Editor’s note: The Civil Beat Editorial Board and other reporters spoke with Mufi Hannemann, president and CEO of the Hawaii Lodging and Tourism Association. He began with an explanation of what his group stands for. Our interview has been edited for length and clarity and with an eye toward saving some of it for separate stories.
(HLTA) is the largest private sector tourism organization in the state. It started off as the Hawaii Hotel Association. It started in 1947, before I was born. And then I’ve done two stints there. One was in 2011, and then I came back in 2015. When I was there the first go around, I pitched the board to change our name to reflect what we had become through the years — that we evolved from being strictly about hotels, but of including all businesses that have some kind of dependency or relationship with tourism. Restaurants, retail, airlines, ground transportation, what have you. So we changed the name to the Hawaii Lodging and Tourism Association.
There are 700 members and most of our membership are what we call allied members. But the bulk of our membership dues are generated from our hotel resort properties.
We have a three-fold mission: education about the importance of tourism. Why? It needs to continue to be supported, not necessarily just for the hotels themselves or for the industry themselves, but the community. We also have an advocacy role where we play offense. And we play defense, when things are going well, like our charity walk, we want to continue to perpetuate that. That has raised a record $2.7 million in the last one we had pre-pandemic in 2019 with 350 nonprofit organizations in the state.
And so that’s a long ways to the third part of our mission — the philanthropy part of it. We give a lot of scholarship awards, education awards.
So that is what we are all about. And we continue to now go into the second phase of what I’d like to see happen, and that is to build a broad-based coalition of groups that reflected themselves, that manifested itself when we rose up in opposition to House Bill 862.
We had 35 organizations, tourism-related businesses like retail merchants, attractions, the Hawaii Restaurant Association, Hawaii Agriculture Foundation. And then we also were able to have with us all the Chamber of Commerce groups all folded in there. And that’s never happened before. We had unions part of it. Every county chamber group was a part of it. Every ethnic chamber group was a part of it. And we really got strong support from the business sector, growing support from the labor community, especially as reflected by ILWU, which has a strong neighbor island presence. The Teamsters Union — the bus drivers transport a lot of tourists throughout the community — and the Ironworkers Union from the construction trade side.
We’re going to be doing more in the future because I’m finding more and more that, if the voice comes just from tourism, you get sometimes easily dismissed for a lot of obvious reasons. But if we come from sectors not necessarily dependent on tourism it’s a lot stronger and goes a lot further, in my opinion, because the jobs are not directly related to this industry, per se.
OK, so this is a pretty big hui that you’ve got together here. But still, you guys were unsuccessful in defeating House Bill 862 in changing the funding of the Hawaii Tourism Authority and the hotel tax for the counties. You convinced the governor and he vetoed it, but the House and Senate narrowly overrode the governor.
Let me look at just the cup being half full. We came within one vote in the Senate of getting our way because I quickly saw that we didn’t need both houses. The other side needed both houses to get the two-thirds majority. All I needed was to get one-third in one chamber, and I very clearly said at the beginning, it’s the Senate, not the House — the House leadership has really come down hard. They were really pushing this thing. I thought the opportunity, as I said, came within one vote. We got eight senators.
You know, you’ve got to recognize this was going to be tremendous odds. The leadership wanted it, and this was a gut and replace bill. There was a lot of pressure on legislators. I know that because numerous conversations I had they said they had to toe the line, and yet we came within one point of doing it.
So yeah, we didn’t get it. But I think we sent a strong message that we will continue to stand up in the future, not just the tourism side sector, if you will, but I think the business community is ready and labor and the community to sort of give the other side of why we felt in this particular case, it’s still not the right thing to do.
And I look forward now to the challenge we have on addressing the management of tourism and how we can work together to achieve that end. That’s what everyone wants to see. Less emphasis on marketing, more emphasis on management. I think it behooves us to work together because, until the state finds another alternative to tourism, it’s going to be tourism from our standpoint, as long as we’re the biggest game in town.
HB 862 is now law. It changes the funding of the HTA dramatically. They’re going to have to go hat in hand every year now to the Legislature rather than have a dedicated portion of the TAT. It’s also giving the counties taxing authority. That’s something I’m sure you can comment on as a former mayor — how much of an impact is this law going to have on your industry?
Well, I think it first of all, for those who can’t remember or were part of the whole debate back in the ’80s and the ’90s when the TAT was first broached — and sort of sold, if you will, to the industry that it would go for at that time tourism, marketing and promotion. And then a couple of years after that assistance to the counties, which we were fine with because we recognize and there’s a lot of things that police, the firefighters, emergency services protect not just our residents but visitors who come here. And then to pay for the Hawaii Convention Center.
But since then a very alarming trend is occurring. More and more, the money is going into the (state) general fund. So here’s my question: Where is that money going to? We have never been able to get any kind of answers. It’s kind of like, “It’s our money. You’re getting your share for tourism promotion. We’re helping with assistance to the counties.” And I think the public should ask — not just the coalition that we’ve put together — where is that money going?
I mean, if it’s going for economic diversification initiatives, then that’s why tourism has to continue to be strong. Where else does that money come from? But we had no clue where the $340 million (in TAT) was going before. And now no one’s talking about where that money is going to go in the future. That’s 90%. That’s a huge amount of money that’s going into the general fund.
The bill has been described by critics as a money grab on the part of the Legislature. Would you agree with that?
Well, I think when you look at the math here, yes, it appears to be that way. And the counties have balanced their budgets. And they did it without the 30% increase in the TAT. So you have to ask now, why is there a rush to get that money? Why can’t they continue to get a greater share of what’s going into the general excise tax?
I’m all for giving more money to the counties. They deserve it for what they do — police, firefighters, lifeguards, what have you. All those things are important to the success of a tourism industry. So they should take it from this additional monies that they have as opposed to telling them you can now increase it by 3%, which is really a 30% increase over TAT. And, you know, some have even been told we’re open to increasing it in the future. To me, that appears to be a money grab.
How is that going to affect the average person wanting to come to Hawaii? What are they going to see in their hotel bill or retail bills or whatever the case may be?
Well, it’s going to be a lot more expensive to come here. And I know some are dismissive and saying, you know, “people are showing right now they’re coming back and we’re not promoting. So let’s not market, stop promoting and do more management and so forth.”
And so when we say it’s going to be more expensive, yes, it is going to be more. Because what we have cornered the market on now is the fact that we own Safe Travels. We own that image that everyone is looking for. “I’m cooped up at home. I want to travel, I want to get out there. Yeah, Hawaii is going to make you do that 72-hour quarantine if you have to quarantine, but it’s worth it because they have one of the lowest COVID-19 case counts in the country.”
I’ve been involved with every economic development and diversification initiative for the past four decades. It always comes back to tourism.
We own that now. But sooner or later, Mexico will get its act together sooner or later, French Polynesia. So all these other sun and surf destinations will come to the forefront. Very few people are traveling to Asia. It’s all going to change. So this is why we have to be very careful on the price of what it costs to come to Hawaii, because that’s where we’re going to get hurt at the end of the day.
Scott Saiki, the House speaker, said as much that we don’t really need an HTA because the numbers actually are exceeding pre-pandemic levels in terms of arrivals. Spending is a different question. But how do you respond to his argument that we really don’t need to market the state because they’re coming here anyway?
Well, has Rainbow Drive-In stopped advertising? There’s long lines every time. Has McDonald’s stopped advertising? There are long lines every time. It’s all about competition. It’s all about making sure that we get the right kind of traveler that comes here. I have to say, and you may not like this, those that are coming now, some of them are not the kind of travelers we’d like to see when we start getting back to real normalcy, if you will.
Some are staying at short term illegal vacation rentals. Some of them are looking for free events, free attractions. Some of them are not paying attention to a lot of the campaigns that we’re putting up there to tell people to be respectful of our culture and the like and our resources and so forth. So we need to do strategic marketing so that the profile of the visitor that comes here is going to be someone that they always call a “quality” visitor.
But, you know, (they are) not just content to stay in a lodging facility. They are going to get out and spend. I mean, you look at the retailers, they’re not going to come back in any shape or form, at least the high-end retailers, until we get international travel back. And that looks to be perhaps the last quarter of the year, and that’s going to depend on what happens in Japan with the Olympics. I mean, if that’s a successful venture, fine. I want to see a successful Olympics. But, right now they’ve already said no fans.
Yeah, no spectators.
So those are things that we have to be mindful of. The other thing, too, is that we have not started to really aggressively go after folks who will come here to attend a convention or what we call structured meetings because the (COVID-19 and travel) rules are not in place. Will county rules be preempted by the state? And how do we know it’s going to be that way tomorrow? Is that the same for this neighbor island and so forth?
So that’s another market that will ensure that a quality traveler comes here. And you just can’t start marketing and getting the resources to results in 10 days, five days — it takes time. So this is why I really believe you can’t stop that effort of trying to promote yourself as a safe destination. We’re trying to say we’re a safe and healthy place.
That also requires a lot of things — that we’re going to manage tourism better has to get out there. We don’t want, you know, freeloaders coming into our community. We want (visitors) to be very cognizant of looking at what makes a special place and also wanting to start giving back while they’re here.
I know it’s not your call, but what do you think the four mayors are going to do? Are they going to be able to impose that 3% tax, which is really 30%, as you indicated? Can you paint a picture of how that might look?
Well, let me just say this: It’s not going to be that easy to implement. And I think that’s what people have to understand.
It has to be a decision by the executive branch and how they’re going to administer and collect the tax — that’s not a legislative decision. So you have to have the state Department of Taxation come up with some rules on how they’re going to administer the tax, and then that also has to fit in with the county tax sections and so forth. And the last time I checked, they were not in agreement on how they’re going to do this because counties do real property taxes, they don’t do TAT. And the last thing that we want to see from the hotels and resorts is that “we’ve got to sort this out to give to the county, sort this out to give to the state.”
Don’t add another tax at a time when we try to reduce taxes, not increase taxes.
And, because they said up to 3%, who knows? You would think they’ll all go 3%, but you also have a mayor who we believe was really right on this issue. That’s (Hawaii County) Mayor (Mitch) Roth who is saying, you know, now’s not the time. So he may recommend 1%. Other counties may set their own rates. So that has to be flushed out and it hasn’t been.
The good news there is that they’ve already balanced their budgets over the next fiscal year. So it’s something that I think they need to think through how the tax is going to be administered, how it’s going to be collected, set up a system, and then secondly, come to some kind of agreement. Because the last thing we want to see, as I indicated earlier, is every county is different.
Why do you think the House leadership was so insistent on HB 862? Earlier you said there was really no changing their minds but with Senate you said you had some wiggle room.
What I would have ascertained is that the House really wanted the county tax option. It really came from that part of the chamber, where on the Senate side (it) was more focused on changes within HTA. So that’s why I felt that there was some in the House that really feel that the counties needed to do a better job of explaining how that county tax would be administered. And then also there are some folks of the mindset, even when I was there (as Honolulu mayor), that if you guys want to do more, stop looking to the state — raise your real property taxes. You have some of the lowest real property taxes in the country you should be raising.
Which goes to my second point that that’s why this is really not necessary, because look at the real estate boom that’s taking place. Next year’s real property tax at the same rate, they’re going to collect much more than they got in 2021 and 2020. So that’s another area, too, that could lend itself to have more money, to take it from where the taxing authorizations are already, given the real property tax. Don’t add another tax at a time when we try to reduce taxes, not increase taxes.
Tourism, while it was always sort of a pain point before, seems to have emerged from the pandemic as being a real fight now. A lot more people are just fed up with over-tourism. What do you do about that as the tourism industry? Is there anything you can do to help people feel better about tourists?
So I want to say for the record some things that occurred that I think are not given a full understanding of what that was all about. The industry particularly is being faulted for not doing enough to anticipate tourists coming back to Hawaii, and they should have been doing that. But during the pandemic year, we were working side by side with state government to basically put forward the Safe Travels program, which has proven to be successful. It was very uncomfortable for us. We’re so used to asking visitors to come and all of a sudden we’re telling them “time out, now is not the time to come.”
In fact, we launched a campaign called Aloha Later where we just kind of went on the media and just said, “Come when we’re ready to receive you. So Aloha Later. But for now, do not come to Hawaii.” And, you know, we never dealt with quarantines before.
So there were a lot of things that we were doing then to help the state recognize that we needed to keep this place safe. We needed to win back the confidence of our local people so that we could start the economy going again.
So now we’re at this stage where, all through that period, HTA was not able to shine the light enough, I believe, in their Destination Management Action Plan program that they had put in place, which consists of four counties getting together with 20 or so stakeholders, kind of laying out the plans to how to make this place a better place — not just for visitors, but for residents, touching on cultural areas, natural resources, environment and so forth. And now we have to fast-forward and put that into action sooner rather than later, because the thought is that we didn’t do enough during that period.
So I’ve always maintained the two things that should have been done. In the mid-’90s I championed the bill at Hanauma Bay to create a user fee there that has to go into a special fund. And I’ve got no problem charging tourists to use the beach. But let’s make sure that local residents are not charged because charging someone to use a beach in a way is anathema. That should have been commonplace throughout the state, so now we’re playing catch-up. But it has to go back to the ongoing preservation or maintenance of that road or that trail or that bay.
The second thing that we’ve been saying for a while is they’ve got to rein in illegal short-term rentals. The number really hasn’t changed in 20 years. It’s been 45,000 to 50,000 hotel rooms. What has grown is the vacation rental side. We’re still bringing in 6 to 7 million visitors based on 40,000 to 50,000 rooms. That has grown. So and I’ve always said this, I’m OK with short-term rentals operating in resort areas. Let them compete with us, because that’s what they’re fashioning themselves as, an alternative source of accommodations.
Where I have a problem is when they go into neighborhoods and communities. And we saw during the pandemic they weren’t quarantining. They knew there wasn’t anybody looking over their shoulders, because oftentimes (it) was an absentee owner and they weren’t obeying some of the local rules.
So those are the two areas that we’re ready to roll up our sleeves and work with government, state and county and the local community. I really believe we can have some instantaneous results that could help not all of the issues that people have with us, but demonstrate, hey, we’re on your side. We want to rein in our vacation rentals. We want to see more impact user fees.
You mentioned that there were tourists that were more desirable than others to bring here. It just seems like anybody can buy a ticket and fly to Hawaii if they want. How do you control that?
That point is exactly what’s going to happen, more so if we don’t have strategic marketing, targeted marketing. Right now people are just jumping on the plane. I saw a guy at church this past week who came in with shorts, T-shirt and his duffel bag. And I said to him, “Where are you from?” He says, “Oh, I’m just visiting for the first time.” I said, “Oh, how did you get here?” He said, “I have a friend that’s a pilot and he said, ‘Hey, want go to Hawaii? I’ll get you a ticket, a buddy pass.’” And bingo, he’s in Hawaii. No place to stay. He’s just fending for himself and so I just think that you’re going to encourage more of that kind of traveler, if you will, if you don’t try to target your marketing for that visitor that we’d like to see here, according to demographics, according to income level, according to their taste preferences, what have you.
And the West Coast has always been our base market. But certainly we’re seeing more and more now with flights being increased, direct service. And so that’s the other thing, too, when they say “stop the flights from coming here.”
You know, to me, as these other destinations open up, they’re going to start pulling these flights. They know that there was this pent up demand for Hawaii. But everything is driven by the marketplace. So I don’t think we’re going to see that grow as much as perhaps people are afraid of right now, because at the end of the day, we can’t stop the airlines from flying. We’ve got to keep promoting Hawaii until there’s more of a balance.
I think this is an opportunity now to reemerge and have a more sustainable, resilient economy.
So until that time comes, we have to do strategic marketing of Hawaii and seek that profile visitor. International visitors are what everyone likes in the retail business, obviously, because they spend at the high-end retail shops that right now are not as robust as they used to be. And that’ll start coming back. Gov. (David) Ige just relaxed travel restrictions on the Philippines and South Korea recently. And that will occur more frequently. And, of course, we’re all waiting for Japan.
There’s been a pushback against over-tourism for four decades now. Do you see anything different in what’s happening now? And if so, what do you think is driving it?
It’s louder now. It’s more pronounced because we never had a pandemic before. We’ve had spikes here and there of people complaining about tourists. But I think we’ve let our guard down, quite frankly. And I think this is an opportunity now to reemerge and have a more sustainable, resilient economy.
I’d be willing to not feel as strongly as I do about it if there was another idea out there that could replace or come close to replacing tourism. But there’s not. At the state level, county level, it always comes back to this. So let’s recognize it for what it is and let’s try to do our part.
You would have thought that 2020 should have been a major lesson for all of us on how dependent we are on tourism. No one anticipated it coming as quickly as it did. No one. But, you know, it came back very quickly.
I think people who are opposed to (tourism) are also much more articulate. They’re taking advantage of (smart phones) which weren’t around a few years ago. And so that gives you instantaneous reach to folks across the board.
Where do you come down on this fight between the governor and the lieutenant governor over opening up Hawaii? Just lift the rules now or wait until 70% of all residents are vaccinated?
You know, I think it’s going to fall somewhere in the middle. It’s always the case. I mean, Lt. Gov. (Josh) Green pushes one side, and the governor by nature is an engineer, much more cautious and so forth. I look at it like it’s ideas that are being floated and see which one catches, and also to base things on the science. I know Dr. Libby Char very well, she was my director of emergency medical services at the city. It’s a tough job for her now because oftentimes the (state) health department gets blamed. But she’s also trying to strike that balance.
Do you think the uncertainty, though, of not being able to fully open up is actually hurting the economy?
Oh, yeah. That’s why we’ve had so much support with our coalition, because the hotels and the airline workers are coming back but it’s small businesses that are still hurting. You know, the drive-ins, the coffee shops, mom and pop stores — all of those businesses are still hurting and they’ve continued to hurt.
Where do you see Japan? That’s our main international market, I suppose, along with Canada. When do you see that returning to some level of normalcy?
I see it start to return by the fourth quarter, barring no unforeseen circumstances like the Olympics that lead to some kind of normalcy, probably sometime in 2022.
And then meetings and conventions, I’m guessing there hasn’t been a whole heck of a lot because of the COVID-19 restrictions. But you see a lot of business travel desire to return to that market.
And it’s an important market because that’s that quality traveler that people want to see coming. Come here to stay for the convention, stay a few more days and they’ll spend while they are here. So that really depends on the rules and restrictions being clarified. It differs from county to county and then it needs an overarching approval from the state. So I know the convention center is really hurting and they just lost a major convention.
Do you feel that the residents, that local members of the community should have more of a formal voice in the management of the tourism industry?
Oh, I do. That’s why we have this DMAP process, this destination management action plan. They bring together 20 stakeholders in every county and they run the gamut from people who are not necessarily pro tourism. They’ve had questions about tourism in the past, Hawaiian culture experts, practitioners. And everything that I’ve heard so far — because they integrated with the mayor and county offices — it’s a really good process because people are coming together uninhibited. They’re able to say what they want to say. And it’s being drawn up in a plan that’s going to be endorsed by each of the county governments and then will find its way up through HTA.
And in fact, some of the recommendations that have been acted upon as a result of this process — the shuttle service, for example — really came through this process.
The HTA is the appropriate agency to bring these voices together, and I think there’s going to be more of a willingness to engage.
We’re just going to wrap this up with non-tourism related questions. What’s your assessment of what’s going on with rail and the mess with Dillingham Boulevard? I ask you this obviously because of your background with it. But I suppose it’s also related to tourism in a way, too.
You know, they’ve got to get their act together, HART. And, you know, Civil Beat was instrumental in getting those emails. I mean, that’s not good, (the move to hire consultants who appeared to have been chosen before bids were even put out.)
The public is calling for more scrutiny and so forth before we spend another dollar going forward. And I think that’s why they have to clean up that mess first before they do anything. Once they clean up the mess, my feeling has always been, they need to start interim service. Even if they just go from like Waipahu to Aloha Stadium, that’s fine. Then reconfigure the buses to do the regular express service. You can do it on weekends or just rush hour. But just start it, get it going, because right now, as you’re seeing there, everybody is saying the future is so uncertain.
Do you still think this thing is going to make it to Ala Moana?
It’s going to be challenging, but I think you’ve got to start first. You got to start first with an interim service to prove that this thing does operate, that it can move people. And then get the buses.
But to me right now, what they’re suffering from is a major credibility problem. Someone has to clean it up and you can’t expect them to do that. Blangiardi is in the perfect position as our mayor. I mean, he’s pro rail. I think he’s got a golden opportunity to right the ship, to right the train.
But how will he do that? What does he do to right the ship? Right the train?
Well, I think he’s got to clean house, ask for the resignation of some of those board members, everybody on that email thread that was part of the conspiracy needs to be held accountable. And that’s why I think Kurt Fevella is spot on. It’s amazing that he’s the only voice speaking out. I don’t quite understand that.
You know, he’s been a supporter from the beginning. So he’s got some real passion. And he also had another good idea. The state has four representatives on the HART board but they don’t vote. I don’t get that. They count them towards a quorum. But they don’t vote. He tried to get the bill through, it passed the Senate and stopped in the House for a lot of reasons, but those four should vote.
They’ve got to stop these executive sessions. Too many executive sessions, put it out in the open, be transparent about it.
Civil Beat is a small nonprofit newsroom, and we’re committed to a paywall-free website and subscription-free content because we believe in journalism as a public service.
That’s why donations from readers like you are essential to our continued existence.
Help keep our journalism free for all readers by becoming a monthly member of Civil Beat today.
The members of Civil Beat’s editorial board are Pierre Omidyar, Patti Epler, Nathan Eagle, Chad Blair, Jessica Terrell, Julia Steele, Lee Cataluna, Kim Gamel and John Hill. Opinions expressed by the editorial board reflect the group’s consensus view. Chad Blair, the Politics and Opinion Editor, can be reached at email@example.com.