The Hawaii Tourism Authority, which is facing an existential crisis in a pair of bills about to go into House-Senate conference committees, took a swing back Wednesday in a press conference in Honolulu, with the organization’s CEO calling it “a critical time at the Legislature.”
“We’ve been inundated with calls of concern from people throughout the state and our communities in our industry,” said John De Fries. “To say we’re at serious odds with the Legislature is an understatement. But … we all care about our island home, and this standard and this kuleana gives me optimism that in the next five to 10 days, we will be able to find our way into the future.”
De Fries was referring to House Bill 1375 and Senate Bill 1522, which would dissolve the HTA and move its functions to an Office of Tourism and Destination Management within the Department of Business, Economic Development and Tourism.
The Legislature in 2021 axed HTA’s funding from the Transient Accommodations Tax-funded Special Tourism Fund. Although then-Gov. David Ige vetoed House Bill 862, both houses of the Legislature overrode his veto. The agency tasked with tourism marketing and destination management received at least a temporary reprieve through federal coronavirus relief funds.
De Fries said state tax revenue generated by tourism is an indicator that HTA is doing the job it was created to do. Those revenues were $2.09 billion in 2019, $1.53 billion in 2021, $2.21 billion in 2022, and $409 million in the first two months of 2023. No numbers were available for 2020 because of the lockdown phase of the novel coronavirus pandemic.
If the 2023 numbers hold steady, direct state tax revenue from tourism would be $2.45 billion for this year.
“When I joined the HTA in September of 2020, the numbers that we achieved in year 2022, I thought, was four to five years away,” De Fries said. “And thanks to the great work of the private sector, together with HTA as its public partner, we’ve been able to generate these kinds of triggers from a marketplace globally that is still relatively unstable.
“And so the consistency of all of our work in the area of branding, in the area of (destination management market plans), and work in our communities must continue.”
De Fries said HTA should be allowed to complete its strategic action plan that covers the years 2020 to 2026
“That plan has four major pillars in it — natural resources, Hawaiian culture, community and branding. And an important element of this is the work we’re doing on every island, where a Destination Management Action Plan steering committee is guiding our way into resolving some of the issues, some of the hot spots that now are present on every island.”
HTA has requested $75 million for Fiscal Year 2024 and $60 million for 2025, plus $64 million to repair the roof of the Hawaii Convention Center in Honolulu.
While both HB 1375 and SB 1522 have been subject to amendments by both houses, the former proposed in its original version a $60 billion budget for HTA in 2024 and the $64 million requested for the convention center roof repairs. The latter didn’t have appropriations for either the agency or the roof.
De Fries showed a video of a House Tourism Committee meeting, featuring committee chairman Rep. Sean Quinlan, an Oahu Democrat, who authored HB 1375.
“I just want to say publicly, thank publicly John De Fries and your entire staff. I’m very sorry there’s been so much uncertainty of HTA,” Quinlan said on the video. “I really can’t apologize enough for the way all this has gone down. I want to thank you guys for your loyalty to the state. I want to thank you guys for your hard work. It has not gone unnoticed. And you guys have started the important work of destination management.
“Everything that we’re doing right now started with you.”
De Fries said he appreciates Quinlan’s comments, and said the remarks recognize “that each of the last two years, when our source of funding was no longer the transient accommodation tax, but instead … the federal monies, that that delay in getting our funding identified, committed and deployed affected the sequence in which we do our work, the cadence with which we do our work.”
“And people at the Legislature are now starting to understand the implications to that,” De Fries said. “Because no business should be running on a fiscal year that starts on July 1 and gets its financial commitment in November of that fiscal year.”
De Fries also showed a video of Sen. Donovan Dela Cruz, the Ways and Means Committee chairman who authored SB 1522. De Fries said the video came from a legislative panel in a spring tourism update HTA hosted on April 12 for community and industry partners.
“I feel really, really good on what we passed on third reading, because it is a lot of money,” said Dela Cruz. He was referring to the House bill, which included the roof money but not HTA funding
“It’s really difficult to give the $75 million to the HTA plus the $64 million for the convention center. We have to make our choices (about) how do we accommodate and meet the needs of what’s suffering at the moment?”
“While it’s not everything that we asked for, I appreciate the fact that Chair Dela Cruz made that commitment in front of an industry that’s very anxious about this.”
De Fries expressed guarded optimism that the HTA would be funded either through conference committee or through the governor’s budget bill.
“At HTA, we’re not questioning the fact that we need change, OK? It’s been 25 years in this model,” he said. “The model has been refined along the way.
“The model has been affected, more recently, in the past couple of years when … our dedicated source of funding, TAT, and procurement exemption were taken away in one swoop, that then began to affect the organizational structure of the way in which we do business.”
Email John Burnett at jburnett@hawaiitribune-herald.com
