The pandemic has brought on some heated discussion about Hawaii’s reliance on the tourism industry and how the economy might be rebalanced once activity ramps up. That reboot has already begun, fueled by Americans’ own eagerness to make their escape with a long-delayed island vacation.
And it’s happening without any huge marketing nudge from the industry. That alone should alert state officials that if tourism is to be reshaped at all, its planners will have to act fast.
The Hawaii Tourism Authority was established expressly to do that planning — which makes the current posture of the Legislature on the agency baffling. It’s likely to undercut the HTA’s ability to chart necessary course corrections and make it harder for legal, taxpaying tourist accommodations to operate in a competitive market.
In legislation due for a final vote today, the HTA would be left with a reduced budget to handle the more robust mission it had adopted to develop a more sustainable and culturally sensitive visitor industry.
And, with the advance of House Bill 862, lawmakers would redirect the counties’ share of the transient accommodations tax (TAT) revenue to the state general fund coffers. The move would compel counties that want to overcome the loss in revenue to add their own surcharge of up to 3% for as long as 10 years.
If the counties raise their own tourist tax, the hotels and legal vacation rentals will pass on a bigger bill to potential travelers, making any illegal rentals that don’t assess the TAT a more affordable, attractive option. The counterargument: Counties will be incentivized to crack down on illegals to rake in the tax revenue.
Perhaps. But it makes no sense to adopt a tax policy that essentially pushes potential visitors in that direction. And on Oahu, where the problem of illegal rentals has been most acute, city officials are still months away from adopting the rules that will make enforcement more practical.
If Gov. David Ige’s administration does end up with this windfall of taxes previously sent to the counties, it should use some of it to bolster the visitor experience. That means, for starters, taking better care of the parks, beaches and other resources visitors and residents all enjoy. After all, county officials will rightly be hesitant to tack the whole of their revenue losses, in the tens of millions, onto visitors’ bills.
As for the HTA itself, the Legislature is now cutting less deeply into its budget than previously proposed. And, thankfully, it now proposes to retain the agency’s mission based on “four pillars” — marketing and branding, Hawaiian culture, the environment and the community — rather than direct it to focus on marketing alone.
Indeed, if Tourism 2.0 is to fit more comfortably within island life, the HTA will need to bring all these elements into sharper focus.
It won’t be easy. It will require thoughtful long-term planning for an industry still trying to find its footing as COVID-19 rages on.
Moving HTA’s research department to the Department of Business, Economic Development and Tourism, as lawmakers intend, won’t make the job any easier. And shifting HTA’s overall budget to the state’s general fund, rather than a fixed share of the TAT — meaning its officials will need to compete for money from the Legislature routinely — will impede its ability to respond nimbly to industry challenges.
Yes, the budgetary gaps are large and must be closed, and lawmakers face difficult choices. But micromanaging a specialized agency is not a long-term strategy for success.
In the 2022 session, when revenue losses should abate, legislators should strike a better balance, providing oversight but giving the HTA the ability to do its job well.
