Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Tourism and Intergovernmental Affairs, to which was referred S.B. No. 1031 entitled:

begs leave to report as follows:

The purpose of this measure is to provide dedicated funding from the tourism special fund to develop and implement a strategic business attraction and distinct business-related marketing program to change Hawaii's image to more than a leisure destination.

Your Committee received testimony in support of this measure from the Office of the Governor and the Department of Business, Economic Development, and Tourism. The Hawaii Hotel Association, Maui Hotel Association, and Waikiki Improvement Association submitted testimony in opposition. The Hawaii Tourism Authority submitted comments.

Your Committee finds that business travel is the fastest-growing component of the visitor industry, both in terms of arrivals and expenditures. Visitors who come to Hawaii for business meetings, conventions, and incentive travel represent seven per cent of the total visitor traffic, but account for thirteen per cent of visitor spending.

Your Committee further finds that Hawaii's success in promoting the islands as a tourist destination hampers current efforts to promote Hawaii as a business destination – a serious concern in an increasingly competitive global market.

Your Committee supports the efforts to attract more business travelers to Hawaii, but finds the proposal to spend one-third of the moneys in the tourism special fund – approximately $20,000,000 – an excessive amount, given the many mandates of the Hawaii Tourism Authority.

Your Committee has amended this measure to restrict the spending for development and implementation of a strategic business attraction and marketing program to twenty per cent of the current contracts for the Hawaii Visitors and Convention Bureau (HVCB), through the expiration of the contracts on December 31, 2002, and to require the Hawaii Tourism Authority to report to the legislature in 2002 and 2003 on the plan and its implementation.

Your Committee notes that the current contracts for the HVCB total approximately $45,000,000, and spending $9,000,000 of that amount is a much more prudent investment in the development and testing of business-related marketing and promotion.

As affirmed by the record of votes of the members of your Committee on Tourism and Intergovernmental Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1031, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1031, S.D. 1, and be referred to the Committee on Ways and Means.