Business Beyond the Reef

Last week I took a look at where Hawaii’s international visitors come from.  Today I want to look at where Hawaii’s tourism marketing money is going.  There seems to be a mismatch.

I will use HTA’s own budget numbers and inbound tourism statistics, some of which you can find at their website.  No really detailed budgets are available on their site, only a dated 2008 annual report to the Hawaii Legislature.  Web-sleuthing turned up HTA’s 2009 annual report, presented to the Legislature on October 31, 2009.  It’s on the HTA site after all, but with no way to find it directly.  Curious.

Hawaii Tourism Authority FY2009 Actuals

Let’s examine the Leisure Marketing expenditures, nearly 56% of the total.  That, of course, includes U.S. domestic marketing, which we need to back out to get a look at HTA’s international marketing.  Luckily, the 2009 Annual Report allows us to do that – with one significant limitation.

Hawaii Tourism Authority FY2009 Leisure Marketing Budget

OK, backing out the North America budget leaves us with an international marketing budget of $12,560,000.  But that does not include Canada, a major source for Hawaii’s visitors!  If any of my readers knows how much HTA spends in Canada, I’d love to have it so that we get a true picture of HTA’s full international marketing.  Ignoring Canada, which is ignoring a lot, we’ll go with what we have.

So what is Hawaii getting for its marketing money?  Those are FY 2009 dollars above, so let’s compare it with HTA’s projections for visitor arrivals in 2010.  I’m blithely making an assumption that 2009 expenditures leads to 2010 sales.  According to their Spring 2010 market briefing (you can see the presentations here and my report here), HTA predicts that Hawaii will attract 1,589,619 international visitors (not including the 343,000 visitors expected from Canada).  In terms of HTA’s budget, each foreign visitor costs HTA about $7.90, but let’s look at individual markets to the extent the data allows.

HTA FY2009 Marketing Budget v. 2010 Estimated Arrivals

I had to tease the data a bit to get a clear picture.  Besides leaving Canada out, HTA provided no estimates for markets other than those shown, so I didn’t include their “Other” budget item.

Several things attract my attention.  One is the absolute dependence on Japan (73.9% of international visitors, 72.8% of the international marketing budget).  The portion of the budget that goes to “Other Asia” (almost entirely China and South Korea) seems to be an attempt to diversify, but there is no evidence that resources are being shifted out of Japan to do it.  In other words, the attention that continues to be paid to Japan smacks of simply going back to the sources you are comfortable with.  (It is hearsay, but a contact who often works with HTA tells me the prevailing attitude is to ignore any market that doesn’t already send large numbers of visitors – China and South Korea being exceptions.  One wonders how to build an industry if one ignores new markets.)

Building up China and South Korea is laudable, but look where the money apparently came from.  Somewhat reduced expenditure per customer in Australia, and almost nothing spent on European visitors.  And that is exactly what has happened: the marketing budget for Europe was cut from $883,000 in FY2008 to only $103,000 in FY2009 – a Draconian cut of more than 88% from your most cost-effective market! Does this make sense?  Most businesspeople would look at the cost/customer for Europe (only $0.94) and conclude that this is where the marketing funds need to go.  What’s going on here?

This entry was posted on Wednesday, May 5th, 2010 at 7:29 am and is filed under Hawaii, Tourism. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.