1 of 3 bills to repeal Hawaii Tourism Authority advances

Feb. 5—It's a sign of the times that House Bill 1375 passed out of the House Committee on Tourism and the Committee on Economic Impact without pushback from the visitor industry, the state Department of Business, Economic Development and Tourism or even the Governor's Office.

Three bills are seeking to repeal the embattled Hawaii Tourism Authority this legislative session, which may prove one of the more contentious for the agency since state lawmakers gave it life in 1998.

It's a sign of the times that House Bill 1375 on Thursday passed out of the House Committee on Tourism and the Committee on Economic Impact without pushback from the visitor industry, the state Department of Business, Economic Development and Tourism or even the Governor's Office. In the past, all mounted robust defensive strategies to support HTA when lawmakers threatened budget cuts or reorganization.

A reason is that some Hawaii residents are still deeply critical of tourism, which has been blamed for everything from Hawaii's housing and traffic ills to over-tourism and degradation of natural resources and neighborhoods. HTA's difficulty in awarding its largest U.S. tourism contract, which is heading for a third solicitation, also has cost it some visitor industry support.

The lack of a long-term U.S. tourism contract at a time when economic uncertainty has caused domestic softening is increasingly resulting in the visitor industry's biggest players marketing Hawaii without HTA, which has made the agency seem less relevant. That's a problem for HTA, which has always counted the visitor industry as its largest base of support during legislative sessions.

House Bill 1375, which was introduced by Rep. Sean Quinlan (D, Waialua-­Kahuku-Waiahole ) and other House members, would repeal HTA's board and refashion the organization as a destination management agency overseen by a paid, governor-appointed three-member commission administratively placed within DBEDT. The proposed bill was amended to fund the new agency through a $100 million allocation from transient accommodations tax revenue, of which $50 million would be earmarked for a matching fund program to support Destination Management Action Plan projects throughout the counties.

"What I'd like to create is a structure where the state can provide that help to local communities, because we've done a lot for visitors in Hawaii, we've done a lot for the visitor industry in Hawaii, " Quinlan said. "At long last it's very appropriate that we start doing things for all of us."

HTA is facing threats from two other bills that also would refocus the agency's statutory mission more toward stewardship of home rather than tourism promotion, which was the main statutory requirement of 25 years ago.

Sen. Donovan Dela Cruz (D-Wahiawa-Whitmore-­Mililani Mauka ), who chairs the Senate Ways and Mean Committee, introduced Senate Bill 1522, which would dissolve the HTA and its board, instead establishing under DBEDT an Office of Tourism and Destination Management with a goal toward regenerative tourism and best-practice destination management.

As of Friday, neither SB 1522 nor its companion HB 1376 had been scheduled for a public hearing. Discussion of the bills as well as other aspects of tourism governance are taking place from the highest seat of power to the grassroots community level.

Gov. Josh Green "is supportive of efforts to update the state's approach to tourism to incorporate destination management, rather than solely or mostly about marketing, " said senior adviser Blake Oshiro in a email Thursday. "Whether that means fundamentally changing HTA, or changing to a new agency will be an ongoing discussion throughout the session, but the Governor wants to ensure that whatever the end result, the existing or new agency will have this important focus on managing tourism and not just marketing for it."

DBEDT Director Chris Sadayasu was present at the hearing for HB 1375, telling the Star-Advertiser in an email Thursday that his department is committed to collaborating with the legislative committees "should it be determined that a destination management agency will be established. We will participate in any discussions related to our potential role and responsibilities."

John Knox, tourism consultant and principal of John M. Knox &Associates Inc., urged legislators during Thursday's hearing on HB 1375 to also hear HB 1381, which would conduct a study with public stakeholder input to learn what other destinations have done to change governance systems to manage their tourism better.

HTA President and CEO John De Fries and HTA Board Chair George Kam told the Star-Advertiser on Friday that they support HB 1381, which was modeled after a bill they advocated for last year to fund a tourism governance study. They said HTA has been steadily evolving toward a vision of home stewardship and they fully embrace discussion about reshaping tourism governance.

However, they added that they favor completing the tourism governance study before making major structural changes to HTA, which could result in unintended consequences.

De Fries said the three bills are fundamentally flawed in that they are based on the premise that HTA mismanaged the U.S. major market area request for proposals, supposedly in violation of the state procurement code.

Former DBEDT director Mike McCartney rescinded awards for the U.S. tourism contract made to the Hawaii Visitors and Convention Bureau in December 2021 and to the Council for Native Hawaiian Advancement in June 2022. His decisions, which he justified only as being "in the best interest of the state, " nullified unresolved protests.

De Fries said HTA handled procurement for the U.S. tourism contracts fairly and according to state law. He said HTA successfully made two U.S. tourism awards ; however, once protests were mounted state law gave the DBEDT director authority for the process.

"My concern is that HTA is getting held accountable for all of this when, in fact, the award constituted the culmination of our work, " he said.

He said the makeup of the current board, which was confirmed by the state Senate, is diverse and balanced between community, culture and commerce. De Fries added that only three of the 12 members can be affiliated with any one industry.

De Fries said part of what attracted him to HTA, which he joined in September 2020, was that the board was already moving to a resilience model and had adopted a strategic plan that looked at visitors and residents in a holistic way, leading to development of the Destination Management Action plans. De Fries said the board also had voted to become a signatory in 'Aina Aloha Economic Futures, a grassroots initiative to bring together various stakeholders to develop a vision for Hawaii's economic future "that is grounded on a core set of values that embrace our unique island culture and identity, " according to the group's website.

HTA Public Affairs Officer Ilihia Gionson said preliminary figures for transient accommodation tax collections also show that HTA is fulfilling its resilience goals. Gionson said TAT grew to more than $830 million in 2022, when some 9.25 million visitors spent more than $19 billion in the islands. That's up from $637 million in TAT collections in 2019, when 10.4 million visitors came to Hawaii and spent nearly $17.8 billion.

Mufi Hannemann, president and CEO of the Hawaii Lodging &Tourism Association, said its members have not taken a position on any of the tourism governance models outlined in the bills, but would like the discussion and process to go forward.

"HTA and HLTA has enjoyed a very cooperative, collaborative working relationship and that model has worked for us as an industry. However, it is clear, abundantly clear, that there are many in the Legislature and people in the community that want a reassessment, if you will, or some changes that they want to see implemented, " he said. "They run the gamut from abolish HTA or tuck HTA back into a state agency like DBEDT, or change its mission and focus."

Hannemann said members want to see "stronger, more laser-focused state tourism advocacy."

"Right now, it's kind of unclear. Who is in charge ? Is it DBEDT or is it HTA, " he said. "A lot of that is because of what has happened with the handling of the procurement contract."

Tom Kiely, a longtime tourism marketing and sports promotion executive who has worked with clients around the globe, said Hawaii must develop clear tourism goals, which he believes should come directly from the Governor's Office. He said he's never "witnessed the utter confusion and fruitless debates that exist in Hawaii today. Once the goals are firmly established and the key players know the direction, then the strategies, tactics and team assignments can be made, tracked, and adjusted over time."

Oshiro said Green has participated in multiple discussions over the coming request for proposals for the U.S. marketing contract and is following the issue closely.

Oshiro said Green "wants to see a balanced approach to tourism marketing and tourism destination management implemented so serious work can begin rather than being stuck under the existing extensions. Whether handled by HTA or the DBEDT director, it is more important that it be done soon, be done right and follow procurement laws and get underway so we can finally implement a comprehensive approach to destination management."