New focus for center

Marketer and manager SMG
is changing how the state seeks to
fill the Hawaii Convention Center

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By Tim Ruel
truel@starbulletin.com

Changes are on the way for the $350 million Hawaii Convention Center, under a new marketing company.

The board of the Hawaii Tourism Authority yesterday unanimously approved a $14 million marketing contract under which SMG will replace the Hawaii Visitors & Convention Bureau.

SMG, which manages the center on a contract that lasts through June 2003, is set to take over the marketing contract in January and run it through June 2006. A new state law, aimed at fostering change at the convention center, mandates that the center's manager must also serve as its marketer.

SMG's contract will be reviewed every 18 months against targets to be approved by the authority. SMG, based in Philadelphia, markets two other convention centers in the United States.

SMG will also have access to a $2 million marketing flexibility fund, which allows it to go after significant conventions.

The visitors bureau has marketed the convention center ever since its construction was approved in 1995, and the bureau has the benefit of being the state's lead marketing agency for all other aspects of tourism. The Hawaii Hotel Association had raised nuts-and-bolts questions about the management change.

The authority and SMG issued a written response, outlining a new message for the center and suggesting the creation of a committee that will smooth the transition of the contract. Because of concerns that SMG would be getting into the business of destination marketing, the authority is shifting $200,000 out of the convention center's advertising budget to another use, said Frank Haas, tourism marketing director for the authority.

SMG thinks it can benefit from the expertise of the bureau's staff, and has received several letters of interest from potential employees, Davis said.

SMG's new message for the center is partly based on the views that Hawaii isn't seen as a serious place for business, is too expensive and is too far away, said Joe Davis, general manager of the Hawaii Convention Center.

"Repeatedly, we have heard about lost business because people see Hawaii more as a leisure destination than a business destination," SMG said in its written response to concerns. "Part of the solution is education and the other part is dedication and commitment to a business brand."

SMG plans to use a new tag line: "The Hawaii Convention Center, Where Business and Aloha Meet," which replaces "The Ultimate Global Gathering Place." The firm is also looking for a new logo to replace the existing canoe sail, which is not easily associated with Hawaii, SMG said.

SMG wants to pursue partnerships with local high-tech firms, the University of Hawaii and the state Department of Business, Economic Development and Tourism, Davis said.

Meanwhile, the Hawaii visitors bureau is keeping its larger contract to market all of Hawaii to tourists, but the authority yesterday reduced that contract by $1.25 million to $33.2 million for 2003. The cut became necessary after Gov. Ben Cayetano axed $5 million from the authority's own $61 million fiscal 2003 budget earlier this year.

The bulk of the bureau's reductions, $830,000, will be taken from developmental markets, said Tony Vericella, HVCB president and chief executive. Those markets -- Asia outside Japan, Europe, Oceania, and Latin America -- send a small amount of visitors to Hawaii, but are seen as having a larger potential. The cuts will leave $2.45 million to market Hawaii in those locations, allowing the bureau to maintain a presence, albeit a smaller one, Vericella said.

"Anytime you're stuck with less resources, everybody has to weigh the pros and cons," he said.

The bureau will cut $100,000 from its administrative budget, leaving it with $2.2 million. Market research will be cut by up to $190,000 to about $500,000.

The bureau is still evaluating its personnel needs. The organization also has a $2 million contract with the tourism authority to secure conventions and meetings that would be held at Hawaii hotels, not the convention center.

In other action yesterday, the tourism authority board approved spending up to $75,000 to work with the state auditor on a legislatively mandated audit of HVCB's performance on its leisure marketing contract. The review, expected to be done by April or May, will include a partial audit of the tourism authority, since it is the oversight body, said Rex Johnson, executive director of the authority.

A state audit earlier this year blasted the authority for lax oversight of spending.