Posted on: Friday, August 30, 2002

Anxiety grows over delay in marketing plan

By Kelly Yamanouchi
Advertiser Staff Writer

Tourism leaders warned yesterday that the ongoing delay in approving next year's state tourism marketing contract and budget could hamper Hawai'i's already-struggling visitor industry just as it may be gaining momentum.

Last month, the Hawai'i Tourism Authority agreed to enter negotiations with the Hawai'i Visitors & Convention Bureau for a new one-year tourism marketing contract that would replace a $37 million contract that expires Dec. 31.

But the authority's new board has not yet approved a budget, the visitors bureau has not yet submitted its marketing plan due Oct. 1, and the two entities have not yet signed a contract.

"We're out on a limb here," acknowledged Frank Haas, the tourism authority's marketing consultant. But, he added, "We are actually doing planning right now (with the bureau). It's not like things are dead in the water."

Tom Mullen, general manager of American Express Hawaii, said yesterday that the authority's thorough evaluation of the budget is appropriate and understandable but noted that action is needed now.

"We are planning for next year now, we are doing our fiscal budgets for next year now, and what we want to know is what the HVCB is planning," he said. "If you think about it, our competition is not going to stop. It's going to cost us a lot of money to get that momentum back."

Haas said part of the delay with the budget and contract talks is that the authority is trying to more carefully evaluate the issues in the wake of a state audit earlier this year that said the authority failed to adequately account for how it spent tax dollars.

"We're very sensitive to the comments of the state auditors that we're looking at everything more closely," Haas said. "The new board is coming up to speed and they want to feel comfortable that they have what they need" before approving the budget.

The value of the contract also is one of the points of negotiation, given Gov. Ben Cayetano's $5 million cut to the authority's 2003 budget.

"We know we're going to give them the contract but we just don't know the details," said Stephen Yamashiro, who sits on the tourism authority board.

The $5 million cut will come from the visitors bureau's calendar-year budget this year and next. Haas said the bureau has not yet submitted a plan for what might be cut from the remainder of its budget this year.

"We're assuming it's $2 million," Haas said.

He also said businesses in the tourism industry shouldn't wait until a budget is approved to make plans for next year.

"The world doesn't stop until all the I's are dotted and all the T's are crossed," he said. "You proceed on assumptions subject to final approvals."

However, Yamashiro said he also is concerned that marketing opportunities may be lost because if the bureau's budget is not quickly in place.

Karen Hughes, regional director of sales and marketing for Starwood Hotels & Resorts Worldwide Inc., said one of the greatest challenge for the tour wholesaler industry is the timing of the bureau's budget.

"The worst message in the down market right now is to not be ready," said Keith Vieira, Starwood's senior vice president.

Mullen said the $150,000 that he wants matched by the visitors bureau for marketing — which would include a travel planner magazine insert and other media advertising — could generate

$1 million in financing from the private sector, and has the potential to draw 16,000 visitors to the Islands next year.

"We shouldn't lose the program for the want of making a decision," Yamashiro said.

Mullen urged the authority to approve an interim budget for bureau, but Haas said allocating part of the money may not help because without knowing the total budget, it will be difficult for bureau to set priorities and allocate money.

"The urgency is that we need to make sure we don't lose our opportunities, to keep the momentum that we have going, specifically with the Westbound market," Mullen said.

Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.