Editorial: Tourism contracts need clear goals

It was hardly the breakthrough it pretended to be, though last week’s statement updating a controversial Hawaii Tourism Authority (HTA) contract tried mightily to spin things forward.

The disappointing bottom line: Instead of a highly touted change of direction for Hawaii into “regenerative tourism,” HTA has essentially extended the status quo.

Two bidders — the Hawaii Visitors and Convention Bureau (HVCB) and the Council for Native Hawaiian Advancement (CNHA) — are vying for HTA’s lucrative U.S. brand management and global support services procurement; when the bid went out in April, the two-year contract was worth $34 million through the end of next year. HTA initially awarded the contract to HVCB last year then rescinded it; after the bid was reworked, CNHA won the deal in June — but murkiness over HTA’s selection processes led to longtime contract holder HVCB contesting CNHA’s win.

HTA hastily extended HVCB’s then-existing contract by three months, and last week, again for another six months, through March 2023. HVCB, for all practical purposes, will now be getting much of the contract; for its part, CNHA said it looks forward to having a seat at the table.

“Both organizations add tremendous value to the visitor industry with their commitment and skills,” Mike McCartney, director of the state Department of Business, Economic Development and Tourism, which oversees the HTA, stated last week. “In the spirit of HRS 5-7.5b, the Aloha Spirit law, we plan to move quickly, collaboratively and with due diligence during this extension, to work through the details so that a resolution that is right for all of Hawaii is reached.”

But what that means — and at what cost to taxpayers — is anyone’s guess. There were hints of splitting the contract into marketing and destination management, but nothing firm. It’s abundantly clear, though, that HVCB wants, and will continue, to be a player in the state’s top money-making sector; it will not easily relinquish its 100-year-old marketing role. CNHA, meanwhile, is trying to rebrand itself, along with Hawaii’s tourism industry. CNHA has drawn city-government praise for its role in disbursing federal COVID-19 grants, but questions have been raised about bookkeeping deficiencies involving pandemic funds via the Office of Hawaiian Affairs.

Just what role each organization will have with HTA remains to be defined. HTA must be transparent about what the contract is paying for, whether benchmarks are being met, and if taxpayers are indeed getting the expected return on investment. With HVCB’s current contract extension running through March, the next governor and his DBEDT director must ensure that the next request for proposals for this contract, or contracts, is clear and above reproach.

HTA’s own operations have come under scrutiny in recent years, leading to a scathing state audit in 2018 that blasted the agency for “lax oversight (and) deficient internal controls,” and noting that HTA wasn’t ensuring that taxpayer funds are spent effectively. A follow-up audit out last month noted that while HTA no longer enjoys the procurement exemption that it did in 2018, “we continue to emphasize the need for and importance of HTA developing clear policies and procedures relating to procurement.”

HTA in the last couple years under CEO John De Fries has advocated an enlightened strategy of “regenerative tourism” for Hawaii, guided by island-specific Destination Management Action Plans. Realizing residents’ backlash to unbridled visitor growth that has topped 10 million yearly, DeFries envisions a tourism-sustainability approach based on “four pillars”: natural resources, Hawaiian culture, community involvement and marketing for responsible travel.

It’s a tourism direction that the state Legislature endorsed this past session, even as it put HTA’s funding through the ringer. While legislators ultimately allotted $60 million for annual HTA operations, it took away the agency’s dedicated funding mechanism. What that means is that come March, with the 2023 Legislature in full swing, the spotlight will be even hotter on what this disputed HVCB-CNHA contract bought, what it yielded for Hawaii and if it gives lawmakers confidence for HTA’s overall funding.