I am an original board member of the Hawaii Tourism Authority (HTA) when it was formed in 1998. I feel it is important to clarify the origins of HTA and why it is important to keep HTA intact.
Back then, the HTA was created as a result of recommendations from Gov. Ben Cayetano’s Economic Revitalization Task Force to help the tourism industry overcome a sluggish Hawaii economy that had been stagnating for seven years following the burst of the Japan bubble.
To compete effectively, it was recognized that Hawaii must have more aggressive marketing efforts in order to maintain its position in the global market. It created a new and dedicated mechanism to fund tourism through the transient accommodations tax (TAT), increased the level of funding for tourism to a globally competitive level, and formed a Cabinet-level authority for fiscal oversight, and tourism development and marketing.
The dedicated funding source limits legislature interference and provides a consistent funding source for the authority’s marketing and tourism management activities. The original legislation which created HTA dedicated 37.9% of the TAT revenue to the Tourism Special Fund (TSF), which was approximately $60 million. Over the last 20 years, the amount to the TSF has decreased significantly. In fiscal year 2019, the state collected $600.3 million in TAT revenues, however, the TSF received only 13% ($79 million) of the TAT revenue. The TAT distribution is now diluted with 57% of the TAT going to the general fund and the remaining to other areas.
HTA’s marketing and positioning of the destination doesn’t drive demand alone. It is also its investment in Hawaiian culture programs, natural resources, festivals and events, other community-based tourism projects and tourism data that safeguard our destination and its brand. That’s followed with our private businesses spending more than nine to 10 times the amount of HTA’s marketing budget, focused on a call to action for their businesses.
Two bills are being considered at the state Legislature that, if passed in their current form, would cripple HTA’s ability to sustainably manage tourism and compromise the branding of our visitor industry at a time when Hawaii tourism is expected to take years to rebound. House Bill 862 was reconfigured to strip out HTA’s vital cultural, environmental and community programs that are essential to how we share Hawaii with the rest of the world as well as HTA’s ability to manage the destination.
HB 200 eliminates the dedicated funding source for HTA via the transient accommodations tax, which is collected from the monies spent by people staying in legal accommodations in Hawaii. In its place would be a temporary and much smaller source of funding through the American Recovery Planning Act in 2022, and then the state’s general fund thereafter.
HTA has more than proved its value in the two decades since its formation. This is not the time to change HTA’s funding mechanism or take away from HTA’s ability to direct the marketing and positioning of the destination and address communities’ concerns for managed tourism. For tourism to remain an important economic development strategy for the state of Hawaii, we cannot be complacent about our approach to tourism. We need to focus on the livelihoods of our community and getting our residents back to work.
Keith M. Vieira is principal at KV & Associates, Hospitality Consulting.