Here’s why transforming Hawaii’s tourism industry is so difficult

As recently as early 2020, before COVID-19 wrecked the state’s economy, Hawaii was grappling with a problem very different from today’s economic challenges. The question arose as to what to do against the ever-increasing masses of tourists.

The 250,000 visitors to Hawaii each day represented almost a fifth of the state’s population. And residents’ attitudes toward them plummeted as visitors swept up beaches, hiking trails, and homes in neighborhoods that had become vacation rental meccas.

Then the virus struck. Tourism was shut down by order of Governor David Ige. And residents’ sentiment towards the industry only deteriorated.

By the end of 2020, 57% of residents responding to a Hawaii Tourism Authority survey in September and October strongly or strongly agreed that Hawaii is overly dependent on tourism, up from 37% in 2019. Nearly a third strongly disagreed or disagreed doesn’t admit at all that their “island is run for tourists at the expense of the locals.”

Tourism resumes during COVID-19 pandemic with results at Diamond Head Visitor Center.
Tourism has resumed during the COVID-19 pandemic with results at the Diamond Head Visitor Center. Cory Lum/Civil Beat/2021

Hawaii Sen. Glenn Wakai echoed others who recently called for a change when he expressed frustration at the Hawaii Tourism Authority’s inability to gain much traction for tourism to be restored to the islands during the shutdown.

“We wasted a year,” said Wakai, who chairs the Senate Committee on Energy, Economic Development and Tourism. “They only have vague generalities. They did nothing to reinvent tourism.”

Tourism Authority President and Chief Executive John DeFries said the agency has made progress on planning to transform tourism. For example, he pointed to a series of destination management plans the agency has created with public input for Maui, Kauai and the Big Island. A report for Oahu is due to be completed this summer, he said.

Regardless of what ultimately emerges from HTA’s work, one thing is hard to argue with – if transforming tourism is a challenge, it’s especially difficult during a pandemic. One reason politicians don’t want to make changes that could jeopardize the industry’s recovery: Hawaii needs jobs.

“If you don’t want visitors to come back, that’s the same as not wanting your neighbor to have a job,” said Carl Bonham, executive director of the University of Hawaii’s Economic Research Organization.

In 2018, the Hawaii Tourism Authority saw worrying signs that public sentiment toward tourism had deteriorated. Since then, the agency has noted, sentiment has continued to erode.

Even if it were possible to rethink tourism, Bonham said, now is not the time.

“The whole idea that in less than a year you could somehow live with an economy with 20% or 30% fewer visitors and have the same number of jobs was never realistic,” Bonham said. “In the short term, and that could be two or three years, it’s all about tourism to get people back to work.”

Agreements with holiday platforms gather dust

But even where jobs are irrelevant, nothing has changed.

In some cases, dealing with the pandemic has simply so engrossed the attention of government officials and business leaders that other initiatives have stalled. A stalled attempt to crack down on unauthorized vacation rentals is a case in point.

Few tourism reforms should have been easier to implement during the pandemic, especially for Honolulu. The cause is backed by a rare coalition that includes hotel managers, unions, housing advocates and neighborhood groups united against vacation rentals.

However, property owners and investors see vacation rentals as a way for ordinary people and small investors to make money from Hawaii’s tourism industry and want more to be legalized.

Critics say illegal vacation rentals bring unwanted tourists into neighborhoods, take away residents’ housing and undermine government attempts to limit tourist numbers through land-use restrictions. Even tourism executives, who have benefited from the recent explosion in tourists from about 8 million annually to more than 10 million in 2019, said the boom was made possible by the proliferation of illegal vacation rentals.

In November, after years of sometimes bitter debate, Honolulu forged deals with major vacation rental platforms Airbnb and VRBO-owner Expedia. The agreements require property owners to list property locations on property registers, which would allow officials to determine whether a property is operating legally.

But the city of Honolulu still hasn’t passed administrative regulations and other steps needed to make the agreement effective, said Curtis Lum, a spokesman for the Honolulu Department of Planning and Permits.

Honolulu has also delayed any action until at least August, he said, meaning an expected surge in summer travelers can likely return to residential neighborhoods.

Kekoa McClellan, Hawaii spokesman for the American Hotel and Lodging Association, acknowledged that in the early days of the pandemic, the industry shifted its focus from the issue of short-term rentals to creating hotel safety policies and procedures. In this context, it is understandable that the government of Mayor Rick Blangiardi also focused on overcoming the pandemic and postponed the implementation of the Airbnb agreement.

“I think they have a duty to do that,” he said. “But everyone only has so much bandwidth.”

Blangiardi’s office did not respond to a request for an interview.

The idea is floated one day for residents only in Hanauma Bay, one of Hawaii’s most popular tourist attractions with about 850,000 visitors annually. Tourism managers say reserving the bay for residents one day a week would send the wrong message. Courtesy: Keisha Bahr

Still other efforts are hampered by a lack of common ground and implementation challenges. Consider a proposal to reserve some recreation areas for local residents on weekends. The idea has the support of DeFries, Ige and Mike McCartney, director of the Hawaii Department of Business, Economic Development and Tourism. All three discussed the idea on the Honolulu Star Advertiser’s “Spotlight” program last week.

But the implementation of such a policy is another matter. Dan Dennison, a spokesman for the Department of Land and Natural Resources, said in an email that the agency has not yet started developing such a policy.

Laura Thielen, a former DLNR chair who is now director of the Honolulu Department of Parks and Recreation, said keeping people away from most recreation areas is nearly impossible. For example, she said, even trails with seemingly restricted access at the trailheads can often be reached from other approaches.

Exceptions might be places like the state’s Diamond Head Monument and Hanauma Bay, which is administered jointly by the state, city and county.

But she said such a big change should go to the city council and include ample opportunities for public testimony. And it’s almost certain that tourism managers would compete against locals-only parks, beaches, and hiking trails, even for a day or two a week.

“I have concerns about this type of policy: a locals-only policy,” said Mufi Hannemann, a former mayor of Honolulu who is now president and executive director of the Hawaii Lodging and Tourism Association.

In a place like Hanauma Bay, when the reef needs a break from the influx of visitors, one solution would be to close it to everyone, he said. “Just to give a blanket guideline for locals only: I don’t think that sends the right message.”

Political process often favors inaction

The political process is also a major obstacle to tourism renewal, as it often favors the status quo. Even modest changes with strong political support have problems.

One of Hawaii’s most powerful legislators sponsored a bill that would have imposed a so-called “green fee” on travelers to offset the environmental impact of tourism. While destinations like Palau and Bhutan charge such fees, Hawaii does not.

Sen. Donovan Dela Cruz, chair of the Senate Ways and Means Committee, tried to change that. His proposed fee of $20 per person — arguably modest compared to Palau’s $100 — would fund conservation work to manage Hawaii’s natural resources.

The measure sailed through the Senate but stalled in the House without a hearing after opposition from businesses and tourism organizations. The bill is technically still alive and could be revisited during the 2022 legislature.

Jack Kittinger, who runs the Hawaii office of the non-profit organization Conservation International, has been researching extensively for ways to help fund conservation efforts in Hawaii.

Kittinger said travelers have shown a willingness to pay for a COVID-19 test to get to Hawaii, as required by Hawaii’s Safe Travels program. This shows that visitors would be willing to pay a lower fee.

“You want a readiness degree?” he said. “You have it. It exists.”

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