With every new state administration comes a call for the diversification of our economy.
I know. I was with the Ariyoshi administration when the governor and Legislature led the expansion of diversified agriculture, aquaculture, film-TV production, high tech and alternate energy, all the while maintaining strong support for our mainstays of tourism and construction.
His successors followed that strategy. As Department of Business, Economic Development and Tourism director for Gov. John Waihee, we expanded on the theme, channeling more resources to tourism and complementary industries such as agriculture, local products and services, film and TV, sports, and defense spending. This is a game plan that’s served us well for the past 30 years.
Tourism is our core competency. Tourism is something we do exceptionally well in a global marketplace. Tourism — which provides tens of thousands of jobs and $13 billion in revenue this year alone — is largely responsible for our enviable quality of life, and will continue to be so for years to come.
Now some are renewing the call for diversification away from tourism, fretting over a perceived over-reliance on the travel industry.
As someone who supports and appreciates economic diversification efforts, I agree. But I also believe diversification should be pursued within a tourism context. We can build on education, health, cultural and agricultural activities, science and technology, renewable energy, sports, film and TV — and still prove that Hawaii is a great place in which to vacation, do business and invest.
A terrific example is in November’s Asia Pacific Economic Cooperation summit, which will bring world leaders, as many as 20,000 government and business delegates, and the news media to Hawaii. Bank of Hawaii CEO Peter Ho, heading the APEC host committee, recently told Hawaii Hotel & Lodging Association members his committee has developed a solid community-based, public-private partnership that will showcase the "quality of Hawaii" from business and visitor perspectives.
First Hawaiian Bank CEO Don Horner also spoke recently to HHLA members about tourism’s importance. "Tourism represents 40 percent of our jobs statewide, directly or indirectly," he said. "We eat out of the same rice bowl. If tourism is healthy, the state will be healthy."
Don said tourism is not an "old industry," as some have described it, but has become a "high tech" industry with very good-paying jobs. Hawaii tourism has reinvented itself over the years.
Hawaii hotels paid $244 million more in taxes than other industries in 2010. This included $224 million in room taxes and $20 million in additional real property taxes in Maui County because hotels, resorts and timeshares there are taxed at higher rates than other commercial property. Furthermore, the four county governments split more than $90 million of that revenue in 2010, easing their budget situations.
It’s also worth noting that a growing share of the hotel room tax revenue — originally created for tourism marketing, the convention center and the county governments — is now being diverted to the state’s general fund to help balance the budget. That visitor revenue will generate $66 million this fiscal year, then soar to a high of $151 million by 2015.
Also, the annual Visitor Industry Charity Walk raised more than $1 million for dozens of local charities in May, money sorely needed as government has slashed public funding for many nonprofit organizations.
When I was mayor, the city continued investing more than $1 billion in Waikiki in the form of sewers, roads and sidewalks, parks and public facilities like the zoo. That was more than matched by $3 billion in private investment, such as construction at Beach Walk, the Royal Hawaiian Hotel/Sheraton Waikiki, Royal Hawaiian Center and Trump Waikiki. These projects created jobs for the construction industry and generated tax revenue.
It’s too bad that some feel ambivalent about tourism. Yes, we should pursue economic diversity, by all means. But we also need to acknowledge the critical importance of tourism to our future, the vitality of the visitor industry in competing successfully in the global marketplace, and the essential role tourism will have in supporting the very diversification we seek.