Familiar issues in audit
A decade after a critical audit,
the state and the visitors bureau
have failed to fix oversight shortfalls
A blistering state audit of the Hawaii Visitors & Convention Bureau shows that the state and the private bureau are facing some of the same issues 10 years after the last time the HVCB was hit by a negative audit.
A 1993 state audit recommended that the state Department of Business, Economic Development and Tourism create measurements for the effective use of state funds by the bureau.
The audit said that state contracts should be signed on time, to improve contract management.
A decade later, another state audit has blasted the state Hawaii Tourism Authority for some of the same shortcomings. The authority, formed in 1998, took over the responsibility for contracting with the bureau.
The new audit said that the tourism authority agreed to $151.7 million in contracts with the bureau, covering January 2000 through December 2002, without clearly defined goals and objectives.
"As a result, the authority was unable to adequately assess whether the $151.7 million in state contract funds were effectively spent," the new audit said.
The authority signed the contracts when it was led by Bob Fishman, who stepped down when the Pentagon called him up after 9/11. Rick Humphreys served as an interim executive, then Rex Johnson took over as chief executive in September.
And as for signing contracts on time?
The authority did not sign the bureau's current $33.2 million tourism marketing contract until this month, even though the contract's term started in January, five months ago.
The new state audit, conducted from October up through this month, has not yet been publicly released, though draft copies were given to some state officials. A final version of the audit is to be released next week.
The recurrence of problems from the last audit shows that answers aren't easy.
Part of the problem is that it's inherently impossible to measure the exact dollar value of marketing, whether for the state's tourism industry, or for a business, said David Carey, a former board member of the Hawaii Tourism Authority and chief executive of Outrigger Enterprises Inc.
Still, the authority has worked to strengthen its hold over the visitors bureau, which works for the visitor industry, and has a 40-member board of directors comprising representatives of tourism companies.
Under Johnson, the authority has added so-called loyalty provisions to the bureau's contract, intended to prevent the bureau from criticizing the authority or lobbying against it.
Those provisions were negotiated in the HVCB's current one-year contract, and it took state Attorney General Mark Bennett's involvement before the contract was signed earlier this month.
That was part of the reason for the delay.
The authority has also prohibited the bureau from entering contracts without sharing the contract information with the authority, a reaction to the bureau's confidential "Lilo & Stitch" marketing venture that ended earlier this year.
But the relationship between the state authority and the private bureau has become even more gotten complicated lately.
The HVCB's million-dollar contract is up for bid, and the HTA is reviewing competing offers.
Three weeks ago, Lingle named Marsha Wienert, executive director of the Maui Visitors Bureau, as the state's first tourism director. The Maui Visitors Bureau is an island chapter of the HVCB, and Wienert has been its executive director since 1994.
Initially, Wienert said she hoped to take an active role in awarding the HTA contract, and that she could be objective, even though the contract is held by her employer.
It didn't work out. After discussing the issue with Linden Joesting, a state deputy attorney general, Wienert did not participate in the formal contract presentations last week, Wienert said yesterday.
Wienert said she also may not vote on the contract when it comes to the authority's board for approval. Wienert is stepping down from the Maui visitors bureau to start her new state job next week, which eliminates a direct conflict of interest.
But because of questions about the appearance of a conflict, Wienert plans to ask the state Attorney General's Office for a formal opinion on her role.
Wienert said she is concerned about dividing up the leisure marketing contract by geographic regions. Currently, the bureau is responsible for global marketing in all regions.
"How do you keep the brand image and the integrity of it when you've got multiple people doing the marketing in the various geographic areas?" Wienert asked yesterday.
In addition to these complications, Hawaii's economy is recovering from world events that have stung the international tourism industry.
In the first five months of the year, international visitor arrivals to Hawaii have dropped 7.8 percent, the result of the war with Iraq and the spread of severe acute respiratory syndrome, or SARS.
But domestic travel to the islands is growing. Visitor arrivals to Hawaii from cities in the United States have increased 3 percent to 1.78 million people from 1.73 million last year.