Funding allows Hawaii Tourism Authority to cover procurements

The Hawaii Tourism Authority is slated to make three major awards today, covering procurement to manage the brands and market Hawaii to the United States and Canada, and to offer support services for destination stewardship.

If all goes smoothly it’s a pivotal opportunity to earn the trust of the state Legislature, whose doubts left the agency without a dedicated source of funding this year.

Trust will be paramount as lawmakers allowed the only bill with an HTA appropriation, House Bill 1375, to die at the end of session. The bill, introduced by state Rep. Sean Quinlan (D, Waialua-­Kahuku-Waiahole) along with other House members started with a focus on repealing the HTA and its board and replacing it with a Destination Management Agency that would fall under the state Department of Business, Economic Development and Tourism and would be headed by a commission rather than a board. The bill took on many new forms throughout the session and in conference, and ultimately the clock ran out before lawmakers reached consensus leaving HTA intact but without adequate funding.

Lawmakers, however, did open the door in the final days of approval for the state budget bill, House Bill 300, for HTA to petition up to $60 million from a $200 million appropriation to the state Budget and Finance Department. But the move was more of a lifeline than a vote of confidence, and whether HTA gets the funding will be subject to a five-point system of checks and balances, and likely perception over how well it executes procurement and its destination management programs.

HTA spent most of the past Legislative session with Gov. Josh Green and former director of the Department of Business Economic Development and Tourism Chris Sadayasu taking a neutral position on whether it should continue as the state’s primary tourism governance model. Support from the visitor industry and from community groups, including Native Hawaiian organizations, also came later in the session than in past instances where HTA was in the hot seat.

However, it now has a new champion in Jimmy Tokioka, appointed by Green to head DBEDT May 5 after lawmakers did not confirm Sadayasu earlier in the session. Tokioka, who most recently served as the deputy director for the Department of Transportation Airports Division, has a nearly two-decade background in hotel management. He also has extensive experience in county and state government, where he served on the Kauai County Council for 10 years and was a state representative for 16 years with a tenure that included a stint as vice-chair of the House Committee on Tourism.

“I have always supported the HTA from the time I was at the Kauai County Council and all the time when I was at the state Legislature,” Tokioka told the Star- Advertiser in an interview Friday. “I felt like we needed an agency that was separate from government because they are a lot more nimble and they can go quicker.”

Tokioka said what happened to HTA during this year’s session continues a trend over the past several years, when lawmakers took HTA’s state procurement exemption away and switched its funding from a dedicated amount of transient accommodation taxes to general funds and federal America Rescue Plan Act funds.

“I think what happened was that legislators got frustrated with the lack of communication and because of that they lost trust in the HTA,” he said. “Anything that fell under HTA is uncertain, unfortunately.”

HTA said it was able to proceed with today’s awards because it was assured that additional funding can now be made available through the $200 million fund. HTA President and CEO John De Fries expressed his gratitude to Lt. Gov. Sylvia Luke and all of the legislative leaders who worked to make it possible for HTA to obtain funding.

However, it’s not a slam dunk. Tokioka said an approvals process is being set up for HTA’s requests, which will be subject to support from him, legislative leadership, the state Budget and Finance director, and the governor and lieutenant governor.

De Fries said, “We are grateful we have a fund to begin with. This will require a much more deliberate process with certain reviews and approvals starting with our board at the coming board meeting (Thursday). It will be more time consuming and deliberate but we’ll get through it and I appreciate the cooperation that Director Tokioka and (state Director of Finance Luis) Salaveria, are providing.”

Tokioka said, “We are looking at a 48-hour approvals process from the five different checkpoints,” adding that he’s never seen an appropriation process with so many checkpoints.

Tokioka said the breadth sends a message that HTA needs to continue building trust with lawmakers and learn how to communicate better and deliver better results. He said he is already taking a more active role in the HTA, where he is in meetings about three or four times a week, with the aim of helping the agency restore confidence.

Tokioka said he does not know what’s in store for HTA during next year’s legislative session. But said “we’re going to do everything we can to present a different model of governance, a different model of communication, and hopefully, a model that people can trust.”

HTA procurement was such a point of contention during the session that the Senate inserted language into the preamble for HB 1375 saying that HTA had mismanaged the awarding of a $34 million contract for the marketing of Hawaii as a tourism destination to the United States major market area leaving it in a state of uncertainty since 2021.

De Fries said since he assumed leadership of HTA in September 2020, HTA has probably executed 65 procurements, and “until today you will not find a written notice of procurement violation from the State Procurement Officer or the deputy attorney general.”

HTA Chief Brand Officer Kalani Ka‘ana‘ana said during an interview Friday that the awards issued today could become final as early as May 25 if none of the offerors request a debriefing during the three-day window. If a debriefing is requested, Ka‘ana‘ana said HTA has seven business days to comply, and an offeror would have five business days after that to file a protest.

Hawaii Lodging and Tourism Association president and CEO Mufi Hannemann said it’s critical that HTA’s latest procurements aren’t delayed and are executed in a way that passes legal muster.

“We cannot delay because that will be another sign and signal that Hawaii’s tourism is in disarray because that’s exactly how many are seeing us and our competitors will just feed off of that and it will put more burden on private businesses,” he said.

Outside of procurement, HTA also was under the gun for much of this legislative session because many lawmakers, including Quinlan, wanted to see the agency pivot faster to a greater emphasis on destination management.

Quinlan told the Star- Advertiser during an interview Thursday that there has been a growing push for change among lawmakers but that prior to the session, “We had not sat down and had those hard conversations about what is HTA going to look like. Is it going to be a tweaked version of HTA or is it going to be something completely different that takes its place? It really was the enormity of scale of what we were doing that led to us not being able to reach agreement this year.”

State Sen. Lynn DeCoite (D, Hana-East and Upcountry Maui- Molokai-Lanai- Kahoolawe), chair of the Senate Committee on Energy, Economic Development and Tourism, was not immediately able to comment because she was traveling. However, she issued a statement after the close of conference saying that Senate conferees had proposed that the HTA continue to exist with a reduced governing board consisting of only nine members and a primary focus on marketing and promoting tourism. At the same time, she said Senate conferees also had wanted to create a new Office of Destination Management under DBEDT.

HTA Chief Administrative Officer Daniel Naho‘opi‘i said there are a myriad perspectives on HTA’s future, which is a reason that the HTA board has established a permitted interaction group to come up with a concrete proposal to execute its own tourism governance study.

“We are making that commitment to studying what would be best for implementation and address all of these concerns,” Naho‘opi‘i said.

Quinlan said Hawaii must answer the existential question, “What is our relationship with tourism going to be for the next 50 years?”

He said he and other lawmakers expect to work with HTA to search for answers this summer and fall, and that he plans to keep an open mind.

“I’m not really 100% committed to repealing HTA. What I am committed to is focusing on destination management — that’s what I think the critical missing piece has been for the last 20 years,” Quinlan said. “I think they are moving in the right direction. It just hasn’t been fast enough.”