Visitors bureau loses hold on tourism marketing

By Kelly Yamanouchi
Advertiser Staff Writer

The Hawai'i Visitors & Convention Bureau lost a third of its $25.3 million state tourism marketing contract yesterday, a development that could mean fundamental changes in how Hawai'i promotes itself around the world.

HVCB has been the primary agency selling the Islands to visitors for decades and its hold on the state's marketing contract has been both praised and vilified.

The agency held on to the North American market contract, the most lucrative portion of the agreement.

But in a historic change, HVCB will no longer market Hawai'i to Europe, Oceania, Japan and the rest of Asia.

Those markets accounted for $8 million of the contract. That business will now go to other agencies which had competed for a piece of the marketing agreement from the Hawai'i Tourism Authority.

"We are disappointed, but we are very happy that we've retained the largest leisure marketing contract," said Les Enderton, HVCB interim president and chief executive.

HVCB will continue to promote the state in the United States and Canada with a budget of about $15.2 million.

The bureau also will keep a $1.4 million contract for marketing corporate meetings and incentives in Hawai'i.

The tourism authority selected Tokyo advertising agency Dentsu Inc. to market Hawai'i in Japan under a contract worth about $6.3 million.

Another Japanese agency, Marketing Garden, will get about $850,000 to market Hawai'i to the rest of Asia. The Mangum Group will promote Hawai'i to Europe for about $750,000 and the The Walshe Group in New Zealand will be awarded a contract of less than $500,000 covering Oceania.

The contract dollar values are estimates as the tourism authority will have to negotiate each agreement, all of which run for four years.

HVCB's loss of some of the marketing contract follows the release of a critical state auditor's report of the bureau and the resignation Monday of its president, Tony Vericella.

Vericella was criticized for using about $1,000 in state money for personal expenses, which he was asked to repay.

According to the authority, the decision to allocate parts of the contract to other companies was based on the merit of their proposals, not the audit.

But it is clear that the continuing probe into HVCB's operations could have an impact on its future dealings with the tourism authority.

"The HVCB contract will provide continuity for the North American marketing program while the Hawai'i Tourism Authority completes its investigation of the issues raised in the recent state auditor's report," authority executive director Rex Johnson said in a written statement.

Johnson estimated that out of the nearly 100 people employed by HVCB,15 are involved with marketing Hawai'i to Asia, Europe and Oceania. HVCB has five months left in its current contract. Enderton said he does not plan to lay off any employees this year.

Some HVCB employees may decide to seek work with Dentsu and the other new contractors, Johnson said.

Donna Mercado Kim, chairwoman of the Senate Tourism Committee, said the decision to split the contracts is a step forward in marketing Hawai'i.

Part of the tourism authority's aim was to find marketing agencies with strong expertise in particular areas of the world, and it wanted to consider different approaches to promoting Hawai'i. Kim agreed with that reasoning.

"We have to admit that how you sell to Japan may not be the same way you sell to the U.S.," Kim said. "One brand does not sell all, and we need to look at that."

Supporters of HVCB said the authority's parceling out of the contract will hurt Hawai'i's effort to promote a united image throughout the world.

Gov. Linda Lingle, who earlier said HVCB would not likely get the state's entire marketing contract, acknowledged that challenge yesterday.

"We worked for a hundred years to create the image of Hawai'i that we want, that conjures up certain images in people's minds," she said. "How do you maintain that consistency of image now that you've broken this up into five contacts? And that has to be answered."

Lingle also stressed that the authority has authorized negotiations with the new agencies, but not the signing of new contracts.

She said the distinction is important because important issues still need to be discussed.