State-funded marketing is not the answer to low tourist turnout

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

When you make it difficult for people to visit you, they tend to take the hint and stop coming.

That’s a good strategy for dealing with unwanted houseguests, but not the smartest move for a state that depends on visitor dollars to fuel its economy.

Hawaii already has some of the highest visitor taxes in the world. And it’s about to get worse. That's because earlier this year, Gov. Josh Green signed into law SB1396, also referred to as the “green fee” bill.

This measure calls for the state’s transient accommodations tax rate to increase from 10.25% to 11% starting Jan. 1, 2026. It also applies the TAT to cruise ships — a move that the Cruise Lines International Association has challenged in a federal lawsuit.

Not surprisingly, Hawaii’s visitor numbers are already slipping even before the tax increase takes effect. In response, representatives of the visitor industry have called on the state to increase its marketing efforts.

According to an article in the Honolulu Star-Advertiser, top tourism executives voiced concern in a letter to Gov. Green “that Hawaii’s visibility and messaging are not keeping pace with other destinations.”

The executives wrote, “With consistent and dedicated funding, both state organizations and external partners can invest and plan strategic messaging campaigns to amplify the story and culture of Hawaii to a global audience.”

In other words: “Let’s spend a lot of taxpayer money on advertising.”

Hawaii’s declining arrivals shouldn’t come as a shock, though. When the Legislature was debating SB1396 earlier this year, the Grassroot Institute of Hawaii warned that higher tourism taxes would affect visitor numbers and spending.

Grassroot testimony cited multiple studies that examined the impact of high tourism taxes. One recommended lowering visitor taxes to increase competitiveness, another found a 10% increase in tourism taxes reduces demand by 5.4%.

I share the concern about declining visitor numbers, but I don’t agree that state-funded marketing is the answer. In fact, it’s a little nonsensical. We raise taxes on tourists, so fewer tourists end up coming to Hawaii. So we take tax money from locals in order to buy ads to get more tourists to come.

Dress it up in language about “strategies” or “destination management,” and that’s basically the mission of the Hawaii Tourism Authority.

I believe that tourism is important, but destination marketing should be managed and paid for by the visitor industry, not taxpayers. If Hawaii policymakers want to help attract tourists, they should focus on making the state more affordable, not throwing more money toward marketing.

E hana kākou! (Let's work together!)