NEWS ANALYSIS
Repackaging Hawaii
The breakup of the contract to
market the state's tourism industry
has prompted queries about
management and accountability
For decades, the New Zealand company Walshes World has promoted Hawaii in that corner in the world to tourists, and the firm has answered to the Hawaii Visitors & Convention Bureau.
Come next year, that will no longer be, under a recent state decision. Walshes World will become a sibling of the Hawaii visitors bureau, and their officials will report to the state Hawaii Tourism Authority. In the words of former Gov. Ben Cayetano, the HVCB will be "just another vendor."
It's an historic turn of events, and like all change, it is bound to raise questions, anxiety and concern. The Hawaii visitors bureau has been the islands' primary voice for a century, and tourism has grown into the state's top industry.
Yet, the new deal, on a policy level, is simple: The Hawaii visitors bureau will no longer be big Kahuna. The Hawaii Tourism Authority, a state agency, will demand that all five of the state's tourism marketing agencies, including the bureau and Walshes World, be accountable for spending taxpayer dollars.
"The people that are responsible need to be accountable," said Frank Haas, tourism marketing director for the authority.
Last year, the quasi-autonomous authority formed a marketing office, and the authority has sought to add personnel to help with managing the contracts. (A veto by Gov. Linda Lingle nixed the prospect of adding three employees this year.)
The Hawaii visitors bureau, stripped for the first time of international tourism marketing duties by the authority, has floated the idea of maintaining control as the head marketing organization.
"We're willing to help facilitate but that's (the tourism authority's) call," said Tony Guerrero, chairman of the Hawaii visitors bureau and executive vice president of First Hawaiian Bank.
The notion has been under discussion since the tourism authority board agreed July 24 to break up the state's tourism marketing contract for the first time.
The board voted unanimously to leave HVCB in charge of promoting to North America, the source of 72 percent of Hawaii's visitors this year and three-quarters of total visitor spending. But the board awarded the international markets, including Japan, China, other Asian countries and Europe, to four separate for-profit companies that have extensive expertise: Walshes World, Dentsu Inc., the Mangum Group and Marketing Garden.
A month ago, the Hawaii visitors bureau joined the HTA and Gov. Linda Lingle on a tourism mission to Japan, Hawaii's No. 2 market for tourists. This week, HTA staffers are back in Japan to talk shop with Dentsu, Marketing Garden and the tourism industry. The bureau won't go on this trip.
The HTA must now negotiate the new four-year contracts with the five marketing organizations, create accountability measures and amend the document that spells out who is responsible for what. It's a process.
In a crisis -- such as the Iraqi war and September 2001 -- the tourism authority is already designated to take the lead, along with other state agencies.
Still, the tourism authority doesn't want to spoil the broth.
"It's clear that there are some limits to our role," said Haas, the HTA's marketing director. "We don't want to do marketing programming. We are in the business of taking strategic plans that are in Ke Kumu" -- the HTA bible -- "and finding marketing companies to implement those plans."
The HVCB first received funding from the Hawaii territorial government in 1903, when it was just a committee. It became known as the Hawaii Visitors Bureau in 1945, then the Hawaii Visitors & Convention Bureau in 1996, when it began marketing the newly built $350 million Hawaii Convention Center.
Amid Hawaii's economic woes of the 1990s, the state created the Hawaii Tourism Authority to free the bureau from state interference. The bureau went from receiving $25 million in annual state funds to $35 million.
Then, a state audit in 2002 found that the young authority had poor management skills. A new authority board and a new chief executive, Rex Johnson, moved to clean things up, and forged a stricter contract covering 2003.
At the same time, the Legislature ordered the bureau out of marketing the convention center and forced an audit of the HVCB, a private nonprofit agency funded mainly by taxpayer dollars. The audit, which slammed the bureau's spending habits, came out last month during the bidding process for the HVCB's $35 million-a-year job. The HTA said the audit did not affect the awarding of the contract, which starts next year.
Cayetano faulted the audit, saying it was a political move, when the point of creating the HTA was to remove HVCB from state micromanagement.
"For many mainland tourist businesses, HVCB is the model they would like to have had in their states. But now HVCB is just another vendor," Cayetano said in an e-mail this week. "Parceling out the marketing on contracts to five different vendors means throwing out the infrastructure of contacts, relationships, goodwill and expertise HVCB developed over the past 50-some years. An incredible waste."
State Sen. Donna Kim, who called for the audit and raked the bureau over the coals for its spending practices, says the Legislature needs to keep track of state funds.
By the way, the bureau cannot criticize the HTA's decision to break up the state contract. Per the terms of the bureau's 2003 contract, it cannot criticize the authority's decisions, or it risks a $25,000 fine.
Hawaii Tourism Authority
