Dissolving the Hawaii Tourism Authority

by Paul Brewbaker, Frank Haas, and James Mak, UHERO, April 5, 2023

State lawmakers in the 2023 state legislature are bashing the Hawaii Tourism Authority (HTA)…again!

This year, the existence of HTA is at stake. Two bills (Senate Bill SB 1522 SD2 and House Bill HB1375 SD3) propose to repeal the HTA although they differ in the entity that would replace it. At issue is finding the most effective governance system for managing Destination Hawaii.

If passed, SB 1522 SD2 would establish an Office of Tourism and Destination Management [OTDM] within DBEDT (for administrative purposes). It would be governed by a nine-member (unpaid) Board of Directors appointed by the governor. The board membership would include a member from each of the 4 counties who reside in the respective counties, a member who represents the hospitality industry, a member who represents the airline industry, a member who represents the retail industry, and a member with a background in Hawaiian culture, and a member with background in agriculture. (Presumably, the county representatives are not county government executives acting in their official capacities.) It would essentially do what HTA is presently doing plus tourism research (which is currently housed in DBEDT). It would have an executive director, appointed by the OTDM Board of Directors, who would be responsible for its day-to-day operations. Funding for OTDM would come from the general fund (around $50 million for fiscal year 2023-2024 and the same sum for 2024-2025). This means that there will be no dedicated stream of revenues (i.e. the transient accommodation tax) that OTDM can count on; instead it would have to fight for its funding every year at the legislature. (The funding link between HTA and the transient accommodate tax has already been severed.)

In the House of Representatives, HB No. 1375 SD2, if passed, would replace HTA with a destination management agency (DMA) that’s attached to DBEDT for administrative purposes only. The agency would be headed by a commission (akin to the Public Utilities Commission) that would consist of 3 paid members appointed by the governor (not subject to Senate confirmation); members would serve terms of 4 years (but not to exceed 8 years). Commissioners will appoint an executive director (who has knowledge, experience and expertise in all of the represented industries) to be in charge of the day-to-day operations of the office and its staff. Thus, the current 12-member HTA unpaid citizen board will be replaced by a (paid) 3-person commission; all the powers and duties conferred on HTA by HRS Chapter 201B will be transferred to the commission.

Honolulu Star-Advertiser editors opine that creating a new agency while tourism is moving in a new direction is not a good idea. A better idea is to fix HTA. The editors offer no recommendations on how HTA should be fixed. So what is not working at HTA that requires fixing so it can better carry out its mandate to manage Destination Hawaii?

In a white paper that we wrote in 2019 (Charting a New Course for Hawaii Tourism), we argued that HTA “has faced chronic structural challenges” which have prevented it from fully taking on the role as the lead agency for destination management. Hence, “achieving HTA’s mission was never realistic given the limitations of the governance model under which it has operated.” The lack of effective management is the root cause of the growing resident dissatisfaction with tourism. On the surface it appears that HTA has authority to “coordinate all agencies and advise the private sector in the development of tourism-related activities and resources;” in reality HTA’s statutory authority lacks force. HRS 201B-13 states, “Any state or county agency may render services upon request of the authority.” May is not shall. And even if other government agencies and stakeholders are willing to co-operate, where will the resources come from? Significant improvements in tourism destination management will require a new management model that will address the current structural deficiencies.

That Hawaii has not had (and still does not have) an effective governance system in tourism was publicly acknowledged in HTA’s FY2015 Annual Report to the Hawaii State Legislature: “In 2015, the HTA developed a new 5-year strategic plan to replace the previous 10-year plan adopted in 2004. The Hawai‘i Tourism Strategic Plan 2005-2015 was organized as an overall “state” plan for tourism that designated government agencies or various private-sector groups as the lead agencies responsible for some of the plan’s key initiatives. In reality, the HTA did not have sufficient authority or resources to require others to help carry out that plan, or to constantly monitor and oversee what was being done by others. Therefore, the new Hawai‘i Tourism Authority Strategic Plan (HTASP) is an “HTA” plan only, though it recognizes the need to work with partners and stakeholders.”

Tourism is a complex sector that involves many different types of actors and stakeholders, both private and public. An effective tourism governance system is one that is able to pull together all the diverse stakeholders to work together to achieve a common goal using the least amount of resources. Maria de la Cruz Pulido-Fernandez and Juan Ignacio Pulido-Fernandez put it succinctly by defining governance in tourism as “…the coordinated participation of all stakeholders in the tourist destination with a view to achieving shared goals…This involves dialogue and the on-going involvement of all destination stakeholders, which fosters negotiation, consensus, commitment, knowledge exchange and agreement between all public and private stakeholders.”

Thus, an effective tourism governance system in Hawaii is one that is able to provide horizontal coordination (i.e. coordination across state agencies), vertical coordination (i.e. coordination between state and county agencies) and interaction with the industry, the community and all other tourism stakeholders. This suggests a need for a new model of tourism governance in Hawaii which is able to manage tourism across jurisdictions, agencies, functions, and stakeholder groups. It can be a revamped HTA—a super-HTA– that is endowed with the authority to marshal the expertise and resources of other agencies in addressing tourism’s challenges.

Another suggestion is to look at the composition of the board. The Hawaii Tourism Authority board was designed to have a balance of industry, community, Hawaiian culture and other diverse representatives. The reality has been that this diversity hasn’t always been represented on the HTA board. The long term solution for sustainability will require buy in and participation from a broad range of experts and stakeholders.

The current bills at the Legislature don’t adopt the two suggested changes. In each case, a new governing board/commission moves into the building replacing the old board that’s moving out. The same structural deficiencies remain. Hence, there is no assurance that the proposed HTA replacement agencies will be able to manage Destination Hawaii any better than HTA. Co-ordination problems will continue. 

Instead of rushing into a decision that holds little promise of success, what is needed is a cool-headed look at how Hawaii can craft a new tourism governance system that will actually work. Hawaii is not alone in trying to fix its destination governance system; other destinations are doing the same, and some—especially in Europe– have a head start on us. We can benefit from studying what other destinations are doing. There is a bill (HB1381) at the Legislature that proposes to do just that, but it didn’t get a hearing and, thus, died during the session. Repealing HTA without an improved replacement is unwise.

PDF: Read the full UHERO brief.