The chicken and egg of tourism promotion

Gov. Neil Abercrombie raised hackles in the local visitor industry when he proposed to cut $10 million from the Hawai‘i Tourism’s Authority’s $81 million allocation to help balance the state budget, and again when he specifically criticized the $4 million HTA spends to bring the Pro Bowl to Honolulu.

The Legislature got in on the act by claiming a bigger portion of the hotel room tax for the state general fund by capping HTA’s share at $69 million.

Washington state has taken that strategy of budget balancing to the extreme by ending all state funding for tourism promotion by the end of the fiscal year, leaving the function of marketing to visitors entirely to the industry.

According to an AP story, the state’s Senate Republican Leader Mike Hewitt made some of the same points Abercrombie did in criticizing the Pro Bowl, saying, “When you’re taking kids off health care and raising tuition, you have to make some tough decisions.”

There are limits in comparing the two states, as tourism isn’t as central to Washington’s economy as it is to Hawai‘i’s and that state was spending only $2 million on promotion before funds were cut.

But it points up the fundamental question on tourism promotion in recessionary times: Do you cut marketing along with other state spending to help balance the budget, or are you better off doubling down on promotion to bring in more visitor spending and tax revenues that help dig out of the recession?

According to the AP story, the country is divided between the two approaches, with states such as New York and Arizona cutting back sharply while others like Michigan are stepping up spending on marketing.

In Hawai‘i, there’s little question that the expected devastating blow to local tourism from the Japan earthquake and tsunami has been softened by increasing promotion in other markets.

This isn’t a good argument to keep having every time a recession rolls around.

The smart move would be to have an objective and cool-headed discussion as the economy rebounds so we have a clear strategy in place one way or the other the next time we face a recession.

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4 Comments on “The chicken and egg of tourism promotion”

  1. atomicmonkey Says:

    Reading your story encouraged me look up one from last year by the Maui News (from an interview with the then candidate):

    “Finally, he [Abercrombie] said that the state needs to reconfigure its approach to tourism and get away from unreliable markets like conventions and casual visitors. Instead, he said the state should take a page from the playbook of many island hotels, and start moving toward the time-share and part-time resident markets.”

    I remember the visitor industry being incredulous, and taking this as an ominous warning.

  2. el guapo Says:

    According to the AP story, the country is divided between the two approaches, with states such as New York and Arizona cutting back sharply while others like Michigan are stepping up spending on marketing.

    Never been to Michigan, but no amount of marketing would make me want to go there for a vacation. As for the home front, agreed that a clear strategy is needed as IMHO the theory of diminishing returns would apply at some point. Improvements to infrastructure, for example, would pay off better in the long run.

  3. Richard Gozinya Says:

    We need to re-think tourism promotion. To me, the hotels, retailers,restaurants and visitor attractions need to pony up a much larger share of the advertising and sales costs. The tourism industry components should produce the tv clips, the ads, the glossy frothy stuff.

    In turn,the HTA should be focusing on improving the visitor experience and representing the needs of the industry to our legislators and promoting support of tourism by our residents and providing some overall coordination of theme and message.

    I could foresee a reduction in HTA funding by maybe 50% along with a complete restructuring of its Board (populated by industry dinosaurs) and mission.

    Bottomline: put the private sector on the hook for promotion of its own business interests.

  4. atomicmonkey Says:

    Richard, it sort of is already, in that the TAT used for visitor promotions came from them in the first place.

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