Citing public concerns over a botched attempt to award the state’s most important tourism marketing contract and ever-increasing numbers of visitors crowding beaches, streets and hiking trails, lawmakers are moving to dramatically reshape the agency in charge of marketing Hawaii as a tourist destination.

Measures proposed in the House and Senate differ in several ways but share a common goal: to essentially eliminate the Hawaii Tourism Authority and replace it with an agency focused on destination management.

Rep. Sean Quinlan, who authored a House bill, said the tourism authority succeeded in its mission to promote Hawaii.

“They did so well that the public feels we have a few too many tourists and that residents are being crowded out of public resources,” said Quinlan, who also chairs the House Committee on Tourism, which has scheduled a joint hearing on the bill with the House Committee on Economic Development for Thursday.

“It’s about putting the local community first, which we’ve not done for a long time,” Quinlan said of his bill.

Quinlan’s bill would refashion the Hawaii Tourism Authority and rename it the “Hawaii Destination Management Agency.” Like the authority, the agency would be an independent entity, attached to the Department of Business, Economic Development and Tourism for administrative purposes only, and governed by its own board.

But unlike the HTA, which is overseen by a 12-person board required by law to include at least five members with tourism industry experience, the new entity would be governed by a three-person commission appointed by the governor with no set number of commissioners required to come from the tourism industry.

Also, Quinlan said, as the organization’s new name indicates, the entity will shift from marketing Hawaii as a tourist destination to managing the state’s resources to balance the needs of residents with those of tourists.

An Evolving Vision

It’s a vision different from what lawmakers had when they established the HTA in 1998. In the preamble of what became Act 156 establishing the HTA, lawmakers wrote: “The legislature finds that the visitor industry brings almost seven million visitors into the State every year. It accounts for almost twenty-five per cent of the gross state product and provides over thirty per cent of all civilian jobs.” 

“In light of the State’s dependence on tourism, it is extremely important that the development, marketing, and research of this industry be coordinated in a manner consistent with the needs of the State,” the act said.

Under the law, the authority got dedicated funds from hotel taxes, and was responsible for creating a “strategic tourism marketing plan.” Although the enabling legislation did envision using hotel tax money “to offset the burdens transients and visitors place on the State and the counties,” there was no mention of the current buzz phrases like “destination management” and “regenerative tourism.” And the overarching idea was for the tourism authority “to further promote Hawaii and tourism in Hawaii making Hawaii a more appealing destination.”

Tourism hit a tipping point two decades later, as visitor arrivals topped the 10 million mark in 2019 and, according to an HTA survey, most residents felt the islands were being managed not for them but for tourists. Amidst this, lawmakers cut HTA’s dedicated funding.

HTA meanwhile promised not simply to market but also to manage tourism. As part of redefining itself, the HTA drafted a destination management plan for each island based on public input.

Still, the authority has only recently begun to implement the plans and, given its mission, simply doesn’t have the statutory power to effect many changes its plans call for.

Quinlan commended the authority for shifting to destination management but said the organization’s focus has remained on marketing with destination management “as an add-on.” The House bill would reverse that, he said, by placing destination management first.

The Senate has proposed a more dramatic plan. A bill introduced by Sen. Donovan Dela Cruz, the influential chairman of the Senate Ways and Means Committee, would dissolve the tourism authority and move its duties and functions entirely to the Department of Business, Economic Development and Tourism. This would put the director of DBEDT, and not an independent board, in charge of the new agency, which would be called the “Office of Tourism and Destination Management.”

The bill states the reason for the dramatic changes. As part of the HTA’s attempts to refashion itself, the authority rescinded a marketing contract, aimed at U.S. travelers, previously awarded to its long-time marketing firm, the Hawaii Visitor and Convention Bureau, which had promoted Hawaii for more than a century. 

Then, in June, the authority awarded the two-year, $34 million contract to the Council for Native Hawaiian Advancement, a community finance and development organization that had assembled a multi-disciplinary team to bid for the contract.

The rescission and award to CNHA led to a procurement protest that former DBEDT director Mike McCartney tried in vain to resolve.

During a series of informational briefings, Dela Cruz and his fellow Ways and Means Committee members grilled the Hawaii Tourism Authority’s chief executive, John DeFries, about the procurement problems. And Dela Cruz referred to the findings of those briefings in his call to dissolve the tourism authority.

“Due to the mismanagement by the Hawaii tourism authority, the award of a $34,000,000 contract for the marketing of Hawaii as a tourism destination to the United States major market area has been in limbo since 2021,” the Senate bill states. “This situation has been widely publicized and has demonstrated the Hawaii tourism authority’s noncompliance with the state procurement code.”

“To re-establish public confidence in the State procurement process, the legislature finds that it is necessary and appropriate to dissolve the Hawaii tourism authority and transfer its duties and functions to the department of business, economic development, and tourism,” the measure continues.

Senate Bill Faces Easier Path

It’s not clear which version of a new Hawaii Tourism Authority will prevail. House leadership referred Quinlan’s bill to three committees for hearings: the joint Tourism/Economic Development committee that is slated to hear the bill on Thursday, as well as the House Water and Land and the House Finance committees. This so-called “triple referral” often dooms legislation because such bills must make it past two committees before a key deadline on Feb. 16.

Dela Cruz’s bill, by contrast, has an easier path: just two committee hearings, with the second being before the Ways and Means Committee, which he chairs. In addition, as the chair of the Senate’s main money committee, Dela Cruz holds enormous influence, with the ability to kill virtually any measure that has a financial element meriting a referral to Ways and Means. Finally, Dela Cruz’s influence has only grown with the recent departure of his former House counterpart, longtime House Finance Committee Chair Sylvia Luke, who was elected lieutenant governor in November.

In any case, Quinlan said he would support the Senate bill and has introduced an identical House companion bill.

Dela Cruz did not return a call for comment.

Tourism executives are prepared to work with whatever the Legislature does, said Mufi Hannemann, president and chief executive of the Hawaii Lodging and Tourism Association.

But Hannemann stressed lawmakers and HTA officials should be as transparent as possible during the process.

“HTA’s present model has always resulted in a positive, productive and collaborative working relationship for HLTA,” said Hannemann, a former Honolulu mayor who was director of DBEDT when the department still had direct responsibility over tourism. That was before the HTA was created and spun off as an attached agency with its own board.

“That being said, it is clear that the general public and our elected officials want to have an open and frank discussion on our state tourism agency, its duties, and its governance,” he added. “As an industry, it behooves us to allow this discussion to occur in a transparent manner, not in a boardroom and not in conference committee.”

“Hawaii’s Changing Economy” is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.