Developing a Dream Destination: From Laissez-Faire to Destination Management

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By James Mak

In 2008, I published an interpretive history of how public policies toward tourism in Hawaii changed over nearly half a century from statehood until circa 2005. During much of this period, tourism in Hawaii was booming until the 1990s, followed by a period of relative stagnation. The early role of the state government in developing tourism in Hawaii was much at odds with conventional wisdom that developing a successful and sustainable tourism destination requires comprehensive planning and tight government oversight and control.  Hawaii succeeded in becoming one of the world’s greatest destinations—one of 50 Places of a Lifetime—according to the National Geographic Traveler magazine in 1999 without heavy-handed government intrusion in the development process.

A very different story is currently unfolding. Beginning in 2009, Hawaii experienced an uninterrupted string of rising visitor arrivals which were celebrated in state news releases. Unfortunately, what was overlooked in the news releases was that growth in visitor spending (after adjusting for inflation) had fallen way behind that of visitor arrivals. Thus, tourism’s negative impacts on the community were rising but its economic benefits had not kept pace. The laissez-faire model of tourism development wasn’t working for the benefit of residents. Not surprisingly, there has been growing public pressure on the state government to do a better job of managing Destination Hawaii. This essay tells the story of the state government’s response, and explains why it is so difficult to pivot from brand management to destination management under the current governance structure.

Myriad state and county government agencies, non-profits and non-governmental organizations are involved in tourism. At present, the lead organization tasked with the responsibility to manage tourism is the quasi-autonomous Hawaii Tourism Authority (HTA), founded in 1998. However, HTA does not have sufficient authority or resources to require others to help carry out its plans. HTA’s new strategic plan for 2020-2025 aims to accelerate the shift of its resources (time and money) into programs that support the community, perpetuate the Hawaiian culture and protect Hawaii’s natural resources. However, the plan focuses “primarily on what HTA can do on its own, and secondarily, what it hopes to do in partnership with other public and private organizations.” HTA sees its role as destination manager to include “…advocating for solutions to overcrowded attractions, overtaxed infrastructure, and other tourism related problems.” Advocating is not managing. State lawmakers have not been impressed with HTA’s performance and have passed measures to reduce the state’s financial support and strip away some of HTA’s fiscal autonomy.

Hawaii’s inability to manage the destination holistically is not the fault of any single organization/institution. It is a failure of governance. What is needed is a new governance model that is able to manage tourism across jurisdictions, agencies, functions and stakeholder groups. It must have the authority to marshal the expertise and resources of other agencies in addressing tourism’s challenges. The long-term solution for tourism sustainability will require buy in and participation from a broad range of stakeholders. That may mean either creating a more inclusive super-HTA with more authority and resources or creating a separate implementation/coordinating agency similar to the Sustainability Council recommended by the Hawaii 2050 Task Force (2008) to implement the statewide sustainability plan.

Hawaii appears to have reached an impasse in deciding how best to manage Destination Hawaii. Before the impasse becomes too entrenched, perhaps it is time to bring in outside expertise to provide an independent evaluation of the situation and offer suggestions/options on how the state might move forward. That person (or group) selected should be someone who has knowledge of tourism, understands and is committed to the principles of sustainability, and has had a lot of experience studying how other destinations have successfully managed their destinations.

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3 thoughts on “Developing a Dream Destination: From Laissez-Faire to Destination Management”

  1. I am curious as to the cause of the change in real visitor spending per tourist. Do the growths in peer-to-peer vacation rentals and timeshares play a role? Do these accommodations bring tourists who spend less? (My guess is that spending by tourists who stay in these accommodations is something of a cross between spending by residents and spending by tourists who stay in hotels.) And both of these types of accommodations are effectively encouraged by the transient accommodations tax (the TAT on timeshares is lower than the rate on equivalent hotel stays and the TAT is harder to enforce for peer-to-peer rentals). Do the lower real air fares brought about by airline deregulation bring poorer tourists? It seems to me that an investigation into the causes of declining per-capita tourist spending is an important first step to developing a cure for the malaise.

    1. I agree with you Don. I think DBEDT can and should do such a study now that tourism research has been transferred from HTA to DBEDT. There are, of course, other potential explanations– the rise in the share of repeat visitors, the decline in the share of Japanese visitors, etc. We have sufficiently good data to sort out these possibilities. Thanks. Jim

  2. Paul Brewbaker

    Hi Don, check your email. The fact that constant-dollar per visitor daily expenditure in Hawaii has declined on trend for about fifty years, and only because we have about fifty years of data, is not inconsistent with an earlier finding Jim wrote about some years ago, that air fares have done the same thing since the 1930s. In today’s dollars, Shirley Temple paid about $14,000 to fly the Pan American Clipper to Hawaii in the late-1930s. Jim and co-authors showed that real air fares declined throughout the regulated fare era (CAB regulation), until 1978. From summer 2021 “post”-Covid air fares we can infer that fares continued to decline for four recent decades. (I’m paying $600 to fly to Denver, or perhaps cancelling that flight with a zero change fee–a no-cost put option on a forward contract–now that the Delta variant is ascendant, no puns intended.) Why non-travel per capita visitor outlays would NOT decline over time is a mystery to me, but Jim is right: someone like DBEDT would find it a worthy research subject. Technological progress is only part of the answer, as are enhanced competition and contestability, or recreational preference shifts towards open-access natural resource amenities, retail pricing arbitrage, and e-commerce. These and other testable hypotheses await investigation.

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