Hawaii Visitors and Convention Bureau Loses Contract With Hawaiian Nonprofit

The Hawaii Tourism Authority has given the Council for Native Hawaiian Advancement its lucrative job of marketing the state to U.S. visitors — a major blow to the Hawaii Visitors and Convention Bureau, which has held the job for years and was originally chosen to hold the post to keep a multi-year $100 million deal.

HTA announced on Thursday that it had selected the non-profit organization to handle its US brand management and global support services contract. The new contract begins on June 30 and is expected to end on December 31, 2024, with an option to extend the contract by a further two years.

In addition to CNHA, the winning group includes a consortium of other Hawaii-based organizations and has roles for Ann Botticelli, a former Hawaiian Airlines executive and current Honolulu Police Commissioner, and Aaron J. Sala, a Hawaiian entertainer and former HTA board member.

HTA said it is still negotiating the contract. However, according to the latest April 15 call for proposals, the fixed contract price is expected to be $16.4 million for the first calendar year and more than $18.8 million for the next year.

Kuhio Lewis, President and CEO of CNHA, said in a statement that the organization is “humbled that the Hawaii Tourism Authority has trusted us as a unit to bring about the changes that Hawaii has long demanded of our visitor industry. We understand that a process is still in place and we will follow HTA’s example in the coming days to maintain the integrity of that process.”

Any company wishing to dispute the latest RFP award has five days to file a complaint.

Officials at HVCB, HTA’s largest and most heavily funded contractor, did not immediately respond to the Honolulu Star-Advertiser’s request for comment.

In theory, HVCB could bid as a contractor to do some of the work for CNHA. However, it is unclear what role, if any, HVCB will play in relation to the new deal.

The award of the contract to the CNHA group represents an important change of direction for HTA as HVCB was the only company to ever handle its US marketing. The move is also a major shock to Hawaii’s tourism industry, of which HVCB has been a part for about a century.

It almost didn’t happen.

Multiple sources have told the Star Advertiser that HTA 2021 has awarded the US order to HVCB. He was scheduled to take effect on January 1, 2022, replacing HVCB’s previous five-year, $105 million contract, which expired on December 31.

Instead, according to sources, Mike McCartney, director of the state Department of Business, Economic Development and Tourism, revoked the HVCB’s new award in December after a formal complaint from the runner-up, a group that included the Council for Native Hawaiian Advancement.

According to sources, only a few points separated HVCB and the runner-up during the initial bidding process, which McCartney ended abruptly in December.

McCartney then granted HVCB an $8.5 million extension to its US contract as a stopgap measure to allow time for a second bidding process. HVCB’s contract extension for the US market is scheduled to end on June 29.

HTA denied the star advertiser’s formal public information request in March for information regarding the first call for proposals. When asked about the documents Thursday, HTA spokeswoman Ilihia Gionson said HTA will look into the star advertiser’s request.

During his tenure as HTA’s prime contractor, HVCB had grown into a powerful private, not-for-profit, membership-based organization overseeing tens of millions of dollars in HTA contracts. The office’s latest headcount is not available, but in 2019 it had approximately 66 full-time employees.

The office still oversees more than $25.5 million worth of contracts, including the US contract renewal. Among them is a $9.4 million contract to oversee community programs, including HTA’s Destination Management Action Plans.

HVCB also has a $4.5 million contract to operate HTA’s global meetings, conventions and incentive marketing through at least 2025. It also has a $2.4 million contract for island chapter support services, the scheduled to end on December 31st.

Keith Vieira, director of KV & Associates, Hospitality Consulting, said HVCB’s reduced role was startling.

“The most successful recreational marketing organization in the world in the last 100 years is in one of the most incredible recoveries we’ve ever seen,” said Vieira.

Vieira said he hopes the new contractor will continue to focus on building relationships with tourism partners such as airlines and travel wholesalers. He said marketing to attract more affluent visitors to Hawaii should also remain a priority.

The change in contractors follows HTA’s decision in 2021 to reorganize its structure and operations to focus more on destination management than tourism marketing. HTA’s restructuring was preceded by several years of growing dissatisfaction among both residents and visitors, leading to legislative criticism of the agency.

State legislatures passed House Bill 862 in 2021, which made functional changes to the HTA and eliminated the distribution of the temporary accommodation tax to the agency as well as to individual counties.

That year, conference participants in the House and Senate left HTA funding out of the final version of the state’s $17 billion supplementary budget, and a legal battle over alternative bills threatened the agency’s financial prospects. Only after an eleventh-hour fight did HTA emerge from the 2022 legislature with a fully intact annual budget of $60 million.

Based in Kapolei, CNHA describes itself as a nonprofit organization with a mission to advance the cultural, economic, political, and community development of Native Hawaiians. The group says its services include financial counseling and providing grants and loans to underserved communities in Hawaii.