Uncertainty builds as end of US tourism deal for Hawaii nears

Members of the Hawaii visitor industry are increasingly concerned that the Hawaii Tourism Authority will not have a clearly defined plan to provide branding and marketing services to the domestic market after Wednesday, when a U.S. tourism contract extension expires.

HTA on June 2 selected the Council for Native Hawaiian Advancement for a multi-year US tourism award worth more than $34 million over the first two years. However, HTA and CNHA cannot move forward with a deal until a June 21 protest from the Hawai’i Visitors and Convention Bureau is resolved.

HTA extended HVCB’s U.S. tourism contract and its global support services contract by three months in June as a stopgap measure to buy time for Mike McCartney, director of the State Department of Business, Economic Development and Tourism, in his role as head of the purchasing agency to settle a procurement protest.

HVCB was originally selected by HTA for the US tourism contract to retain those obligations in December in what is expected to be a multi-year $100 million deal. The CNHA protested, and McCartney subsequently canceled the contract with HVCB, which was valued at $22.5 million in its first year.

HTA paid HVCB $4.25 million for the US tourism contract renewal and $375,000 for the global support contract renewal.

HVCB declined to comment, as did McCartney, who has a number of options to resolve the protest, including brokering a compromise between HVCB and CNHA. Industry insiders say a compromise is possible. However, both companies have hired legal counsel.

CNHA CEO Kuhio Lewis issued a statement to the Honolulu Star-Advertiser on Friday, saying that “the state has had more than enough time to resolve the protest. We are pushing for confirmation of the CNHA award so we can begin the important work of transforming Hawaii‘s visitor industry.

“While we await the ‘expeditious’ resolution of the protest by the State of Hawaii, as required by law, our pending contract award appears to be impacted by contract extensions for protesting bidder HVCB,” Lewis said. “Any further extension beyond the current September 28 deadline will only compound this harm to CNHA — and deprive the public of the provider’s services, which the state has determined to be superior.”

HTA Public Affairs Officer Ilihia Gionson told the Star Advertiser that an award decision or contract extension is not off the table. However, he added, “If there is no resolution by September 28th, our active brand marketing in the US will be temporarily suspended while HTA takes on this responsibility internally, with a focus on visitor education and industry support.”

Keith Vieira, director of KV & Associates Hospitality, said HTA also needs to plan to maintain the visitor call center operated by HVCB, especially now.

“People have questions about whether it’s COVID or hurricane season,” Vieira said.

Gionson said the “call center is among the services we plan to continue beyond September 28 and we are looking at ways to do so.”

Meanwhile, HTA is also preparing to launch a call for proposals for Japan, Canada and China this month. It must also relaunch a previous call for proposals for sporting events it unsuccessfully issued this spring.

Gionson said the island chapters are under contract until December.

“We plan to issue (a call for proposals) for these services in October, in time for award and contracting by the end of the current contract in December,” he said.

Industry insiders believe HVCB will try to keep the island chapters. The CNHA has announced that it will make an offer.

Jerry Gibson, president of the Hawaii Hotel Alliance, said now is not the time to make sweeping changes given the challenges facing the US and global economy.

“There is currently no company that could have the market knowledge to create the impact that HVCB could create. There’s nobody out there that can pull anything out of the gap,” Gibson said.

Gibson said the industry is showing future bookings are coming in at a slowed pace.

“I’m really worried that we won’t get the Asian business back as soon as we thought,” he said. “In addition, it is almost impossible to quickly improve our group situation after the virus. If we don’t consistently and consistently greet visitors with the right messages, it will definitely impact our industry. It will therefore have an impact on Hawaii’s economy.”

Lynette Eastman, general manager of the Surfjack Hotel & Swim Club in Waikiki, said if HTA believes it can serve the US market internally, it needs to create a viable plan.

“Hawaii is just surviving in the US market,” Eastman said. “We need to make sure we don’t negatively impact the first quarter, which historically can make or break the year for Hawaii.”