Hawaii Tourism Authority’s future in limbo

Lawmakers head to conference today on two bills that provide a last chance for the Hawaii Tourism Authority and the Hawai‘i Convention Center to get funded this session after their operational budgets were left out of the final version of a state budget bill earlier this week.

Lawmakers put $64 million into the state budget measure, House Bill 300 CDI, to fix the leaky roof at the Hawai‘i Convention Center. However, failing to fund HTA also could affect the operating budget of the Hawai‘i Convention Center, which typically gets an annual allotment of $4 million to $4.5 million from HTA’s $60 million budget.

HB 1375, introduced by Rep. Sean Quinlan (D, Waialua-­Kahuku-Waiahole) along with other House members, is considered by some political pundits to be the most viable of the remaining options to fund HTA and the center. The bill is slated to be heard at 10 a.m. in Room 325.

The catch is that the current version of HB 1375 bill repeals the HTA in favor of establishing an Office of Tourism and Destination Management within the state Department of Business, Economic Development and Tourism. The change would take place July 1, and the new agency would be governed by a nine-member board and an executive director.

Another possible funding option for HTA and the Hawai‘i Convention Center is Senate Bill 629, which went to conference on Thursday and will reconvene today at 10:10 a.m. in Room 325.

SB 629, introduced by Sen. Donna Mercado Kim (D-Kalihi Valley­-Moanalua-­ Halawa) and other senators, would require contracts entered into by the Hawaii Tourism Authority for management of the Hawai‘i Convention Center facility to include marketing for all uses of the facility.

SB 629 isn’t aimed at operational funding for HTA and the Hawai‘i Convention Center. However, the HTA board paused its Thursday meeting to tune in to the conference. Some HTA board members and staff members were hopeful that lawmakers could possibly insert language into the bill that would restore operational funding to the HTA and the convention center.

The stakes are high as HTA navigates through the most contentious legislative session for the agency since state lawmakers gave it life in 1998. Past experience tells the agency that all bets are off once lawmakers head to conference, especially when their funding lies in bills rather than in the state budget.

The embattled Hawaii Tourism Authority has said state lawmakers could cause the state to lose millions of dollars in federal funding, halt destination management efforts and put community programs at risk if they continue down a path of repealing the agency or failing to provide adequate funding.

Lawmakers have much to unpack as they consider HTA’s fate and the future of tourism governance in Hawaii. In recent years HTA has been transitioning to an increasingly destination management-oriented model. In 2020 the HTA board adopted a strategic plan with four pillars that included natural resources, Hawaiian culture, the community and brand marketing. The agency then worked with communities to create Destination Management Action Plans aimed at moving toward a regenerative tourism model.

However, some lawmakers, especially those who represent constituents who live in tourism hot spots, desire even greater change. The preamble to HB 1375 also indicates that lawmakers took issue with HTA’s solicitation for its top U.S. tourism contract, which is in its third procurement after awards were rescinded twice.

Concerns of over-tourism also have been climbing since Hawaii’s pre-pandemic visitor count soared above 10 million. The decline in visitor arrivals during the pandemic only served to fuel the desire for more destination management as some residents relished having fewer visitors on their beaches and roads and in their communities.

The pressure is rising as Hawaii tourism heads closer to recovery. DBEDT reported Thursday that more than 2.4 million visitors arrived during the first quarter — down just 3.2% when compared the first quarter of 2019. In the first quarter, nominal spending hit $5.37 billion, up 26.8% from the first quarter of 2022 and up 19.5% from the first quarter of 2019.

Keith Vieira, principal of KV and Associates, Hospitality Consulting, who was on the first HTA board, said the most recent tourism numbers align with the goal of growing tourism through spending rather than arrivals.

“I hope they will amend the bills to keep HTA and that they kick the can down the road a year and do a study,” Vieira said. “We’ll find out other people copy Hawaii. We don’t want to make the mistake of putting it under government — then it turns completely political.”

Jerry Gibson, president of the Hawaii Hotel Association, said, “The Legislature may find it worth considering funding HTA forward with a Forbes-style study analysis of HTA’s entire organization and process.”

Gibson added, “This study will lead us to concrete decisions and yield a way forward, a model for the future of the Hawaii Tourism Authority. This alleviates a quick structure change with results unknown and allows the continuity of the destination management and marketing we need.”

On Thursday the HTA board gave staff a green light to prepare for a governance study with the goal of putting out a request for proposals by July. The study, which is expected to cost between $10,000 and $250,000, would target a November completion.

But it’s not known whether HTA’s latest move will be enough to sway legislators, who have said they have heard feedback from HTA supporters and opponents, as well as those who are keeping an open mind.

Hawaii Lodging and Tourism Association President and CEO Mufi Hannemann said HLTA supports HTA but has taken the pragmatic view to support repealing HTA if that’s the only alternative to tourism ending up without adequate funding.

“Unfortunately, if that’s what we have to do to salvage the money, that’s what we have to be supportive of. But our preference is to keep HTA as is,” Hannemann said.

Gov. Josh Green said during an interview on the Honolulu Star-Advertiser’s “Spotlight Hawaii” live­stream program that it wasn’t his place “to meddle with the Legislature” and that he could “go either way” on the HTA issue.

“I know I can put good professionals in DBEDT on this issue. I know that I can also contract with the private sector to make sure we are well represented globally,” Green said.

Green added, “If they do disband HTA, we will form an advisory commission under the DBEDT director. If they, however, feel that it’s OK to go forward and just amend it, then we’ll also make sure that we have a good direction there.”