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The reversal of fortune that has left the Hawaii Visitors and Convention Bureau with a fraction of the tens of millions of dollars in state contracts it enjoyed will become clearer Tuesday after a formal debriefing on the Hawaii Tourism Authority’s decision to award its top U.S. contract to a Native Hawaiian nonprofit.
HVCB is so intrinsic to HTA that the state tourism agency awarded at least 10 contracts to the bureau between 2016 and last July totaling $145.9 million. Its most lucrative HTA deal was the U.S. major market area multiyear contract worth $105 million, which expired Dec. 31 but was extended to June 29 in an additional $8.5 million contract.
Flash forward to this month and HVCB has only five active HTA contracts worth $25 million, $11.6 million of which will expire this year.
HVCB’s dramatic drop in funding is tied to HTA’s turnaround decision on June 2 to award its largest piece of business, the U.S. brand management and global support services contract, to the Council for Native Hawaiian Advancement. The new contract, worth more than $34 million in the first two years, will begin June 30 and is slated to end Dec. 31, 2024. The contract comes with an option to extend for an additional two years.
John Monahan, HVCB president and CEO, declined to comment for this article.
However, he said in a letter Wednesday to HVCB’s membership: “This week we sent a letter to HTA requesting a formal debriefing on the results of the U.S. Leisure market solicitation. Please know we intend to be as transparent as possible as we proceed; however, to comply with state procurement laws and to preserve the integrity of this process, we are currently unable to provide further details. After we have received the debrief, we will reassess the situation and report out to our membership.”
Sources familiar with state procurement said the debriefing resets the appeals deadline to June 14 for the latest contract award.
Following that debriefing, HVCB could appeal HTA’s decision or take a vastly downgraded role in the state’s lead tourism agency.
It’s a pivotal decision, given that HTA has never existed without HVCB.
The bureau, which has always had the U.S. marketing job, was originally chosen to retain those duties in December in what was expected to be a multiyear, $100 million deal.
State Department of Business, Economic Development and Tourism Director Mike McCartney rescinded HVCB’s new award in December after a complaint from the runner-up, a group that included the Council for Native Hawaiian Advancement.
HTA has said it cannot talk about what happened until the procurement process ends.
A key question in Hawaii’s visitor industry now is: Without HTA’s major contract, what will happen to HVCB and the infrastructure built around it?
Monahan said in his letter to members that “HTA has confirmed that HVCB’s existing contracts with Global MCI (Meet Hawaii), Destination Management Action Plans and the Island Chapters will remain in full force.”
HVCB still has a $9.4 million contract to oversee community programs, including HTA’s Destination Management Action Plans. That contract expires May 31. The bureau also has a $4.5 million contract to run HTA’s global meetings, conventions and incentives marketing through at least 2025.
Still, HVCB’s $2.4 million contract to provide island chapter support services is slated to end Dec. 31. The bureau’s $750,000 contract to provide support services to HTA ends June 29, along with the U.S. contract extension that McCartney issued as a stopgap measure after the original contract award was rescinded.
“HVCB, a private member-based organization, has been serving Hawaii and the tourism community and residents for over 100 years and we will continue to do so,” Monahan said in his Wednesday letter to the nonprofit’s members. “We proceed with an open heart and open mind, tenets of aloha. Thank you for your continued support. We are stronger together and value your undeniable partnership.”
OVER THE course of its tenure as HTA’s main contractor, HVCB had become a powerful private nonprofit, member-based organization. Any drop in HTA funding to HVCB could have broader visitor industry implications.
The lack of transparency in the process as well as the depth of the change has become distracting and divisive within the industry.
Some members of Hawaii’s visitor industry see HTA’s decision as healthy and critical — even exciting — to its new destination-management focus. Others have allegiance to HVCB or fear shifting course during a pandemic.
Some visitor industry leaders say they are keeping an open mind while they wait for HTA and CNHA to give them a glimpse into their new vision. They say they will reserve judgment until they get an explanation about what prompted the change and reassurances that it was properly executed.
“This switch in the contract, I’m concerned about it,” said Waikiki Improvement Association President Rick Egged. “I’m anxious to hear how it’s going to work going forward. My concern is that in HVCB we have a known high-performing entity and we’ve now replaced it with something that I just don’t know anything about.”
CNHA was not immediately available to share details with the Honolulu Star-Advertiser about its plan for Hawaii tourism or its new team, including transition specialists.
Kuhio Lewis, CNHA president and CEO, issued a statement on the day of the award saying the nonprofit was “humbled that the Hawaii Tourism Authority entrusted us as the entity to deliver the change that Hawaii has long demanded of our visitor industry.”
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.
Egged said HVCB over the past several years has been responding to community concerns about the need for greater destination management. HTA’s change management plan, which focused on creating sustainable and regenerative tourism, was not adopted until July.
“HVCB definitely saw the handwriting on the wall early and responded to it,” he said.
Some of HVCB’s fee-paying members have said there is a movement to support a challenge to the June 2 contract award. Still, a bit of resignation is emerging among Hawaii’s tourism industry leaders who see HVCB losing the U.S. contract as another symptom of the community difficulty that tourism has encountered.
ON THE flip side, some HVCB members are considering ending their paid memberships due to the bureau’s perceived loss of clout.
HVCB’s members pay annual fees to have access to business exposure on GoHawaii.com, as well as access to advertising and promotional opportunities. HVCB also provides members with market research, trend analysis and visitor industry training.
Industry leaders have speculated that without the U.S. contract, HVCB could operate only as a shell of its former self. The bureau’s latest employee count is not available, but in 2019 it had about 66 full-time staff.
Industry insiders estimate that more than a dozen of HVCB’s key people were focused mainly on the U.S. contract.
“Certainly, they’ll have to restructure without the contract,” said Keith Vieira, principal of KV & Associates, Hospitality Consulting. “They have some other HTA contracts but they are much smaller. There’ll probably be mass layoffs.”
The future of HVCB’s island chapters, including the Oahu Visitors Bureau, the Kauai Visitors Bureau, the Maui Visitors & Convention Bureau and the Island of Hawaii Visitors Bureau, is undetermined.
There also is likely to be a trickle-down hit to HVCB’s longtime vendors and contractors — businesses that provide the bureau with creative, strategic and technical services.
Vieira said he has heard CNHA “is trying to look at how many people it can pick up that were working for HVCB.”
It’s still unclear what role, if any, HVCB or its contractors will have in relation to the new contract.
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