulsing with activity, while there is clearly an economic impact related to surfing, without tickets or gate receipts, it is hard to say for sure if the competition is the reason for the crowds.
"Depending on who you talk to, and who that number will benefit, you're going to get a different view," Story says. "So you can always poke holes into economic impacts, but I would say it's still important to try to measure impact, even if sometimes it's just your best guess."
As for the future, "there's always something new coming in," Story says.
"Traditionally, we've been looked at as this funding mechanism — pure sponsor and that's it. They come to us for dollars. But nowadays what we really do is act more like gatekeepers.
"The trick is to have a very broad portfolio that hits on certain key items. Economic impact is very important, exposure is very important, and the community and quality of life is very important. The one thing we always try to look at to integrate everything is the visitor-resident mix and how that's going to work and how the event is going to fit into Hawaii.
"Because you could have an event that you think is possibly the best event in the world, but if the community doesn't want it, you'll never be able to sell it."