Hawaii’s new tourism leader is shaking up the top ranks even as the visitor industry enjoys one of its best runs since the Japanese bubble.
George Szigeti, who took over as Hawaii Tourism Authority president and CEO on May 28, has been mobilizing a new leadership dream team and making personnel cuts, including HTA’s top marketing executives, while downsizing the administrative budget by $1.3 million to meet a smaller legislative cap.
Among the casualties were David Uchiyama, HTA’s former vice president of brand management, and Brian Lynx, the agency’s former vice president of meetings, conventions and incentives, who were laid off along with one other marketing and two administrative workers.
Szigeti said change was necessary because a law expired that had allowed HTA to spend up to 5 percent of its tourism special fund on administrative costs. State Sen. Donna Mercado Kim scathingly brought the issue to the HTA board’s attention in May. However, by that time it was too late for the organization to make up for its lack of oversight.
“We’re under a new administrative cap,” Szigeti said. “We lost $1.3 million since the first of July. It was the cards we were dealt. We’ve done the due diligence in our assessment. We’ll do more with less; we’ll be lean and mean.”
A personnel shake-up unfolded shortly after Szigeti arrived. The HTA board selected Szigeti to replace tourism executive Ron Williams, who served as the agency’s interim chief executive officer for the first six months after Mike McCartney left the agency to became Gov. David Ige’s chief of staff.
Uchiyama, who was a contender for Szigeti’s job, helped take the agency from the doldrums of 2009 to what appears to be its fourth record-setting year in a row. Uchiyama will be paid $103,000 severance in accordance with the terms in his contract, which was worth $225,0000 annually. The state is still working on the compensation package for Lynx, who was recruited from the hotel sector to increase Hawaii’s visibility as a global meetings destination.
Szigeti said core functions of Uchiyama’s and Lynx’s former positions were folded into one job, which will be called vice president of marketing and product development.
“We hired Bishop & Co. and launched the search process in August. We hope to have someone by fall,” Szigeti said.
He said the new team can meet HTA’s projection to grow 2015 visitor arrivals to 8.59 million, a 3.7 percent gain over 2014. He said they also are committed to reaching the 2015 spending goal of $15.6 billion, a challenging 5.7 percent rise from 2014.
Keith Vieira, principal of KV & Associates Hospitality Consulting, said he views the leadership and structural changes as positive provided a new marketing guru arrives quickly.
“It’s easier to come into a new leadership team not dealing with the stuff from the past,” said Vieira, who once served on the HTA board. “Change is good, but we have to make sure that we hire the right person for the marketing job. They’ll need a strong tourism background, and they’ll need to have the right chemistry with George and his new team.”
While Szigeti is still short the marketing component, he’s backed by a new team of HTA leaders, whose private-sector backgrounds, like his own, represent a divergence for HTA. Szigeti spent the last three years as president and CEO of the Hawaii Lodging & Tourism Association but served as president and CEO of Better Brands Ltd. from 1997 to 2012.
Randy Baldemor joined the HTA as its new chief operating officer June 9, filling the void left when Doug Murdock was named Ige’s comptroller. Baldemor has served in a variety of high-level state leadership jobs, but his private-sector experience includes serving as president of DiscoveryBox Inc., assistant vice president of claims at Island Insurance Cos. and law firm partner at Goodsill Anderson Quinn & Stifel. Marc Togashi, who joined the HTA in 2011 as its fiscal manager, rounds out the new executive team with his promotion to vice president of finance. Previous to HTA, Togashi spent seven years with public accounting firm KPMG LLC.
Szigeti also is operating under a different board from his predecessors. The state Senate confirmed Gerald De Mello and Rodney “George” Kam as new board members in May. In July the HTA board elected Honolulu attorney Rick Fried to replace Aaron Sala as chairman of the board. Sala declined to comment on his resignation, which occurred shortly after the personnel changes.
“It’s a new team, and we want to build on all the good things that have been done in the past with a renewed sense of excitement and accountability,” Szigeti said. “We’ll work hard to earn everyone’s trust. Failure is not an option. We’ll drive this thing.”
HTA’s new leadership team needs to focus on being good stewards of public money and actively engaging the Legislature on issues of importance to the tourism industry, said state Rep. Tom Brower, chairman of the state House’s tourism committee.
“For me it’s a wait-and-see attitude,” Brower said. “George is a good public relations guy with good contacts in the community and the private sector.”
But Brower said Szigeti will have to work hard to get past previous legislative concerns about spending and accountability. In 2013 the state auditor blasted HTA for lack of oversight of its contractors, who weren’t even required to provide final reports. That 2013 audit as well as an earlier scandal surrounding former CEO and President Rex Johnson’s firing in 2008 raised questions about HTA’s transparency and accountability.
To address these issues, Szigeti said that Baldemor will take on Uchiyama’s previous airline access functions. He also will serve as gatekeeper of contracts and procurement, which are in flux since a recent flurry of requests for proposals were released seeking to further develop HTA’s cruise market and establish a marketing program for Southeast Asia. HTA also is seeking to update previous contracts for Oceania, Korea, China, Europe and Taiwan.
While so many changes during a period of good growth might seem counterintuitive for some, state Sen. Brickwood Galuteria said fresh eyes could help the industry as it heads into an inevitable period of slower growth.
“We need to follow George’s lead in terms of who he wants in his top tier,” Galuteria said. “He comes from a private-sector background; maybe that means we’ll get more bang for our buck. He’s certainly starting out with the right idea. We have to be lean and mean in terms of our personnel and our contracts.”
Baldemor said he’s working on developing new ways to evaluate contractors and help them collaborate and share data. Szigeti said better communication and cooperation will aid staff, too.
“In the first five weeks, we really worked on changing the culture. There are a lot less silos,” he said. “We want to make sure that we have the measurements in place to deliver all the deliverables and hold them accountable.”
Fried said past HTA leaders were excellent but that the renewed focus on transparency has been healthy for the agency.
“Often on boards you find a real divergence of goals. I haven’t seen that, and from my knowledge of these folks, I don’t expect it. We have to work hard on consensus, and it seems to be there,” he said.
Fried said new board and staff leadership agree that the industry needs to focus more on growing tourism primarily through higher spending, diversifying traffic to the neighbor islands and differentiating Hawaii’s unique island charm from competitors.
“There are lots of warm places,” Fried said. “Hawaii is unique because of the culture. That’s not something that you can teach people, and it helps us overcome competition from emerging places like Cuba.”
While Cuba might not be on everyone’s radar, Szigeti said it should be, along with a host of other competitive destinations.
“We have to step up our game. I don’t like losing to anyone,” he said.
With more repeat travelers turning to alternative accommodations, Szigeti said it is becoming more important for Hawaii to grow hotel-staying travelers. HTA’s new leadership will push to ensure that vacation rental accommodations pay their fair share. They also will seek to grow emerging and group markets, which tend to attract more travelers with traditional lodging preferences.
“Sports tourism will be a focus,” Szigeti said.
Gambling surely won’t, Fried said.
“We all agree that casinos aren’t the right fit for us,” he said.
More of what’s on the radar for HTA’s newest leadership team will be revealed during the Hawaii Tourism Conference, which will take place Aug. 27-28 at the Hawai‘i Convention Center. The event will offer updates on the airline and cruise industries, trends in visitor accommodations, digital marketing strategies and traveler demographics. It also includes the state’s first Hawaii Tourism Authority Airline Summit, where HTA officials will meet with up to 20 airline network planners from the U.S. and Asia-Pacific.
“The most challenging time to run a business is when everything seems good,” Szigeti said. “As we begin this new chapter at the HTA, we look forward to collaborating and networking with our visitor industry partners, stakeholders, community and government officials, and encourage everyone to join us at this year’s Hawaii Tourism Conference.”
