I. Identification

1.    The Issue

Hawaii's tourism industry is the largest industry with 26.3% of Gross State Product and 32.1% of total employment, its growth in 1998 was unimpressive (0.8% in GSP).(The State of Hawaii, 2004 a) In term of the economic structure, Hawaii's dependence on air travel and the tourism industry means destination tourism marketing implemented by Destination Management Organizations (DMO)  severely affects its economy. This case study focuses on the role of Destination Management Organizations’ (DMO) marketing activities in Hawaii. Hawaii’s tourism industry largely contributes to its economical activity, also impacts on sociological and cultural aspects.

From statistical data, Japanese visitors domains the share of 27 % in 2003 and is expected 30 % in 2005.the Japanese market is the biggest market other than the west-U.S and the east U.S. (The State of Hawaii, 2004 b)

2.    Description

Before statehood, Hawaii’s economic structure had been changing dramatically. Until break up of the World War II, Hawaii’s primary economy depended on pineapple and sugar. However in the postwar years, industrialization led to decrease the number of jobs of pineapple and sugar, instead, defense spending and tourism replaced the Hawaii’s traditional industries.

¹ Defense expenditures included.
² Includes crew and airline expenditures.
Source: DBEDT Gross State Products Accounts data base.

It is very challenging issue to find an answer to the sustainable compromise. Hawaii is not an exceptional case. The sustainable tourism is a not easy subject for Hawaii’s tourism industry since its natural resources; sun, sand and surf attract visitors from all over the world. On the other hand, the impacts of tourism industry on Hawaii’s environment are a critical issue.

In the autumn of 1999, the Hawaii Tourism Authority (HTA) awarded a three-year, $114 million contract to the nonprofit Hawaii Visitors and Convention Bureau to promote Hawaii throughout the world as a vacation and business destination. The following January, in an unprecedented move, the Sierra Club sued the HTA to halt the marketing contract until the state can assess the environmental impact of attracting more tourists to its already environmentally challenged beach areas.. The Hawaii Supreme Court heard arguments in November 2000.

      According to the Hawaii chapter of the Sierra Club, increasing visitor arrivals will lead to overcrowded beaches, strained natural resources, clogged roadways and overburdened natural areas. In addition, the effect of adding millions of tourists to the islands’ population each year has an as yet unmeasured impact on the island's limited water resources. More tourists means more roads, more traffic, more power plants, greater freshwater and electricity demands, increased development pressure, and more pollution.(EPA, Coast line 2002) Moreover, tourism growth brings the degradation of native Hawaiian’s cultural heritage values.

On the other hand, tourism industry will play a key role in Hawaii economy, specifically in terms of the international market ratio as mentioned before, the Japanese market would contribute to the economic growth. This case study investigate the correlation of the Japanese visitors and economical, socio-cultural impacts on Hawaii.

3.    Related Cases

Community tourism promoters need to evaluate natural resources in an area and

find what is special locally, and market those special resources. A community

must have a plan to protect their resources before they use them, or risk

destruction of the resources which attract tourists. For example, some counties

and other jurisdictions in the western United States have found it beneficial to

protect recreation and wildlife lands using tax dollars to enhance the quality of life

and promote nature tourism in fast-growing places such as Jefferson and Boulder

Counties, Colorado; Kings County (Seattle), Washington; and Flagstaff, Arizona.

In the Florida Keys, Yellowstone, Yosemite, Nepal, Costa Rica, and other scenic destinations. Where tourism boosts the local economy (in Hawaii, it accounts for one-third of all jobs and one-quarter of the gross state product), politicians tend to be unwilling to probe too deeply into its impacts.

4.    Author and Date:

Mitsuhiro Takeda    Apr 13 2004

II. Policy Impacts

5.     

The Sierra Club filed a lawsuit in January in state Supreme Court, contending that by failing to assess the impacts of marketing program, spending $114 million over three years to promote tourism, HTA violated Hawaiian law, which requires an environmental analysis before spending public funds.

Spending  %114 million over three years affects on the increasing the number of visitor in the short time period. They have set a goal of adding nearly 30,000 visitors per day to the islands in the year 2005. This promotion would be a panacea to boost Hawaii’s economy, however it would neglects the sustainability of tourism.

6. Forum and Scope/Existing Policy Framework:

The Sierra Club filed a lawsuit in January in state Supreme Court, contending that by failing to assess the impacts of marketing program, spending $114 million over three years to promote tourism, HTA violated Hawaiian law, which requires an environmental analysis before spending public funds.

The suit cites a Hawaii law, HRS Chapter 343-1, Chapter 343, HRS - State Environmental Review Law - It is the purpose of this chapter to establish a system of environmental review which will ensure that environmental concerns are given appropriate consideration in decision making along with economic and technical considerations. requiring such a study before spending public money or using public lands.

The Sierra club noted that while state agencies charged with protecting public health and the environment -- the Department of Health and the Department of Land and Natural Resources -- are cutting their budgets, the state is making an unprecedented investment in tourism promotion.

According to Sierra Club attorney Isaac Hall, the lawsuit could open the door for similar challenges elsewhere. While environmental-protection laws have long been used to stop individual development proposals, their application to economic programs is relatively new.This precedent lawsuits affects the marketing strategy of HTA. It would spend more budget on research for the sustainable tourism , also marketing campaign feature the sustainability of destination. As result, visitors would think about the sustainable tourism and attempt to contribute to preserve it. Oppositely, there is a concern that cutting down the budget for the promotional campaign would degrade the Hawaii’s good standing position as the tourist destination in the international market.

7.Decision Breadth/Stakeholders/Policy Actors:

Robert Fishman, chief executive officer of Hawaii Tourism Authority, was saying the call for an environmental study had never surfaced during statewide hearings on the agency's marketing plan.On the other hand, Hawaii’s most distinctive character to attract visitors is its natural resources. Hawaii Tourism Authority should study impacts of tourists on environment of Hawaii.

Act 259 of the 2001 Legislature requested Hawaii, the Department of Business, Economic Development and Tourism (DBEDT) to conduct a study on Hawaii's capacity to sustain future growth in tourism.

(Source:Hawaii, Department of Department of Business, Economic Development and Tourism)

According to DBEDT, this study has been conducting for the sluggish of Hawaii’s tourism industry after September ,11 2001.However, it would say that the study reflect The Sierra Club’s lawsuits, 

The Sierra Club tried to attract public opinion of the negative impacts of tourism. The objective of lawsuits is to demand for the accountability of HTA tourism campaign, the responsibility for determining the tourism negative impacts and  warning the no-plan based tourism campaign.

While the impact of the Gulf War was felt widely throughout the Japan travel industry, statistics shows a decrease in visitors of 73,740 in 1991 against 1,438,585 in 1990. This is rather Japanese concerned safe and security but because Japanese leaders and consumers, out of respect for America’s tragedy, did not feel it was appropriate to enjoy them on a travel holiday in the U.S. when others there were suffering. Japanese government and business leaders and school officials also had a deep sense of responsibility that prevented them from encouraging people to travel and potentially put themselves in harm’s way.

Learning from this, the lawsuits would psychologically affects on Japanese visitors feeling the some kinds of guilty of negative impacts of their visitation. But need to prepare schemes of Japanese tourists being a part of preserve Hawaii’s sustainability such as conservation tax.

8. Legal Standing/Legal Regulatory Framework/Suggested Policy Intervention:

            As far as the lawsuits case, there could be three main stakeholders; HTA, The Sierra Club and visitors. To meet each stakeholder’s demands, suggest discussing innovation of Sustainable Tourism Accounting and conservation tax levy from tourists. HTA could show accountability to apply it for tourism marketing activity and research and Japanese visitors are released from the guilty of participating in harming the sustainable tourism to pay the tax during their stay.  

Environmental protection expenditure (EPE) is a blanket term in the context of environmental accounting, and in practice is made up of a number of sub-accounts that aim to paint a complete picture of the ‘environment industry’.

The two core sub-accounts are for environmental protection activities (EPA) and

natural resource management (NRM) (Statistics NZ,2004)

9. Geographic Locations

a. Geographic Domain: The United States of America

b. Geographic Site:The South Pacific

c. Geographic Impact: The State of Hawaii

 III. Policy Impacts

11. Economic

Prior to 1993, the Colorado Tourism Board was funded by a 0.2 percent tax (two cents on $10) on lodging, restaurant meals, ground transportation, lift tickets, and tourist-attraction entrance fees.  In 1992, this tax generated $12 million, which was used to promote Colorado tourism. The tax was discontinued in 1993, and between 1994 and 1999, Colorado did not invest in tourism promotion. At the same time, governments in every other state were investing in tourism. As a result, Colorado's share of the U.S. tourism industry declined, costing $2.4 billion in business revenues and $134 million in tax revenues.(Richard,2004) This Colorado’s case proves that coherent and appropriate tourism marketing is important factor to affect both of the visitor number and expenditure.

Hawaii’s tourism prosperity attribute to its marketing efforts. Like the Colorado’s case, if the Sierra Club’s lawsuits would prevent Hawaii from continue to promote its tourism industry to the international market, Hawaii could not keep the current economic position. 

Since the Sierra Club’s claim is HTA should investigate negative impacts of tourism. In terms of the circumstance, a significant tax such as conservation tax levy from tourists, applies for investing negative impacts of tourism at the same time HTA can carry on the marketing campaign.

12. Other

           Hawaii Visitors and Convention Bureau(HVCB), a nonprofit private agency receives most of its funding from states contracts, the Hawaii Tourism Authority (HTA), a state agency. Also HTA’s budget consists of  Transient Accommodations Tax" [TAT](Knox,2004)appropriates for marketing and promotion. A state audit released in 2003 said the agency has embezzled from public funds, handed overly generous severance packages to executives who quit, and made questionable arrangements for promoting states. (Song,2003)

After this incident, the Japan bureau is expected to close, and the future of Hawaii promotion offices will be replace by a contacted agency. The governor expressed skepticism whether Hawaii's image can be effectively promoted with the breakup of the contract, and the visitors bureau continues to play a coordinating role. Furthermore, Hawaii’s branding image have been maintaining consistently by one DMO break up into some contracted agencies. It would be challenges the agencies faces in restoring public confidence and regaining its position as the official worldwide marketing arm for Hawaii.

13. Suggested Interventions

DMO should continue to invest destination-marketing activity to the Japanese market. However, DMO should take responsibility for its accountability even though its funding structure is private, public or quasi organization.

IV. Trade Clusters

12. Type of Measure:  

The Travel and Tourism Satellite Account (TTSA) are particularly useful because tourism is not generally treated as a separate industry, so comprehensive data on tourism do not exist in most nations’ economic statistics. These data are instead scattered among other industries—such as transportation services, restaurants, and sporting goods.

Thus, statistics on tourism and on its economic impact tend to be an assembly of anecdotal and partial information on the numbers of travelers, recreational activities, and other physical measures of travel and tourism. The estimates of spending on travel and tourism that are available from trade associations, State agencies, and consultants

often use different definitions and vary in terms of quality and timeliness.

The TTSA framework links tourism expenditures to the industries that produce tourism goods and services in the United States, and it is directly related to the U.S. national economic accounts. The TTSA’s define travel and tourism as the economic

activity generated inside the United States by “visitors” of all types—for business and pleasure, by residents and nonresidents alike—and outside the United States by U.S. residents.The TTSA’s are based on the input-output (I-O) accounts, which trace the full range of commodities that are produced by each industry in the U. S. economy and are used by final consumers and which include the industry distribution of value share of each travel and tourism commodity and of “other” commodities that are purchased by

“visitors” is calculated, and the sum of the shares is traced through the accounts to estimate travel and tourism demand. The TTSA’s also provide estimates of travel and tourism value added that consist of the total value added of only the travel and tourism industries.(Kass,Okubo 1997)

            According to World Travel and Tourism Council’s  report (1997) ,

levels. Hawaii should create a State Satellite Account for Travel & Tourism in Hawaii as recommended by the UN Statistical Commission in 1993, and support the same on a national level.  A Tourism Satellite Account for Hawaii to update estimates of tourism's economic impact on the Hawaiian economy was completed and results will be published annually.

13. Relation of Trade Measure to Environmental/Tourism Impact

a.Directly Related to Product:  Yes

            TSA could measure tourism contribution to GDP.

b. Indirectly Related to Product:

            The Sierra Club lawsuits might change from Hawaii’s traditional marketing; promoting Sun, Sand, Surf to Hawaii’s rich cultural and heritage

c. Not Related to Product:

d. Related to Process:

            Japanese visitors will would be decenterized and visit more diverse destinations in Hawaii.

6.    Trade Product Identification/Trade and Services:

Hawaii's tourism industry is the largest industry with 26.3% of Gross State Product and 32.1% of total employment, its growth in 1998 was unimpressive (0.8% in GSP).Also tourism industry impact on Hawaii’s quality of standard life, socio-cultural aspects. It is important to continue to implement tourism marketing, at the same Hawaii  are required to more research for sustaining tourism.(The State of Hawaii,2004C)

15. Economic Data

STATE OF HAWAII (000's of Jobs)

Travel & Tourism in the State of Hawaii will generate an estimated 176,450 jobs in 1997, across a broad spectrum of economic activities. The industry is expected to account for 31.3% of the workforce, providing 1 in every 3.2 jobs in Hawaii. This includes jobs in hotels, restaurants, airlines and car rental companies, as well as jobs in hotel construction,

convention center construction, airport operations and administration, security and many others.(The State of Hawaii,2004 d)

Source: Hawaii Tourism Authority

16. Impact of Trade Restriction:

            Assume levying environment tax to visitors, its would few impacts on the Japanese market.

            According to state of Hawaii business resources, despite the diversification of the visitor industry towards the neighbor islands and other parts of Oahu, Waikiki remains the flagship of the state's tourism industry with 45% of all visitor units. As an economic asset, Waikiki's visitor industry supports approximately 8% of the Gross State Product. Directly and indirectly, one-square-mile area of Waikiki can be associated with supporting about 11% of all civilian jobs in the state and 12% of state and local tax revenues. In terms of this economic structure, negative impacts affect largely on Waikiki area.(The State of Hawaii, 2004 e)

17. Industry Sector: Tourism

18. Exporters and Importers:

Expenditures by visitors who arrived by air from the U.S. West climbed 11.1 percent to $3.5 billion for the year and represented the largest portion of the total, at 35.7 percent. Spending by U.S. East visitors grew 8.6 percent to $2.8 billion or 28.2 percent of the total. Spending by Japanese visitors (-2.7%) declined to $2.0 billion or a 20.7 percent share, while Canadian visitor expenditures (-15.7%) fell to $261 million or 2.7 percent of total expenditures. Spending by visitors from Europe (+6.2% to $196 million), Other Asia (+12.1% to $131 million) and Oceania (+31.1% to $118 million) increased but expenditures from Latin American visitors by air dropped (-23.8% to $16 million) during the year.

When combined, expenditures from the U.S. West, U.S. East and Japan by air accounted for 84.6 percent of total expenditures in 2002. (The State of Hawaii, 2004 e)

V. Macro/Environment Clusters/Tourism Policy Clusters

19. Environmental Problem Type/ Environmental Aspects:

As discussed in the January 2002 Report to the Legislature, the impetus for the study comes from many decades of public concern over the impacts (both positive and negative) of rapid growth in Hawaii's visitor industry. While that growth leveled off after around 1991, a surge in visitors during the year 2000 renewed discussion on the issue. Since the 9/11 tragedy, tourism has struggled to regain the level of activity achieved in 2000. Understandably, the current emphasis in tourism policy is recovering this loss of market demand. However, tourism is expected to recover and, even at modest growth rates, record levels of visitors present in the islands will again be reached.(The State of Hawaii,2004g)

The primary goals of the study are to:

• Examine the impact of visitors on the economy, the State's physical infrastructure, the natural environment, and on socio-cultural aspects of the community; and
• Provide an information base, an analysis of potential consequences and an analytical tool (specifically a computer model) on the impacts of tourism, in order to assist in proactive policy responses to the long-run growth of tourism.

20. Resource Impact and Effect:

Without preservation efforts led by the States of Hawaii, it would lose its characteristic natural resources and finally cause a decline of visitors since visitors come to Hawaii to enjoy its natural resources.

            SEEA , is a satellite system of the System of National Accounts.( Integrated  Environmental  and  Economic Accounting)  It brings together economic and environmental information in a common framework to measure the contribution of the environment to the economy and the impact of the economy on the environment. It provides policy-makers with indicators and descriptive statistics to monitor these interactions as well as a database for strategic planning and policy analysis to identify more sustainable paths of development. According to state of Hawaii business resources, despite the diversification of the visitor industry towards the neighbor islands and other parts of Oahu, Waikiki remains the flagship of the state's tourism industry with 45% of all visitor units

SEEA defines environmental protection activities as those activities whose principal purpose function is to protect the natural environment, and to prevent or alleviate the adverse effects of human activities, which can be economic or social. Activities include the provision of both goods and services, some of which will be more instantly apparent than others. The environmental benefits of upgrading a city’s storm water reticulation network may not be as immediately obvious as the designation of a new national park. Both will, however, result in significant benefits to the natural environment, together with the non-environmental benefits they provide such as minimizing the risk of homes flooding. (The United Nation,2004)

21. Urgency and Lifetime/Urgency and Policy Review:

Reflecting the poor performance caused by the September 11th and public opinion of the sustainability, HTA conducts study team to research for tourism impacts on economical, sociological and cultural aspects.

22. Substitutes/Alternative Policies:

SEEA account applies for tourism industry. Environmental taxes come in many different forms, but as a general matter environmental tax measures either impose a tax cost on some product or activity that is environmentally damaging, or they give a tax benefit to some product or activity that is environmentally beneficial. (Vermont Law School's Environmental Tax Policy,2004)
 

VII Conclusion

27. Policy Implications

      The role of future DMO is not only contribute to economic impacts such as increasing the number of visitation and tourist expenditure, but responsible for an accountability. Promoting destination is relatively difficult to evaluate its marketing activity affect on tourists’ visitation since different from other industry, comprehensive data on tourism do not exist in most nations’ economic statistics. However, Hawaii applies TSA (Tourism Satellite Account), it contributes to measure the tourism impacts on economic activity. 

Likewise, DMO should take a responsibility of socio, cultural and environmental impacts of tourism to seek for successful sustainable tourism. This is a next challenging issue for DMO. Tourism industry expect that SEEA, satellite system of the System of National Accounts (Integrated Environmental and Economic Accounting) would develop evaluate system of tourism impacts on environment translate into numerical data.

Finally, it is a challenging policy issue to research for negative impacts of tourism on economical and socio-cultural aspects. In Hawaii’s case, tourism is the largest industry, plays an important role of state’s economics. DMO, especially public sector should take an initiative to seek for “the sustainable tourism”. However, in reality, public sector like HTA’s marketing budget is consists of Transient Accommodations Tax (TAT). HTA is expecting to increase the number of visitors and expenditures otherwise they would be in a crisis of distinct.

The sustainable marketing would be a next concept for the Japanese market, diversify the visitation and suggest Japanese tourists to be partners of preserving the Hawaii’s sustainability. Conceptually, launching the new brand image of Hawaii such as it has natural and cultural heritage destination, instead Sun, Sand, Surf destination.

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