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The Honolulu Advertiser

Posted on: Monday, September 9, 2002

Travelin' on with the HTA

By Robert M. Rees
Moderator of 'Olelo Television's "Counterpoint" and Hawai'i Public Radio's "Talk of the Islands"

No one should have been taken aback when the Legislative Auditor's Office, in its report of February 2002, observed, "The management problems at the Hawai'i Tourism Authority are both troubling and alarming."

After all, the HTA's purpose appears to ensure bad management by facilitating the transfer of money from the state to the private interests of the tourism industry and its membership organization, the Hawai'i Visitors and Convention Bureau. Once in the hands of the HVCB, the money can be spent without accountability.

Until 1998, the HVCB got its money directly from the state Legislature, but there was a problem. The Legislature kept insisting on accountability. Some legislators, for example, were irritated when the president of the HVCB, Tony Vericella, informed them that his agreement to pay Donald Trump $3.3 million to hold his horrid Miss Universe beauty contest here should be approved lest Trump sue based on what he had been prematurely promised.

The whole idea behind the HTA was to eliminate the Legislature from the equation. The HTA, ostensibly a government agency with a 13-member board appointed by the governor, would receive dedicated funds directly from the hotel tax paid by visitors. The HTA in turn would transfer the money to the HVCB and other private interests.

As a result of the implementation of this new scheme, legislative scrutiny all but disappeared while the annual budget for tourism more than doubled to $61 million (not to mention $31 million a year for the Convention Center).

What followed, according to the legislative auditor, were cumulative expenditures of $144.5 million for which the HTA is "unable to adequately account."

In reaction to the auditor's report, the HTA hired marketing management specialist Frank Haas. He started on April 1, and by April 4 was spinning to the Senate Tourism and Intergovernmental Affairs Committee. Said Haas in defense of an earlier HTA shell game to gain additional funds, "Spending money was a very important element of recovery."

In spite of Haas' suspect start, the HTA should benefit from his marketing expertise, and also from the chairmanship of former state senator Michael McCartney, now president of Hawai'i Public Television, McCartney says of his HTA assignment, "The governor asked me to turn things around."

Additionally, the presence of seven new board members might help. However, at an orientation meeting on Aug. 29, two of the new members kept referring to the budget as "our money."

For the moment, then, nothing has changed. Vericella, still president of the HVCB, decided this year to pay Walt Disney $1.7 million in exchange for some anemic promotional tie-ins with "Lilo & Stitch." Ominously, the new board, in a two-hour executive session on June 17, accepted Vericella's argument that he could spend that much money without board approval because it amounts to very little on a per-market basis.

Even more disconcerting, the new board has hired a new CEO, Rex Johnson, who has zero experience in tourism or even marketing.

From the beginning, HTA's search for a new CEO seemed wrong-headed. Former board member Shari Chang resigned from the search committee on March 14 because, she wrote to the HTA chairman, the process was a "mockery." The committee, suggested Chang, was looking to ease in someone who would tolerate board members "who have abused their state role to try to position their own company's interests as what is best for the state."

Johnson may fit that bill. Says McCartney of his $240,000-a-year CEO whose job is to circle the wagons, "Marketing experience doesn't matter. That's the HVCB's job. Rex is good at consensus."