STAND. COM. REP. NO. 2077

Honolulu, Hawaii

RE:    S.B. No. 2607

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2010

State of Hawaii

Madam:

     Your Committee on Tourism, to which was referred S.B. No. 2607 entitled:

"A BILL FOR AN ACT RELATING TO ACTIVITY DESKS,"

begs leave to report as follows:

     The purpose of this measure is to clarify requirements for activity providers and activity desks, by:

     (1)  Establishing record keeping requirements for client trust accounts;

     (2)  Requiring registration numbers on all advertising materials, and prohibiting an activity desk from booking or placing a reservation for activities until full payment for the activity is received or direct payment is arranged;

     (3)  Clarifying that all sums paid to an activity desk for activities furnished by an activity provider shall be held in trust for the benefit of the person making the payment and the activity provider; and

     (4)  Repealing the authority to substitute a bond or letter of credit for a client trust account.

     Testimony in support of this measure was submitted by the Department of Commerce and Consumer Affairs; Activities & Attractions Association of Hawaii; Safari Aviation Inc.; and Maui Classic Charters, Inc.  Testimony in opposition was submitted by Activity Link Systems, LLC.  Comments were submitted by Paradise Cruise, Ltd.

     Written testimony presented to the Committee may be reviewed on the Legislature's website.

     Your Committee finds that this measure will assist the Regulated Industries Complaints Office in conducting a thorough investigation of possible violations in an expeditious manner and will provide guidance to registrants as to how long records must be maintained.  In addition, the amendments will ensure that an activity desk does not book reservations with providers until it receives full payment or where direct payment is made to the activity provider at the time of the activity; the current law does not address this situation.

     Your Committee understands that the industry is continuing discussions regarding the repeal of the requirement for a performance bond and irrevocable letter of credit.

     Your Committee has amended this measure by:

     (1)  Clarifying that an activity desk is prohibited from failing to obtain full payment for activities prior to or at the time activity reservations are booked or placed with the activity provider, or within three business days, except where the reservation specifically provides for direct payment of the amounts owed;

     (2)  Deleting the repeal of the requirement for a performance bond and irrevocable letter of credit; and

     (3)  Making technical amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2607, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2607, S.D. 1, and be referred to the Committee on Commerce and Consumer Protection.

Respectfully submitted on behalf of the members of the Committee on Tourism,

____________________________

CLARENCE K. NISHIHARA, Chair