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Hawaii Roundtable: Headwinds and change in the air

Following Travel Weekly's Hawaii Leadership Forum in April, Travel Weekly editor in chief Arnie Weissmann moderated a roundtable that covered a variety of topics, including major changes in leadership at the Hawaii Tourism Authority and Hawaii Visitors and Convention Bureau, federal impacts, economic uncertainty and the increased Transient Accommodations Tax. Here are some of the highlights from that session. (The exchanges have been edited for length and clarity.) Arnie Weissmann: What developments have you seen in the past year in the way of attractions, hospitality developments, things at the airport, etc.? Ray Snisky, group president, ALG Vacations: The great things that we're continuing to see is that ownership groups are reinvesting in products and renovations, and hundreds of millions of dollars are being spent on the quality of experiences. It's good to see that kind of investment. It's vital to this destination. John Kimball, vice president, Hawaii and French Polynesia, Marriott International: There has been a genuine commitment by owners across all of our resorts, and across all brands, to invest big and prepare us for the future. While we've gone through some challenging days, most invested to prepare us for the stronger and positive days ahead. David Hu, CEO, Pleasant Holidays: What I've seen in hotels, which is commendable, is a lot more of the educational aspects to let people understand what their stay means to local people. Hilary Palanza, director of marketing, Hawaiian Airlines: There's been a lot of investment in film and TV. We're seeing the "Moana" live action, "Lilo & Stitch" and "Chief of War," so I think that keeps Hawaii top of mind from a cultural storytelling perspective. And with "White Lotus" in Thailand, there's this set-jetting trend of people wanting to experience what they see on TV. Caroline Anderson, interim president and CEO, Hawaii Tourism Authority (HTA): We've been investing in our community organizations. We did a program called Community Tourism Collaboratives to bring up our smaller community organizations, so they'll have a foot in our visitor industry and help develop experiences so our visitors can get to know the community better and take part in agritourism ventures, for example. Katrin Koenig, chief commercial officer, Delta Vacations: After Covid, we were hearing about outdated hotel rooms at some of the hotels. We've definitely seen a noticeable shift on upgraded properties and rooms and also very definite plans on continuing that. Katrin Koenig of Delta Vacations. Photo Credit: Dave Miyamoto Weissmann: There were two notable resignations at the top of the HTA recently. Last year, an independent report suggested that the HTA needs to restore credibility with the community and the legislature. Have the recent resignations, including the chairman of the board, put the HTA in some sort of jeopardy? Anderson: The HTA is the state's agency for tourism. Tourism is the No. 1 industry for our economy, and it's building trust with the legislature so that they can see that we are spending funds in an appropriate manner. We also share with legislators why tourism is so important and how it helps provide for the livelihood of our community. Tom Mullen, senior vice president and COO, Hawaii Visitors and Convention Bureau (HVCB): Tourism is so important to the state economy. There is a need to have somebody that sets a strategy overall that can get all the departments to work together. We don't have that. The HTA was created to do that, but what has happened over years is it started to turn into a political animal. And unfortunately, an industry that's generating over $2 billion in tax revenues is funded with $60 million. From left, Travel Weekly Hawaii editor Christine Hitt, Tom Mullen of the Hawaii Visitors and Convention Bureau and Angie Licea of Global Travel Collection. Photo Credit: Dave Miyamoto Weissmann: Regarding the HVCB, I know responsibilities had been scaled back to marketing only to the U.S. Is that still true, or are you back to being global? Mullen: U.S. only. Right now, we're putting $14 million into the state of Hawaii, which is about $10 million to $12 million less than what we've been spending over the years. That decrease started in 2016. And so our voice, it's nonexistent. And we've got to find a way to go back, because that is not enough money to maintain a brand over time. What we've had to do is focus our message on the audience that we believe has the wherewithal to come to Hawaii. I think we've proven that we need to drive value without cutting price. We're competing against other destinations that, quite frankly, can deliver more value than we can. But once people come to Hawaii, the experience sells itself, and people will want to come back. From left, Travel Weekly editor in chief Arnie Weissmann; Ray Snisky, ALG Vacations; and Gina Gabbard, First in Service Travel. Photo Credit: Dave Miyamoto Gina Gabbard, chief strategy officer, First in Service Travel: I've heard a lot about investment into the West Coast, and while I understand why you market heavily there, I do believe there's a missed opportunity not to invest heavily in the East Coast, especially in markets where Hawaiian has nonstop lifts. We've got United, Delta. Mullen: There is no funding to go to the East Coast, to put any brand marketing out there at all. We're working everything through the wholesale channel, and then the wholesalers penetrate their customer bases throughout the country. The quickest way for us to get results is from the West Coast markets. Palanza: We're in the same boat. We don't have enough marketing dollars to make an impact in markets outside of the West Coast. Kimball: What we need is more state funding relative to the broader market conversation to try to get this messaging. Marriott Bonvoy wants to play off of that. But unfortunately, to your point about East Coast and all those opportunities, we just need to figure out the funding. Hu: I think getting funding is one element. There needs to be consistent funding because branding does not happen overnight. I think ever since 2000, the budget seems to be dropping and dropping. Weissmann: Sometimes, fear of recession can start the recession. There have been some big swings in the markets, and consumer confidence is down. How is this impacting your businesses? Snisky: We had a fantastic first quarter. Really excited about that. But we see bookings moving forward being really impacted, there's really a softening there. As much as we've all seen the growth of luxury, how you get through these lulls is through some aggressive value, whether that be pricing or value-adds. Hilary Palanza, Hawaiian Airlines, left, and Caroline Anderson of the Hawaii Tourism Authority. Photo Credit: Dave Miyamoto Angie Licea, president, Global Travel Collection: If we start lowering prices, right, your transactions may increase but will increase at the same sales rate you were experiencing, so it becomes dicey. Right now, our transactions are down, but sales are way up. So as things start to come down, unless transactions pick up, that's trouble for travel advisors and all of you. Koenig: I think we need to be really, really careful on this. We have all been through downturns a lot, and I don't think discounts are the answer. Gabbard: What we are seeing with the high-net-worth, ultrahigh-net-worth client is that while they're looking for a good deal, they don't want to feel that they're being taken advantage of. And that's where the value-adds -- the third, fourth night free ­-- comes in. From a luxury hotel perspective, I think they learned after 9/11 that it was very difficult to get prices back up after they've been dropped because you've trained the consumer to wait for prices to drop. For hotels to put up those type of value deals is very wise. Kimball: We're really excited to partner and get creative with value-adds. Costs and labor costs continue to escalate, and driving down just prices is really not the path. We'll do with less occupancy to ultimately give and create a much better Hawaii experience. John Kimball, Marriott International. Photo Credit: Dave Miyamoto Weissmann: Looking at the current federal administration, are there any other actions that are impacting your businesses? Snisky: When there's uncertainty in the market, there are tools and products we have that spike sales. And we're seeing [travel protection programs] moving up in multiple points. That's another revenue stream. Gabbard: There's been a lot of talk, even in Europe and in Canada, about the fear of coming into the country. Will you be detained? Will you be turned around and not allowed to come in? That fear is something we really need to look at, because even in Hawaii, you rely on some of the international markets. Weissmann: Hilary, are you seeing a noticeable drop in Japan and Canada? Palanza: Japan is still struggling for us. We're still investing a lot, from a marketing perspective, so we have confidence that it's going to come back. Our network is smaller out of Canada; we have seen it come down, but not at the levels that we're hearing in the media. David Hu of Pleasant Holidays. Photo Credit: Dave Miyamoto Gabbard: First in Service does have a very large presence in Canada. It's 100% leisure. So the sentiment of our group is twofold: Canadians love Americans; they understand the difference between Americans and politics. But there is the group that has decided they will not be traveling to America and will not be buying American goods. But there is a group that will still travel, but they're not talking about it -- they're doing it silently. A bigger issue for those who are willing to travel is the devaluation of the Canadian dollar, which is tied strongly to the American dollar. Will hotels look to do at-par rates? Can the operators that operate in Canada look at pricing a little differently? Will they offer Canadian resident discounts? Because it's even more expensive than before to come to the Islands. We have seen a shift in business to those products who are welcoming Canadians by dropping prices for them. Licea: Sometimes an advisor will make a decision for a consumer without asking the consumer, so we're [saying], "Your job is consultation. Don't make assumptions that a Canadian traveler is not going to come to the United States. Consult with them." One other thing is that corporate travel is down. So corporate travel to Hawaii is down. That means the leisure add-on attached to corporate is down. Hu: Yeah, we are definitely seeing that slowing in the corporate side and certainly the government side. While that doesn't directly impact some of our hotels, it impacts the whole market. Weissmann:A bill raising the Transient Accommodations Tax (TAT) -- will that help or hurt tourism? And is there a way the TAT can be related to the benefits it provides more closely, so it's clear that the community is benefitting? (Editor's note: This roundtable took place prior to the tax increase being approved by the Hawaii Legislature on May 2.) Mullen: I think that's what has to be done so people will understand how tourism drives the state. We as an industry probably should take it upon ourselves [to make the connection]. Hu: We are not in favor of a TAT increase. We just don't want costs to increase. We talked earlier about value, and it would not take us in that direction. If it happens, we want to make sure it's fenced and it goes toward marketing. Anderson: We had a dedicated source of funding through TAT. We've lost that; now, we're funded generally. If we had a dedicated source of funding, there would be a consistent funding mechanism for HTA, and residents could see that tourism dollars go back into the agency that could market the state. Weissmann: When HVCB CEO Aaron Sala spoke at the Travel Weekly Leadership Forum, it certainly seemed to mark a radical shift in emphasis for HVCB. What did you think about his new positioning? Mullen: We're an organization that has been here for over 20 years. We're born and bred in this state. We understand tourism. We marketed tourism. What we're trying to do now is take control of our destiny and get back into a leadership role and do things with our partners versus waiting for funding from HTA. ____________________ Photo at top of page: Standing, from left, John Kimball, Marriott International; Tom Mullen, Hawaii Visitors and Convention Bureau; Christine Hitt, Travel Weekly; Gina Gabbard, First in Service Travel; Ray Snisky, ALG Vacations; David Hu, Pleasant Holidays. Seated, from left, Hilary Palanza, Hawaiian Airlines; Angie Licea, Global Travel Collection; Arnie Weissmann, Travel Weekly; Caroline Anderson, Hawaii Tourism Authority; and Katrin Koenig, Delta Vacations.