The Hawaii Tourism Authority board voted Thursday to take its U.S. tourism contract to a third procurement and solicit bids for two distinct contracts: one to handle brand marketing and the other for destination management.
In the wake of the new solicitation, which is expected to take at least 75 days, the board voted to buy time by extending three contracts currently held by the Hawaii Visitors and Convention Bureau.
It’s been a wild ride, and it’s still unclear whether HTA’s decision to progress to a third procurement will result in legal proceedings. On June 2, HTA awarded its U.S. brand management and global support services award — worth more than $34 million during the first two years — to the Council for Native Hawaiian Advancement in a second attempt at procurement for the U.S. tourism contract.
HTA had originally selected HVCB for the U.S. tourism award — worth $22.5 million in the first year — on Dec. 2, 2021. Former state Department of Business, Economic Development and Tourism Director Mike McCartney, acting as HTA’s head of purchasing agency, or HOPA, rescinded HVCB’s award in 2021 following an unresolved protest from CNHA.
When HTA embarked on a second round in the request-for-proposals process this year, HVCB lost to CNHA and filed its own protest.
On Dec. 5, McCartney rescinded CNHA’s award, citing the “best interest of the state,” the same reason he gave for HVCB’s earlier rescission. CNHA has formally protested McCartney’s latest decision, which the nonprofit still contends is unlawful.
On Thursday the HTA board approved extending HVCB’s current leisure U.S. major-market-area contract again. The new three-month leisure contract extension is slated to expire June 30. The current six-month extension, worth $8.5 million on the leisure contract, was due to expire March 31.
The HTA board also approved extending HVCB’s global support services contract another three months to June 30. The current extension, worth $750,000, runs through March 31.
The board agreed to prolong HVCB’s island chapter support services contract to June 30 — a six-month extension. The current extension, worth $1.2 million, had been set to expire Dec. 31.
HTA board Chair George Kam said the extensions are subject to approval by the State Procurement Office.
HVCB President and CEO John Monahan testified in favor of bifurcating the tourism contract during the third solicitation, and approving all three contract extensions.
“In light of the two previous failed solicitations, protests and rescissions by the HOPA, it is critical that HTA approach this third procurement attempt with due care and take the time necessary to get it right,” Monahan said.
CNHA CEO Kuhio Lewis testified that McCartney’s decision to rescind was unlawful, and asked HTA to reverse the rescission and affirm CNHA’s full award. CNHA contends that state law HAR 3-126-35 specifies that if an agency is canceling a solicitation after an award, it cannot use “in the best interest of the state” and instead must determine there there has been a violation of law.
Lewis said, “Frankly, we’ve been screwed, and to the tune of hundreds of thousands of dollars, and it’s been a painful 15-month process back and forth; and it’s now been three weeks since the HOPA has made the decision to rescind, and we still haven’t heard what solution is being proposed.”
Rebecca Soon,Ward Research president and member of CNHA’s tourism arm, the Kilohana Collective, asked the HTA board to defer extending the global services and leisure contracts.
“CNHA continues to believe it has an active protest,” Soon said.
She said CNHA was not opposed to extending the island chapters contract.
The extensions, which were not rubber-stamped by HTA, came down to the wire and followed public debate and an executive session. In the end, Mahina Paishon-Duarte was the only HTA board member to vote against two of the extensions: the global services and leisure contracts.
HTA board members, who supported the extensions, discussed the need for continuity, especially in the face of coming economic challenges. The extensions also are expected to allow time for a transition following the next award.
Frank Haas, a Kilohana Collective member and HTA’s former vice president, tourism marketing, submitted testimony that favored a single procurement for the U.S. award.
“Synchronizing marketing and management through the work of a single contractor ensures a seamless approach to fully realizing HTA’s vision of ‘malama Hawaii,’ from targeting the mindful traveler, communicating the concept of malama as part of the brand, properly incorporating cultural content, setting pre- arrival expectations, post arrivals education and messaging, ideally all the way through to developing a post departure relationship,” Haas said.
Several members of Hawaii’s visitor industry, including Hawaii Hotel Alliance President Jerry Gibson, testified or submitted testimony in favor of splitting the U.S. tourism procurement into two contracts and extending the HVCB contracts.
Gibson said the holiday season is soft, projections for the first quarter are off pace by double digits and that Hawaii is “losing visitors to competing markets that are investing nine-figure sums into destination marketing such as Florida, the Caribbean and Mexico.”
He added, “Many properties in Hawaii, particularly in Waikiki, are doing worse than our first year out of COVID or when tourism bottomed out at the peak of the Great Recession in 2007.”
Keith Vieira, principal of KV &Associates, Hospitality Consulting, submitted testimony urging HTA to raise the budget for its next procurement to $40 million or even $60 million, which would fund two separate requests for proposals. Vieira said the marketing and branding award should get a higher share of the funding.
He also argued in favor of extending HVCB’s leisure contract for a year, “so we can compete nationally against those who are coming after our customers.”
