Hawaii Tourism Authority awaits procurement for contract to promote Hawaii

The Hawaii Tourism Authority contract to supply destination management services and promote Hawaii to the U.S. market, the islands’ largest visitor source, is still up in the air at a time when travel spots across the world are competing to tap into rebounding travel demand.

A new five-year contract valued at more than $100 million was supposed to take effect Jan. 1; however, the director of the state Department of Business, Economic Development and Tourism, Mike McCartney, rescinded an offer that HTA had made to the top applicant.

McCartney said in a statement that DBEDT had determined that the solicitation “did not provide for consideration of all factors of significance to the agency, therefore it is in the best interest of the state of Hawaii to rescind the offer and re-solicit the (request for proposals).”

“We are re-starting the process to find a definitive winning proposal to move forward in the best interest of the state,” he said. “The continental U.S. is the largest source of visitors to Hawaii, which makes the effective management of this market one of our most important efforts to bolster our state’s economy.”

The Honolulu Star- Advertiser has made a formal request to HTA for the proposal from the top finalists, scorecards and the complaint that led to the RFP being rescinded. But so far, HTA has not disclosed which applicant received the contract or what went wrong with the agency’s first state procurement. In 2021 lawmakers removed HTA’s procurement exemption, citing a need for greater transparency from the agency.

McCartney said in December that a new request for U.S. proposals would be issued in the coming weeks. However, as the new year rounds into its third month, a new RFP has yet to emerge.

Frank Haas, president of Marketing Management Inc., said the delay in issuing a new RFP is concerning given that it shortens the time applicants have to provide a thoughtful response.

“They are getting to the point where there will be less than 90 days between the RFP and the contract,” said Haas, who is a former HTA vice president and director of marketing. “It shortchanges the state in terms of being able to carefully deliberate on it.”

Haas said the state might be taking more time to avoid another upset with the RFP, “but that’s no excuse, in my opinion. Because it’s a big, complicated foundational contract, they really need to put that out there.”

HTA has created a stopgap by awarding the Hawaii Visitors and Convention Bureau, its longtime contractor and a contender in the failed RFP process, a six-month contract extension. The extension, valued at $8.5 million, began Jan. 1 and ends June 29. Because plans require a lengthy approvals process, the timing of the extension prevented HVCB from beginning to market to U.S. travelers in January, when the majority of destination decisions are made.

Jay Talwar, HVCB senior vice president and chief marketing officer, said as part of its current communications plan, HVCB is sharing ” appropriate behavior messaging (with aloha) to visitors.”

Talwar said the messaging runs on Waze, Facebook, Instagram and is distributed through airplanes/airline communication tools such as confirmation emails, websites, blogs, social, digital and personal video players. It’s also running in some Hawaii hotel rooms, and additional messaging will soon be at airports and on Volta electric vehicle charging stations around Oahu, he said.

Jeff Wagoner, president and CEO of Outrigger Hospitality Group, said HTA and HVCB did a wonderful job during the pandemic, but he questions the effectiveness of any organization operating within the limits of a six-month contract.

“To not have a longer- term opportunity to plan and market does not lend itself well to creating a strategy that will educate or bring consumers to Hawaii,” Wagoner said. “We are one of the largest resort destinations in the world. For us to not have a cohesive, well-thought-out plan where we all latch on and work hard for our state puts tourism, in general, in a position where we may not be as competitive as other major resort destinations.”

John De Fries, HTA president and chief executive officer, said he expects HTA will issue a new RFP for the U.S. contract soon.

“My crystal ball tells me … that we are inside eight days before we issue the RFP,” De Fries said during a March 11 interview with the Star-Advertiser.

HTA Chief Brand Officer Kalani Ka‘ana‘ana said that “there are a lot of moving parts. This is our largest procurement, and so we need to make sure that we take the time to do it right.

“I understand that a lot of people are eager to learn what’s happening and what’s going on, and that uncertainty of not knowing what’s happening is certainly something that we want to addresses, but I also have to address it within the confines of the procurement code,” Ka‘ana‘ana said. ‘My commitment to you is to always be transparent absolutely when everything is available. I want you to know what happened. I want my neighbors to know what’s happening.”

Ka‘ana‘ana, who is writing the revised RFP for the U.S. contract, said he anticipates that there will be some changes in the document.

There’s a lot riding on HTA’s first procurement under its new, more destination management-oriented paradigm, which requires a pivot to “regenerative tourism.”

The U.S. procurement also sets the tone for procurement of HTA’s international contractors. While Korea, China and Oceania are still within their five-year contract terms, new contracts must be let for Japan and Canada.

Keith Vieira, principal of KV &Associates, Hospitality Consulting, said HTA should have delayed the awarding of a new U.S. contract given the pandemic.

“You have to go with the success. This is not the time to make changes like that,” said Vieira, who was a member of the first Hawaii Tourism Authority board. “I feel like HVCB is the right entity. They have the right relationships with the airlines and the travel distribution system and the social media.

“They’ve got to be creative going forward. They have to be cost-effective. I’m not saying that they don’t need change or improvement, but there’s a reason that they have been doing this for all of these years.”

The HVCB is HTA’s longest- running contractor, and was favored to win the new contract although it faced stiff competition going into the process. At the start of last year’s procurement process, 27 entities, some with Native Hawaiian ties, had registered their intent to apply for the U.S market contract.

HVCB, whose roots go back more than 100 years, predates the creation of HTA by the state Legislature in 1998. HVCB is so intrinsic to HTA that the agency has awarded the bureau 10 contracts since 2016 totaling more than $155 million.

With the ending of the lucrative U.S. contract, HVCB has five contracts with HTA totaling $25.6 million, including the six-month extension on the U.S. contract, a $4.5 million global meetings/conventions contract, a $2.4 million contract for island chapter support serv­ices, a $750,000 contract for HTA support services and a $9.4 million contract for destination management and community support.

Without the U.S. contract assured, and with three of the five contracts that HVCB holds expiring in 2022, the future of the tourism powerhouse is uncertain. It’s also likely to be decided without complete sunshine unless the state reverses its decision to withhold public records.

HTA has told the Star- Advertiser that it will not tell the newspaper what went wrong with the procurement process until the next one is completed.

HTA spokesperson Ilihia Gionson said Thursday in an email that the state’s chief procurement officer has ruled that none of the public records sought by the newspaper could be released until after HTA had awarded a new contract.

Gionson said the state’s chief procurement officer views the transaction as a singular process since the original RFP was rescinded and had to be reissued.

“According to the (chief procurement officer), it would not be in the best interests of the state and the procurement process generally to have any information of the type you seek made available to the public (which would include other potential bidders for the coming re-issuance) until after the process has closed,” he said.