State funds for tourism do pay off, study says

A Toronto consulting firm hired by the HVCB finds $7.9 million in spending led to $1 billion in revenue


State spending on tourism promotion clearly pays off by boosting the flow of tourists and adding to state tax revenues, according to a consulting firm’s final report from a three-year study.

The $7.9 million of taxpayers’ money that the Hawaii Visitors & Convention Bureau spent on advertising in 1994 generated 757,000 trips to Hawaii through 1994 and 1996, according to the study by Toronto-based Longwoods International.

Those tourists spent $1.1 billion in the islands and generated nearly $76 million in state taxes, according to the report, part of a $240,000 study commissioned by HVCB to find out more about the image and effectiveness of its advertising.

The HVCB is announcing its results at a crucial time in its budgeting process. The Legislature is nearing the end of its biennium budget session and so far the only clear direction to emerge is a Senate vote to cut state funding of the HVCB to zero after June 30, 1998.

Seiji Naya, director of the state Department of Business, Economic Development & Tourism, told a legislative hearing today that the results of the study were “strikingly good,” but he said it is difficult in such surveys to separate the impact of advertising from the impact of other factors such as economic conditions and fares.

And he said that in spite of the positive reaction to advertising shown in the study, actual tourist numbers from the mainland were down in 1995 and 1996.

Economist Paul Brewbaker, speaking for an economic task force that monitored the survey process, said the study demonstrated convincingly that a significant level of tourism could be linked directly to advertising.

Brewbaker added a personal comment that there should be some form of dedicated government funding for tourism, perhaps tying public and private money together through fund matching, so that businesses that don’t contribute don’t get a free ride.

HVCB officials and Longwoods executives briefed legislative leaders on the study yesterday and presented the full findings to the House Tourism Committee today.

HVCB Chairman Tony Vericella said the study results show the importance of an ongoing information process that allows the mostly state-funded organization to get the most for its money.

“We said three years ago that the (bureau) needed to operate as a business,” Vericella said yesterday. To do that, he said, it is essential to know where the money goes and what it achieves.

Bill Seigel, Longwoods president, said the study that began in 1994 with a questionnaire sent to some 3,500 people got a high response for such surveys, just under 2,000 answers.

Videotapes of HVCB television advertising and copies of print advertisements were sent out and the participants were asked to comment on which ads they had seen and what impact they had, Seigel said.

Two waves of follow-ups checked people late in 1995 and again late in 1996 to see how many had actually come to Hawaii.

The survey showed that HVCB advertisements were seen by 67 percent of adult travelers in the United States and almost 90 percent of travelers in Hawaii’s core West Coast markets.

The advertising also raised perceptions of Hawaii as a place where visitors get good value for their money, the study showed.

Vericella said that study looked at the effectiveness only of the state’s spending on a U.S. mainland-only campaign in 1994. Seigel said it took as long as two years or more for people who saw those advertisements to make bookings.