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.

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1 thought on “Developing a Dream Destination: From Laissez-Faire to Destination Management”

  1. Mahalos for detailing this journey through Hawaii’s tourism history. If you’ve got the time, can you clarify some things and respond to some challenges I have? I don’t doubt the accuracy of the details here but the broader framework makes some leaps between arguments that I get lost in.

    While I can see how the concept of tourism meets the public good criteria, if we move away from tourism as an aggregation and look at micro-level tourism activities, they don’t usually seem to meet the excludability criteria at least. As noted in the brief, the legislature seems to have taken it upon themselves to address excludability even if they don’t realize it (I recall Brewbaker making similar fee/pricing arguments in the past). I agree that it’s not a management plan, but these efforts seem to me to reduce the “public good”-ness of the attractions such that a publicly decided plan may not be required.

    Similarly, I can see how tourism produces externalities if we define that liberally, but attempting to resolve externalities via a tax-financed super-HTA/Tourism Council assumes that the least-cost avoider is the tourist and/or firms in the tourism industry, no? Maybe this is an accurate assessment, but I have yet to see the analysis underlying such a conclusion. Seems like it’s just assumed to be the best course of action in much the same way that most readers assume the polluting firm should be taxed/fined/moved in Coase’s classic example. So while I’m really not certain one way or the other, it just seems like the tax/regulate-the-industry method is assumed to be optimal rather than really examining the notion.

    If we accept that tourism must be publicly managed, I don’t quite follow the recommendation for a centralized institution with more authority and resources that will break the current state of laissez-faire. Although the brief states that Hawaii eschewed government oversight/control, it also outlines the myriad state and government agencies involved in tourism marketing, management, funding, etc., the most obvious being the HTA itself. Can you clarify this judgement of state non-intervention? If you accept that intervention is the current state, then the proposal isn’t moving from nothing to intervention, it’s moving from intervention to more but with better governance/direction/cross-agency cohesion, correct?

    I’m probably just too heterodox, but I’d say that’s the current case and an institution with greater centralized power and a larger budget is ripe for rent-seeking, which will unfortunately make destination management fairly ineffective at the margin. Within the institution, I’d argue that increasing the scope/budget would increase rather than decrease the probability that leadership/management roles would attract individuals interested in their own rents and the greater bargaining power in political transactions. Do you think that this is less of a concern, particularly in Hawaii? Applying a politics-as-transactions framework to Hawaii just seems to reveal a lot of risk since we seem to have a persistent culture of returning favors and “taking care” of relations over meritocracy/results and overcoming status quo bias so this always concerns me.

    Somewhat aside, isn’t a centralized effort like an HTA/super-HTA/Tourism Council also contradictory to the IMF’s diversification report recommendations? Through this entity, the state is effectively picking a winning industry and strategy, in this case subsidizing tourism (some private firms taxed but all of them spend less on marketing and resource management) and the method to manage it (single strategy for destination management dictated by the institution). The report was focused on diversification but I’d say that their point regarding activist policies is applicable here also.

    Sorry, that came out a lot longer than I intended but the brief really made me think about this issue the last couple of days.

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