Hawaii Tourism Authority continues to battle for survival as tourism challenges continue

Visitor arrivals to Hawaii in March increased for the first time in a year, but the state’s tourism rebound still has far to go.

The Hawaii Tourism Authority reported Thursday that 439,785 visitors traveled to Hawaii last month — a 1.1% rise over the 434,856 who came in March of 2020, when pandemic-related fears and containment measures began to drop travel demand.

Spending by visitors in March rose to $745.9 million, a 3% year-over-year increase.

Even with the gains, March arrivals and spending were less than half of what they were in March 2019, a pre-pandemic time when 939,064 visitors came to Hawaii and spent $1.51 billion.

The results have left the Hawaii Tourism Authority under intense pressure to improve Hawaii’s tourism- dependent economy. At the same time, HTA is battling for its own survival at a time when its board leadership is changing.

On Tuesday, state legislators approved HB 862, which will now go to Gov. David Ige. for consideration. If Ige signs the bill, it will cut HTA’s fiscal year 2022 budget by almost a quarter and make future funding uncertain.

It also eliminates the $103 million county share of the transient accommodations tax but allows the counties to raise their own TAT up to 3 percentage points for up to a 10-year period.

The chairmen of the legislative committees responsible for tourism decisions, Rep. Richard Onishi (D, South Hilo-Keaau-Honuapo) and Sen. Glenn Wakai (D, Kalihi- Salt Lake-Aliamanu), phoned in during Thursday’s HTA board meeting to discuss the proposed cuts, while advising HTA that it must find a new path forward.

HTA President and CEO John De Fries told the board that he has yet to receive the worksheets with the details for HB 862 and HB 200, the Legislature’s budget bills. However, he said, “There’s enough detail within (HB 862) to understand the challenges.”

De Fries said Ige messaged the board during the meeting “expressing his deep concern about HB 862 and his intention to convene in executive session to discuss this matter.”

George Kam, who was elected HTA’s new board chairman at the Thursday meeting, said Ige’s intent-to-veto deadline is June 21.

In the meantime, Kam told the board, “We’ll do our due diligence and homework on a strategy and the next step for how we want to address HB 200 and HB 862 moving forward.”

A large part of the agency’s strategy appears to be improving its communications with legislators and members of the community.

“The overall messaging and the message that we are getting is that we aren’t standing up for what’s important,” said Kam, who succeeds longtime HTA Chairman Rick Fried, a local attorney, who vigorously supported the agency during his seven-year tenure.

The chairman’s election was held despite three new board members joining HTA on Thursday: restaurateur Dylan Ching, waterman Keith “Keone” Downing and Sigmund “Sig” Zane. (See On the Move below.)

Some HTA board members had suggested delaying the vote to give the new board members time to get up to speed. However, others, including HTA board member David Arakawa, advocated for haste.

“We have 45 days. Game on,” said Arakawa, who was elected HTA vice chairman after Kam’s selection. “A lot of stuff that we talked about is moot if certain things happen.”

Funding has been a huge problem for HTA since May 2020, when Ige stopped TAT distributions. In fiscal year 2020 HTA received only the first four months of its TAT distribution and cut its fiscal budget in September to $48 million from $86 million and then down to $41 million in November.

Ige had told the board earlier this year that he intended to restore the TAT; however, the issue has been complicated by the Legislature and the tourism downturn in general.

Hawaii’s visitor industry hit rock bottom from March 26, 2020, when the state implemented a 14-day mandatory travel quarantine, until Oct. 15 when Safe Travels Hawaii provided a way for travelers to take a COVID-19 test and avoid the quarantine.

Hawaii’s visitor industry has been slowly coming back from pandemic lows, but not all markets are rebounding equally.

Oahu, which has a greater dependence on international travelers, took a 13.2% hit to March arrivals, which fell to 206,942. March arrivals on Kauai, which didn’t rejoin Safe Travels Hawaii until April 5, fell more than 73% to 15,133.

Nearly 98% of Hawaii’s March visitors came from the U.S., which was one of the reasons that Maui’s arrivals rose nearly 36% to 170,750, while Hawaii island’s arrivals increased nearly 6% to 82,687.

Maui’s visitor spending rose nearly 49% to $330,100. Hawaii island’s visitor spending increased to $129,600, up about 14%. However, visitor spending on Oahu fell more than 13% to $260,000, and Kauai’s spending plummeted nearly 67% to $26,300.