State must develop goals if HVCB is to meet them
In a previous column, I wrote about establishing a stable, predictable source of funding for the Hawaii Visitors and Convention Bureau. With about 50 percent of Hawaii's economy directly and indirectly dependent on travel and tourism, tourism marketing is the best investment government can make on behalf of its citizens, particularly small business.
However, just allocating dollars is no longer enough. As in business, the "funding formula" should be linked to a return on investment. Let's negotiate with the HVCB to establish a set of desired outcomes to be achieved over a period of time -- total visitors, visitor spending, market mix and so forth. Make contract renewal dependent on reaching those goals. Right now that kind of strategic planning does not exist at the state level and the HVCB is doing the best it can without a definitive set of marching orders.
Some people might think that the $23 million the HVCB received last year should have been more than enough to advertise our state. But, the $23 million included legislatively mandated funding for the Convention Center, Neighbor Island HVCB chapters, athletic events and the International Film Festival, all of which I endorse. After paying for those items, the HVCB had only $13 million for marketing and advertising. After deducting expenses for trade shows and brochures, barely $6 million was available for pure destination advertising.
This is peanuts when comparing advertising budgets with our competitors: Las Vegas, $9 million; Puerto Rico, $11.2 million; Florida, $14.5 million -- and five cruise lines combined, $143 million!
It is no wonder that Hawaii is still languishing, in both visitor arrivals and visitor days, far below the records we achieved in 1990 and 1991.
Another approach is to compare the HVCB budget to the taxes the state receives that are directly related to travel and tourism. Our state's marketing budget is less than 1 percent of the income travel and tourism creates. For every dollar the state spends, it gets $100 back! Now that's return on investment.
Adequate funding is crucial, but for maximum effectiveness, we also have to change the way we advertise.
Due to budget limitations, the HVCB has advertised primarily in print media. But the way people receive information has changed and television is now the primary vehicle. Granted, select print media can deliver more potential travelers per ad dollar but in this MTV age, we need to add the impact of sight and sound that only television can provide.
Las Vegas, Mexico, Australia, Jamaica, Bermuda and the Bahamas are all heavy users of consumer-direct television advertising, attracting travelers with excellent campaigns that have broad reach, strong impact and high frequency. The cruise-ship companies do an outstanding job, with heavy emphasis on consumer television. The power of the tube is almost mystical and marketing experts know how persuasive this medium is.
Hawaii has to find the resources to compete in the television battleground for the minds and pocketbooks of consumers around the world. It is expensive, but if the competition is armed with nuclear-tipped missiles, we'd better not show up with spears and arrows.
In addition to television, we need to look to other marketing strategies, like database technology. Using the power of the computer, and data on people's purchasing habits, skilled marketers can zero in on the prospects who are most likely to buy.
Hawaii's competition is not limited to travel destinations; catalog companies also are expert with computers, name lists and demographic information. This is significant because money spent on clothing, home electronics or other goods purchased via mail order is not available for travel to Hawaii.
Recently the HVCB did a co-op data-base marketing program with American Express. It was highly productive. If the HVCB is to succeed, it will have to find more ways to harness technology in the future.
Whether it's television or data-base marketing, Hawaii should not be hard to sell. The recent Longwoods Study, based on interviews with 200,000 members of the United States traveling public, told us that Hawaii still rates highly as a sightseeing and beach destination -- ahead of every other competitor. But having a great product is only the beginning. As Gov. Cayetano recently said, "You have to spend money to make money." And this is no more true than in the battle for the traveler's mind.
Richard R. Kelley is chairman of Outrigger Hotels & Resorts.