STAND. COM. REP. NO. 647

Honolulu, Hawaii

RE: S.B. No. 1522

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Energy, Economic Development, and Tourism, to which was referred S.B. No. 1522 entitled:

"A BILL FOR AN ACT RELATING TO ECONOMIC DEVELOPMENT,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Establish an Office of Tourism and Destination Management within the Department of Business, Economic Development, and Tourism that encompasses regenerative tourism and best practice destination management;

(2) Transfer the functions, duties, appropriations, and positions of the Hawaii Tourism Authority to the Office of Tourism and Destination Management;

(3) Require the Office of Tourism and Destination Management to implement certain county destination management action plans;

(4) Dissolve the Hawaii Tourism Authority; and

(5) Appropriate funds.

Your Committee received testimony in support of this measure from one individual. Your Committee received testimony in opposition to this measure from Pacific Rim Concepts, LLC and one individual. Your Committee received comments on this measure from the Department of Business, Economic Development, and Tourism; Hawai‘i Tourism Authority; Department of Taxation; Office of Information Practices; Council for Native Hawaiian Advancement; Maui Hotel and Lodging Association; Kohala Coast Resort Association; Hawaii Lodging and Tourism Association; and two individuals.

Your Committee finds that due to mismanagement by the Hawaii Tourism Authority, the award of a $34,000,000 contract for the marketing of Hawaii as a tourism destination to the United States major market area has been in limbo since 2021. This situation has been widely publicized and has demonstrated the Hawaii Tourism Authority's noncompliance with the State Procurement Code. Your Committee further finds that, prior to the establishment of the Hawaii Tourism Authority, the Department of Business, Economic Development, and Tourism managed the tourism marketing contracts for the State. This measure will re-establish public confidence in the State procurement process by dissolving the Hawaii Tourism Authority and transferring its duties and functions to the Department of Business, Economic Development, and Tourism.

Your Committee acknowledges certain concerns raised in testimony suggesting definitions for new terms including "regenerative Hawaiian cultural heritage business model", "destination management service", and "integrated marketing". Your Committee finds that these suggestions merit further consideration and requests further examination by your Committee on Ways and Means.

Your Committee has amended this measure by:

(1) Inserting an effective date of January 6, 2050, to encourage further discussion; and

(2) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Energy, Economic Development, and Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1522, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1522, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Energy, Economic Development, and Tourism,

________________________________

LYNN DECOITE, Chair