Report Title:

Tourism

WHEREAS, tourism is the largest industry in Hawaii annually generating $1.9 billion in tax revenues according to the World Travel and Tourism Council (Council); and

WHEREAS, the Council reported that in 1999, travel and tourism produced over 180,000 jobs in the State, a number that has increased each year thereafter; and

WHEREAS, in 1998, after several years of little economic growth, the Legislature adopted the Economic Revitalization Task Force's recommendations of increasing the transient accommodation tax (TAT), establishing the Hawaii Tourism Authority (HTA) and dedicating funding from a portion of the TAT for tourism related purposes; and

WHEREAS, Act 156, Session Laws of Hawaii 1998, authorized HTA to develop and implement a long-range plan for tourism in Hawaii, with a strong focus on marketing and promotion, in addition to coordinating the development of new products; and

WHEREAS, HTA's first major initiative provided a strategic plan called Ke Kumu in which 5,000 individuals from a broad cross-section of Hawaii's community were contacted to participate, and once drafted, Ke Kumu was reviewed by over 700 people at ten public meetings held throughout the State; and

WHEREAS, working with the Department of Business, Economic Development, and Tourism's (DBEDT) Research and Economic Analysis Division, HTA developed a goal of growth in visitor expenditures that provides economic stability for the community and enables HTA to achieve its mission of "managing the strategic growth of Hawaii's visitor industry using its own resources and following the community interests of the people of Hawaii," at an average annual rate of 4.6 percent unadjusted for inflation through 2005; and

WHEREAS, the latest available data estimates that visitor expenditures in 2000 increased 11.5 percent to $11.46 billion; and

WHEREAS, however, consumer confidence among Americans has dramatically decreased over the last several months and the current economic conditions in major source markets for Hawaii's visitor industry, including the U.S. mainland and Japan, remain uncertain; and

WHEREAS, predictions call for only 56,000 people to attend the Hawaii Convention Center this year after 106,000 attended in 2000, and, coupled with the macroeconomic conditions that adversely affect corporate, incentive, and leisure businesses throughout all the islands, these conditions cause downward pressure on room rates, rental vehicles, plane tickets, and all associated travel services as higher spending visitors fail to materialize; and

WHEREAS, it is acknowledged that Hawaii competes for market share in a global marketplace that would react negatively to Hawaii should the State abruptly change fiscal or public policy strategies with regard to tourism; and

WHEREAS, proposals such as charging the TAT on wholesalers' theoretical package room rate will not generate anticipated additional revenues but, instead, discourage wholesaler promotion of our State due to the cost of packaged tours; and

WHEREAS, as the State's commitment through dedicated funding and tax credits for investment has created jobs that strengthen the tax base as identified in the May 2000 report on "Construction Tax Credits" prepared by the Tax Incentive Coalition, the industry is confident in investing in needed upgrades to the visitor plant; and

WHEREAS, this dedicated funding, coupled with private investment and increasing tax revenues, substantiated the major bond rating agencies' recent positive review of the State's bond rating; and

WHEREAS, instability could result in returning Hawaii's largest industry to the conditions experienced in the mid-1990s when tourism promotional dollars were unpredictable and often tied to budget provisos rather than part of an integrated plan; and

WHEREAS, contrary to popular belief, HTA funding has not replaced private sector promotion and marketing, but rather has supplemented and extended such efforts for the benefit of Hawaii by bringing more revenues to the State; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-first Legislature of the State of Hawaii, Regular Session of 2001, that given the importance of tourism to the economic well-being of the State that current state tourism policies must be maintained while the State engages in a thorough analysis of the effectiveness and accountability of all aspects of the state tourism policy and structure; and

BE IT FURTHER RESOLVED that the HTA develop an allocation plan for funds above the $61 million "cap" for emergency marketing and preservation of the natural environment; and

BE IT FURTHER RESOLVED that Department Taxation and DBEDT are requested to determine the impact of increasing the TAT on travel wholesalers given the current market conditions, competitive environment, and reporting methodology of such companies and submit a report of their findings and recommendations at least twenty days prior to the convening of the Regular Session of 2002; and

BE IT FURTHER RESOLVED certified copies of this Resolution be transmitted to the Director of DBEDT, Executive Director of HTA, and the Director of Taxation.