Back in January, the state’s visitor industry had just wrapped up its sixth record-setting year in a row and, it seemed, there was no stopping Hawaii’s tourism streak.
In 2017, 9.4 million visitors spent $16.8 billion, both records. Tourism was the single largest source of private capital for the state’s economy, responsible for 204,000 jobs and $2 billion in taxes, two more records. And industry buzz anticipated visitor arrivals hitting 10 million this year.
There’s now less confidence in that projection. It did not, of course, factor in various snags, such as those touched off by flooding in East Oahu and North Kauai in April, followed by Kilauea’s ongoing eruption. Another setback is the shakeup at the Hawaii Tourism Authority (HTA).
The HTA board voted last week to fire the state agency’s president and CEO, George Szigeti, without cause. That follows the abrupt resignations, in spring, of HTA’s chief operating officer and chief marketing officer. This wholesale change in leadership is precarious: unless handled carefully, it could prompt flailing at a time when the state’s tourism industry is seeing a dip in growth.
Clearly, Szigeti’s ouster effective Oct. 31 — well in advance of his contract end in late 2020 — was prompted by the political climate at the Legislature, where key Senate members have criticized HTA’s destination management efforts. Structured as a sort of self-ruling state agency, HTA handles a steady flow of public money yet is subject to few transparency-related checks, which in recent years, set the stage for clashes.
A state audit released in February persuasively argued that the agency’s freedom has “facilitated lax oversight, deficient internal controls, and, ultimately, less accountability.” And in late 2017, the state Ethics Commission fined four HTA executives — Szigeti included — a combined $12,000 for violating its ethics code by accepting airline travel upgrades for business trips between 2014 and 2016.
The apparent need to better handle public money — along with valid concerns about the industry’s long-term effects on the environment and local communities — resulted in HTA getting a
$13 million legislative budget cut in May. The funding hit was cast as a leadership stumble.
Still, some tourism-related concerns, such as whether Hawaii is near or exceeding its carrying capacity, are not HTA’s to shoulder alone.
If managing the flow of visitors here is a growing concern, comprehensive discussions should be launched on higher tourism-
related taxes, tightening land use and zoning laws, or reassessing funds for tourism promotion. Whatever the future-focus, key decision-making will fall to county and state leaders as well as HTA’s new leadership and other top tourism executives.
Hawaii’s political climate can be tricky to navigate. In many respects, Szigeti’s 3-year tenure at the top, with year-over-year records in visitor arrival and spending, was a success story. Similarly, former public schools chief Kathryn Matayoshi was ousted by the state Board of Education last year despite rising high school graduation rates and impressive gains in student reading and math scores in nationwide testing. Success, it seems, invites dismissal.
The Senate’s dissatisfaction has also cut off HTA Chairman Rick Fried from serving another term, with Gov. David Ige withdrawing his nomination in May. Fried delivered the HTA board’s message that Szigeti’s termination was a vote to “go in a new direction.” It will be loaded with challenges.
Among them: How to rebound from this year’s natural disaster events slowing tourism on Hawaii island and Kauai. How to untangle the tax-related riddle tied to thousands of illegal vacation rentals. And how to mitigate tourist impacts on infrastructure and natural resources.
HTA is tasked with creating a vision and pursuing a plan for promoting and developing tourism. Where it goes from here must be thoughtfully weighed and deftly managed, as the sole certainty in the tourism industry is its fragility.
