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HomeMy WebLinkAboutCOM 0755.011 2016-2018Murashige, Laura From: kohalacoastresortassn@gmail.com Sent: Monday, April 16, 2018 9:55 AM To: Council Testimony Subject: Document from the Hawaii Tourism Authority on proposed cuts - HB2010 and their impacts on Island of Hawaii Visitors Bureau, VASH and festivals Attachments: HTA faces major funding cuts.pdf, 031918HTA Impact of HB2010 SD1.pdf Aloha Council Chair Poindexter and Members of the Hawaii County Council, Attached please find additional documentation in support of our testimony on the Department of Research and Development's budget: 1) Star Advertiser. article — HTA faces major funding cuts 2) 031918 HTA Impact of HB2010 Mahalo for your consideration. Aloha, Stephanie Donoho Stephanie Donoho, Administrative Director Kohala Coast Resort Association PO Box 6991, Kamuela, HI 96743 (808) 747-5762 kohalacoastresortassn@gmail.com Rei: TO: 1 Rei. tate RU y ,. x" 1 CD Rei: TO: 1 Rei. tate RU y s4F.�s:sa�:�i •y awai € t:i)`.Isientiom Coater 801aK kla Avemb, P"arloWtv., Hay!, `i 9581: M97322,55 L 'ls"i sc;.t 09}x.42/53 HB2010 SDI Will Reverse Hawai'i's Tourism Future HB2010 SD1 Unravels the Mission and Purpose of the Hawaii Tourism Authority David Y, Ige G01811Y'as! • HTA's Mission: To strategically manage Hawaii tourism in a sustainable manner consistent with economic goals, cultural values, preservation of natural resources, community desires, and visitor industry needs. • HTA marks its 20th anniversary in 2018 as the agency that was established specifically to support the tourism industry's diversity of benefits and impacts on behalf of the State of Hawaii. • HTA was created in 1998 to provide a comprehensive management of tourism for the State of Hawaii by putting in place a single agency whose various responsibilities were previously handled by several departments, none of which regarded tourism as their primary focus. • In two decades of service, HTA has guided the State's leading industry in staying current with worldwide trends and implementing strategies to reinforce the Hawaiian Islands' appeal in primary source markets, while developing new markets globally to broaden the base of HawaiTs economic strength. • HTA has also responded to the needs of kama'aina, both creating and supporting programs to perpetuate Hawaiian culture, protect natural resources and preserve treasured community traditions. HTA's impact is evident statewide. To be a successful destination, continued investment in the product is a necessity. • Throughout 20 years, HTA has adapted its focus as needed, consistently elevating HawaiTs brand, enacting effective marketing programs to counter economic downturns, and being a valued resource for supporting communities' needs. • Looking ahead to fiscal year 2019, HTA is adapting its focus once more to place added emphasis and funding on initiatives to support HawaiTs people and place. Immediate Negative Impacts of HB2010 SD1 • HB2010 SDI reduces HTA's annual budget by $48.2 million — a 44 percent drop in State funding. • The dedicated funding provided by the Transient Accommodations Tax (TAT) to support HTA's management of tourism for the State of Hawaii will be reduced from $82 million to $60.3 million. The dedicated funding provided by the TAT to support the operations and obligations of the Hawai'i Convention Center, currently at $26.5 million, will be eliminated altogether. • HTA's annual budget of $108.5 million, which has been unchanged since 2016, will be set at $60.3 million if HB2010 SID goes into effect. Potential impacts to the State's effectiveness in marketing Hawai'i tourism include: • Reduction of funding allocated to the Hawaii Visitors and Convention Bureau to market the Hawaiian Islands in the U.S. mainland, Hawai'i's largest market and the source for 60 percent of total visitors. • Reduction of funding to support the Island Chapter Bureaus that market Oahu, Kauai, Maui County, and the island of Hawaii. • Reduction of funding allocated to Hawaii Tourism Japan to market the Hawaiian Islands in Japan, Hawai'i's largest international market and the source for 17 percent of total visitors. • Reduction or elimination of funding to market the Hawaiian Islands in all other global source markets for visitors: Canada, Oceania, Korea, China, Taiwan, Hong Kong, Southeast Asia and Europe. Potential impacts to community and nonprofit programs statewide that rely on HTA's support include: • Reduction or elimination of funding to support community-based, nonprofit programs addressing needs statewide, such as the Kukulu Ola Program (perpetuation of Hawaiian culture), Aloha 'Rina Program (protection of natural resources) and Community Enrichment Program (celebrating community traditions and festivals). In 2018, HTA is providing $3.5 million in funding to support 124 programs statewide. HB2010 SD1 Will Reverse Hawai`i's Tourism Future Page 2 • Reduction or elimination of funding to support vital safety and security programs, such as the Visitor Aloha Society of Hawaii and Junior Lifeguard Program offered in all island counties. HTA also supports the Department of Health's Advisory Committee on Drowning and Spine Injury Prevention. • Reduction or elimination of funding to support festivals and events unique to Hawaii as a destination, such as the Merrie Monarch Festival and Hawaii Food and Wine Festival. • Reduction or elimination of funding to support tourism industry career development programs, such as the ClimbHl LEI program that encourages Hawaii high school students to learn about careers in tourism. Long -Term Negative Impacts of HB2010 SD1 • A downturn in tourism will reverberate throughout the State's economy, resulting in job losses for residents who depend on tourism's success for their livelihoods. • There will be a reduction in travel demand for the Hawaiian Islands, as market research shows there is a correlating decline that occurs when tourism marketing funds are reduced. The impacts will be: ➢ Reduction in Trans -Pacific Air Service: Airlines will reduce service to the Hawaiian Islands or eliminate routes altogether. ➢ Fewer Travel Options: A reduction in total air seat capacity will provide visitors and residents with fewer travel options. ➢ Economic Harm to Hawai`i's Economy: Fewer travelers will book hotel rooms, attractions and activities, dine at restaurants, purchase made -in -Hawaii retail products and goods, and buy foods and daily supplies at stores. ➢ Reduced State Tax Revenue: A decline in visitor spending statewide will produce a correlating decline in State tax revenue generated by the tourism industry. ➢ Impact to State's Funding of Essential Services: A reduction in the TAT will result in fewer funds being deposited into the General Fund and hamper the State's ability to fund essential services for residents and communities statewide. • Hawaii will lose the momentum of its success in vying for global travelers that has been built up since the Great Recession, particularly in developing international markets. • As Hawaii reduces or eliminates its funding of tourism marketing in global regions, particularly in international markets, it becomes more challenging to maintain the level of tourism's economic benefits to the State of Hawaii, including the number of resident jobs supported by the industry's success. Other Negative Impacts of HB2010 SDI • The $60.3 million in funds that HB2010 SD1 allocates to HTA annually will be the lowest total since 2002 when visitor arrivals totaled 6.45 million, visitor spending was $9.6 billion, generated state tax revenue was $912 million, jobs supported by tourism were 160,000, and TAT collections were $157.5 million. • By comparison, in 2017, visitor arrivals totaled 9.38 million, visitor spending was $16.78 billion, generated state tax revenue was $1.96 billion, jobs supported by tourism were 204,000 and TAT collections were $508.4 million. • HB2010 SD1 eliminates any dedicated TAT allocation to support the Hawai'i Convention Center. Additionally, funding to support the Center will have to be generated through the Center's operations, private contributions, compensation, interest and other means. However, total funding produced by the Center for its operations will be capped at $6 million annually, which is insufficient for the facility to be successful. HTA will be forced to seek additional funding from the legislature or other sources. • The $2.5 -million cap on market research expenses limits HTA's ability to seek out new resources for data and information that supports marketing efforts by tourism industry partners. • The $5.8 -million cap for sports marketing will limit HTA's capability to secure new opportunities and negotiate agreements for sports events and programs that benefit the State.