Hawaii Visitors and Convention Bureau loses contract to Hawaiian nonprofit

The Hawaii Tourism Authority has awarded the Council for Native Hawaiian Advancement its lucrative contract to market the state to U.S. visitors — a major blow to the Hawaii Visitors and Convention Bureau, which has held the job for years and was originally chosen to retain the post in a multiyear, $100 million deal.

HTA said Thursday that it selected the nonprofit to take over its U.S. brand management and global support services contract. The new contract will begin June 30 and is slated to end Dec. 31, 2024, with an option to extend the contract for an additional two years.

Besides CNHA, the winning group includes a consortium of other Hawaii-based organizations, and has roles for Ann Botticelli, a former Hawaiian Airlines senior executive and a current Honolulu police commissioner, and Aaron J. Sala, a Hawaiian entertainer and former HTA board member.

HTA said it is still negotiating the contract. However, according to language in the latest request for proposals issued April 15, the fixed contract price is expected to be $16.4 million for the first calendar year and more than $18.8 million in the next year.

Kuhio Lewis, CNHA president and CEO, said in a statement that the organization “is humbled that the Hawaii Tourism Authority entrusted us as the entity to deliver the change that Hawaii has long demanded of our visitor industry. We understand there remains a process in place, and we will follow HTA’s lead in the days ahead to preserve the integrity of that process.”

Any entity wishing to challenge the latest RFP award has five days to lodge a complaint.

Officials from HVCB, which has been HTA’s largest and highest-­funded contractor, did not immediately respond to the Honolulu Star-Advertiser’s request for comment.

Theoretically, HVCB could apply to be a contractor handling some of the work for CNHA. But it is unclear what role, if any, HVCB will have in relation to the new contract.

The awarding of the contract to the CNHA group represents a major directional change for HTA since HVCB has been the only entity that has ever handled its U.S. marketing. The move is also a major shake-up for Hawaii’s tourism industry, of which HVCB has been a member for about a century.

It almost didn’t take place.

Multiple sources have told the Star-Advertiser that HTA in 2021 awarded HVCB the U.S. contract. It was supposed to take effect Jan. 1, 2022, replacing HVCB’s previous five-year, $105 million contract, which expired Dec. 31.

Instead, sources said, state Department of Business, Economic Development and Tourism Director Mike McCartney rescinded HVCB’s new award in December after a formal complaint from the runner-up, a group that included the Council for Native Hawaiian Advancement.

Sources said few points separated HVCB and the runner-up during the first request-for-proposal process, which McCartney abruptly ended in December.

McCartney then awarded HVCB an $8.5 million extension to its U.S. contract as a stopgap measure to allow time for a second request for proposal process. HVCB’s contract extension for the U.S. market is slated to end June 29.

HTA denied the Star-­Advertiser’s formal public-information request in March for information pertaining to the first request for proposals. When asked about the documents Thursday, HTA spokesperson Ilihia Gionson said HTA would review the Star- Advertiser’s request.

Over the course of its tenure as HTA’s main contractor, HVCB had become a powerful private nonprofit member-based organization overseeing tens of millions of dollars in HTA contracts. The bureau’s latest employee count is not available, but in 2019 it had about 66 full-time staff.

The bureau still oversees more than $25.5 million in contracts, including the U.S. contract extension. Among the mix is a $9.4 million contract to oversee community programs, including HTA’s Destination Management Action Plans.

HVCB also has a $4.5 million contract to run HTA’s global meetings, conventions and incentives marketing through at least 2025. It also has a $2.4 million contract for island chapter support services, which is slated to end Dec. 31.

Keith Vieira, principal of KV &Associates, Hospitality Consulting, said HVCB’s diminished role is startling.

“The most successful leisure marketing organization in the world in the last 100 years is out during one of the most incredible rebounds we’ve ever seen,” Vieira said.

Vieira said he hopes the new contractor will continue to focus on building relationships with tourism partners like airlines and wholesale travel sellers. He said marketing to draw more higher-spending visitors to Hawaii also should remain a priority.

The change in contractors follows HTA’s decision in 2021 to reorganize its structure and operations to have a greater focus on destination management than tourism marketing. HTA’s reorganization was preceded by several years of growing dissatisfaction among both residents and visitors, prompting legislative criticism of the agency.

State legislators in 2021 passed House Bill 862, which made functional changes to HTA and eliminated transient accommodations tax distribution to the agency as well as individual counties.

This year House and Senate conferees left HTA funding out of the final version of the state’s $17 billion supplemental budget, and legislative conflict over alternative bills put the agency’s financial outlook in jeopardy. It was only after an eleventh-­hour scramble that HTA emerged from the 2022 legislative session with a fully intact $60 million annual budget.

Based in Kapolei, CNHA describes itself as a nonprofit with a mission to enhance the cultural, economic, political and community development of Native Hawaiians. The group says its services include financial counseling and providing grants and loans targeting underserved communities in Hawaii.