HomeMy WebLinkAboutCOM 0449.020 2020-2022 �f
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Testimony of
Mufi Hannemann
President& CEO
Hawaii Lodging& Tourism Association
County of Hawaii
County Council
Bill 81 (2021)
December 8, 2021
Chair David and members of the Council, mahalo for the opportunity to submit testimony on behalf of
the Hawaii Lodging & Tourism Association, the state's largest private sector visitor industry
organization.
The Hawaii Lodging& Tourism Association—nearly 700 members strong, representing more than
50,000 hotel rooms and nearly 40,000 lodging workers—strongly opposed the passage of House Bill
862 which, among myriad other issues, stripped the State Transient Accommodations Tax (TAT)
allocation to the counties and allowed for up to an additional,three percent surcharge to be levied on
lodging properties. The surcharge proposed by this measure represents a 29% increase to the TAT that
comes at a highly inopportune time for an industry that has been drastically affected by the pandemic
and travel restrictions. However, with the veto, override by the Legislature, and the ultimate passage of
HB 862,we recognize the financial position in which the County of Hawaii finds itself and the need to
deliberate on the introduced bill.
As Section 1 of the proposed legislation notes,the county allocation of TAT monies was established to
"offset the impacts of visitor activities on county infrastructure and services". The proposed legislation
further states that the "County's tax policy should reflect recouping the impacts of visitor activities", and
we feel strongly that the measure should also indicate how these tax monies will be managed and who
will oversee it to ensure that they are used for tourism-focused initiatives and projects.
As the vast majority of monies raised by the TAT—and the proposed three-percent surcharge—will
undoubtedly come from the pockets of visitors,HLTA agrees with the notion that it should be used
specifically to address impact created by travelers to Hawaii County. The opportunities in this regard
are endless and could include more routine county tasks such as road refinishing and updates to our
infrastructure but should also be used on projects more directly associated with tourism like trail
management,beach and park maintenance, additional support for first responders, and the provision of
adequate public safety staffing at beaches and other county installations.
If the goal of the Council is to use the surcharge to offset county expenses driven by tourism, we feel
strongly that there must be transparency and oversight of the tax monies that are collected. The industry
would welcome any opportunity for continued discussion with the Council on the use of these funds and
would also support the establishment of a special tourism fund in which surcharge monies would be
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deposited. This would align with the legislation's stated aim and would ensure that tax dollars are being
used appropriately and efficiently.
We would also like to bring to the Council's attention an issue that is occurring in other jurisdictions that
have enacted similar legislation. In these places, the new surcharge is being retroactively applied to
future bookings that occur after the enactment of the surcharge. This reflects poorly on our overall
tourism offering and also creates an additional administrative hurdle for local hotel properties. We ask
that the Council consider inserting clarifying language that would mirror Act 1, Section 7, First Special
Session 2021 (HB862) and make clear that the surcharge should only be applied to bookings made after
the effective date.
Finally, with the various issues that will arise surrounding the collection of two, discrete taxes,we
would ask that you consider amending the proposed measure to allow for a grace period between
adoption and implementation. This would allow lodging properties and travel partners to navigate the
various administrative challenges presented and notify and educate prospective guests on the new tax.
Mahalo for the opportunity to provide these comments.