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Commission: MVB should get no county funds

$3M grant not cost effective

The county Cost of Government Commission is recommending no county funding in the next budget year for the Maui Visitors Bureau, which helps promote tourism and received a $3 million grant from the county for the current fiscal year.

The major findings of the report included Maui County spending 12 times more on its visitors bureau than its closest county counterpart, the county investment return being significantly lower than other counties and “no clear connection between Maui County’s grant to MVB and additional visitor arrivals or visitor spending.”

The commission, which held a virtual meeting with BlueJeans software, approved the eight-page report April 9 in a 5 to 2 vote with two members absent, said Chairman Michael Williams. Two hours of public testimony were heard employing the same software used by the County Council.

The report, which was sent to Maui County Mayor Michael Victorino and the council, sought to analyze the value and effectiveness of the MVB grant in promoting tourism. Over the two years of discussions, the panel reviewed advertising expenditures, analyzed marketing tools and evaluated oversight of companies contracted by MVB, the report said.

“In the end, the commission decided that it is not equipped to attempt to micromanage the MVB,” a footnote in the report said. “Instead, the commission deemed it more prudent to simply look at the big picture.”

The report focuses on the return on investment per grant dollar using total visitor spending for Maui County in 2018, $3.9 billion, and the $4 million county grant to MVB for fiscal year 2018, which ran from July 1, 2017 to June 30, 2018.

Maui County’s revenue per grant dollar was $975.

Hawaii County provided a $325,000 grant to its visitors bureau. With visitor spending at $1.84 billion, the return was $5,662. Kauai County had a $215,000 grant to its visitors bureau and netted a return of $7,209 on $1.55 billion of visitor spending.

The City and County of Honolulu does not offer a grant to its visitors bureau.

Staff members for the Maui Visitors Bureau and all other county visitors bureaus are employed by the Hawaii Visitors and Convention Bureau. HVCB is contracted by the Hawaii Tourism Authority to market the islands as a tourist destination to leisure visitors in the U.S. and for meetings and conventions globally, the report said.

HVCB markets each island separately; there is no statewide brand, the report said.

In 2018, HTA received $82 million in transient accommodations tax (TAT) revenue — of which $7.2 million was distributed to the Maui County visitors bureaus and community enrichment programs. MVB received $3.7 million; Molokai and Lanai visitors bureaus, $934,183 each; and $1.6 million went to county community enrichment programs, such as the Maui Matsuri, Maui Film Festival and Maui Marathon.

The commission contended that MVB would continue to operate — like Oahu’s bureau — even without a county subsidy because it would continue to receive HTA funding from the TAT. “They will continue to market the uniqueness of Maui County just as the other island visitor bureaus do with their counties,” the report said.

The report also said that HVCB officials could not “produce an objective and verifiable method of the marginal effect of the Maui County grant on total visitors and spending.”

“There is more than enough money spent on marketing Maui as a destination” when including the $44 million spent by resorts, tour companies, airlines, sporting events and other visitor industry entities, the report added.

The commission also did not find a correlation between MVB’s grant and levels of visitor arrivals or spending. While MVB’s current fiscal year grant was trimmed by $1 million, visitor spending and arrivals continued to grow in 2019, the report said.

“Visitors and visitor spending are multi-contextual, and thus depend upon many different factors in the economy,” the report said.

MVB has been receiving a county grant since the early 1990s. Victorino has proposed a $3.5 million allocation for the agency in the next fiscal year budget, which begins July 1. The council currently is reviewing the budget.

The commission advocates no funding in the upcoming fiscal year because of the impacts of the coronavirus pandemic, which has shuttered resorts and shut down the industry. The funds could be used to assist residents and businesses impacted “so they may once again thrive and be ready to receive visitors,” the report said.

In future budgets, the commission recommends grants to MVB not to exceed $500,000.

HTA declined comment on the report.

Victorino said Tuesday that “thousands of residents and their families depend on our visitor industry to pay their bills and put food on their tables.”

“The COVID-19 crisis will pass eventually, and with the help of the Maui Visitors Bureau, adverse impacts can be mitigated through tourism management and bring Maui County back to a strong economy,” he said in response to the report.

The Cost of Government Commission helps the county promote economy, efficiency and improved service to the public by reviewing county operations and policies and making recommendations to improve them, the panel’s website says.

* Lee Imada can be reached at leeimada@mauinews.com.

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