Voices of Authority
Once the envy of the industry, Hawaii’s tourism promotion infrastructure is old and outdated. Can Shari Chang and the HTA bring it into the 21st century?
From the '60s through the '80s, Hawaii and its various visitors' bureaus were the models of tourism success, even though few fully understood the nature of the phenomenon that was tourism. Whatever they did, visitors came. Whatever they didn't do, visitors came. According to the Hawaii Visitors & Convention Bureau, visitor arrivals grew 865 percent between 1965 and 1995, from about 687,000 to 6,629,000.
Joseph Toy, director of Hospitality and Leisure Consulting at PriceWaterhouseCoopers, says for the first 30 years, Hawaii had no tourism coordination or plan. "When tourism was developing here, the government's need to nurture the industry wasn't as necessary. Hawaii was a high-demand and rapidly growing destination," says Toy.
The '90s delivered the one-two punch of the war in the Persian Gulf and the Asian economic collapse. Suddenly, Hawaii's tourist industry found itself in the back of the line, the victim of its own success. During the salad days, when visitor arrival statistics were rising as high and as neatly consistent as Steve McGarrett's hairdo, Hawaii's competitors, especially those in the Pacific Rim, realized that tourism wasn't a wave to be ridden but rather a river that could be altered, dammed and harnessed. Tourism—countries like Australia, Thailand and Mexico discovered—was a product that is grown and manufactured, no different than wheat or automobiles. They also discovered that tourism is a huge industry, worth about $3 trillion a year or about 5 to 7 percent of the world's economic output. And those countries have spent and planned accordingly. For instance, Thailand's Ministry of Tourism budget is a massive $100 million a year, while Australia's is approximately $65 million (see sidebar). Meanwhile, Hawaii waited and waited and waited for the good times to return.
Shari Chang, chairwoman of the Hawaii Tourism Authority (HTA), remembers those heady days fondly. In the early '70s when she was a student at the University of Hawaii, Waikiki was the place to be: sun and surf in the daytime, the clubs at night. It was a wonderful place to play and stay. But although the beach and the buildings are still there, things aren't the same anymore. According to Chang, something is missing.
"I think what made Waikiki special then and what makes a destination special in general is the mix of local people with visitors and the kind of bond that they form," says Chang. "I met so many warm and wonderful people in those days down there. But the locals don't go there anymore and it isn't the same thing. If you isolate locals and isolate visitors then you get something like Jamaica. No one leaves their compound. Whether we like it or not, Waikiki is synonymous with Hawaii. If Waikiki has a tarnished image, so does Hawaii."
For the last year and a half Chang and the rest of the governor-appointed board of the HTA have been furiously trying to turn back the clock and put Hawaii back on top of the heap by running the islands' tourism marketing efforts like, of all things, a business. Now going on two years old, the HTA is the state's lead agency to oversee the visitor industry. It has replaced the Hawaii Visitors and Convention Bureau, which now must receive HTA approval and funding authorization.
With an annual budget of $60 million, funded by an increase of the state's hotel room tax, the HTA is the first, albeit very, very late step in bringing Hawaii into the 21st century of strategic planning for tourism. That means introducing three important and long-overdue elements that are crucial to any type of serious tourism development: dedicated funding, long-range planning and accountability. Until the creation of the HTA and its dedicated funding, tourism marketing budgets (channeled through the HVCB and its predecessor, the Hawaii Visitors Bureau) were subject to yearly approval by the state Legislature. That procedure assured inconsistency, short-sighted planning and political mischief making. More importantly, there were no clearly stated criteria in place by which to determine the success or failure of an initiative or an awarded contract. For decades visitor arrivals always rose, so theoretically everything worked.
"Scary, isn't it?" says Chang. "As a business person in the industry when some of these contracts were renewed I used to wonder whether it was based on performance or politics. But that has changed.
"I just met with someone from the Poipu Beach Resort Association (on Kauai) who had just applied for a product development grant through the HTA," adds Chang. "She wasn't happy about all the paperwork she had to do but after she was finished she knew that someone else wasn't going to get the grant just because of some strings their uncle pulled."
Last June, the HTA submitted its master plan called "Ke Kumu: Strategic Directions for Hawaii's Visitor Industry," a comprehensive document that outlines everything from communications and community relations strategies to regulations and investment incentives. The 19-page document serves as a sort of Bible or template in which nearly every HTA initiative and proposed contract is held up and compared.
"The visitors' bureau in the past had no goals, which wasn't really their fault because no one was really requiring anything besides showing an increase," says Chang. "But an increase in what? Just an increase in visitor arrivals, is that enough? I have bitched about the HVCB over the years because they have done some things that have made you wonder who was minding the store. They had heads of marketing who had no marketing experience at all. But we've seen a lot of changes over the last several years."
Changes indeed. One of HTA's most significant changes may be how it has segmented its target markets previously categorized as simply eastbound and westbound into 10 different markets (U.S. West, U.S. East, Japan, Canada, Europe, Latin America, Other Asia, Oceania, Hawaii Convention Center and Other). The new accounting system will not only enable the agency to better focus its marketing efforts but to also allow it to assess the success or failure of those efforts.
According to Toy, HTA's segmentation reflects the organization's wish to run tourism promotion as a business, incorporating business principles such as dissecting the market and inserting measurable milestones to chart success. These are mechanisms that have been effectively employed by rival destinations for some time now.
"We will know more about our visitors than we ever did," says David Carey, HTA vice chairman and president and CEO of Outrigger Enterprises, Inc. "The HTA has dramatically improved the measurement accountability of tourism for the state, and I believe it is a real plus for all of us."
So now, according to Carey and Chang, Hawaii will not be everything to everybody and will not be marketed as such. For instance, West Coast residents, who are more frequent visitors, don't need to be educated about Hawaii as much as the East Coast visitor. In other words, Diamond Head and Waikiki play a smaller part in West Coast ad campaigns. Value and convenience will be major themes in those campaigns. And there will actually be campaigns on the East Coast. According to Chang, Hawaii has lost approximately 500,000 visitors from the East a year for the last seven years because we have failed to market in that area. "I testified in front of the Legislature that if we don't establish ourselves on the East Coast soon we will be in big trouble," says Chang. "When Castro dies and Cuba opens up we are going to get killed if we aren't prepared."
"We are not going to compete with Manhattan," adds Carey. "We aren't going to compete with New Orleans. We've got beauty, climate, people. So our activities should be based on that."
Another important initiative brought on by the HTA has been how it defines success—total visitor expenditure, the result of multiplying expenditure per person per day with length of stay and visitor arrivals. In turn, the HTA's goal is to grow visitor expenditures an average of 4.6 percent through 2005.
Previous to HTA, success was determined by airline arrival numbers and hotel occupancy rates. Those are still important statistics for sure, but they are numbers that give an incomplete picture.
"We are not interested in increasing visitors if they don't increase expenditures," says Bob Fishman, HTA's CEO. "We aren't terribly interested in the person who comes here and doesn't stay in a hotel, rent a car, or go to restaurants. In other words, doesn't put any money in the economy."
"Before we just focused in on bodies but weren't thinking about who was coming, how much it was costing us to bring them over here and how much pressure we were putting on the infrastructure." says Carey. "When we set our 5-year projections as part of the strategic plan, we asked ourselves how many more arrivals can we absorb, and it wasn't much. So it is a matter of getting people who come here to spend more money or attracting people with a pattern of spending more money. And it is also about getting everyone to stay longer."
So how does tourism promotion work under the HTA? According to Chang, it's all business. The HTA now requires that marketing plans and grant applications be submitted with clearly defined goals and outcomes that are supported by numbers.
"The whole notion of accountability rings like a loud bell at every HTA meeting," says Fishman. "Are we getting the return on investment that we thought we would?"
To illustrate the emphasis on outcomes and returns Carey looks to recent film and television projects shot in Hawaii. "Waterworld was tremendous business for the Big Island but it did diddly squat for tourism, no one knew that was Hawaii. Same with Six Days, Seven Nights, we were supposed to be Tahiti," says Carey. "I'm not saying don't support these projects, just don't support them with tourism dollars. 'Baywatch Hawaii' was a good decision, 'Destination Stardom' was not. Why? Ratings. Numbers."
The HTA is also looking for ways to maximize the effectiveness of events already on island soil. For instance, according to Chang, when the state's Pro Bowl contract with the NFL recently came up for review, Chang discovered that while the media coverage of the island was tremendous, the state got no commercial spots during the telecast. Chang sat down with NFL officials, notoriously tough negotiators, and was able to broker a deal in which the state received a coveted and normally outrageously expensive commercial spot on the Super Bowl pre-game show for free. Furthermore, Chang is also trying to relocate more Pro Bowl activities to Aloha Stadium, turning the all-star game from a week-long event to a month-long program.
As for the HTA itself and its outcomes, it has just recently finished its first cycle of business and will be releasing an evaluation of its programs in the next couple of months.
"Are we making all the right moves?" asks Carey. "Nah, nobody does. I'm happy that we have made some progress but I'm a business executive so things never move fast enough. We are just testing the first stages of our business plan, and we are going to find out that we have done some smart things and we have done some dumb things. And then we will just have to do more of the smart things and less of the dumb things."
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