Mufi's Message 4.20.19

HLTA Gathers at City Hall to Oppose
Real Property Tax Hike!

This past Wednesday, two key visitor industry measures made its way through the Honolulu Full City Council floor: the first, the proposed real property tax increase targeted at our hotel and resort industry and the second, the ever-contentious transient vacation rental bill.
 
On a day that the Honolulu City Council had a full agenda, filled with city budget measures and controversial topics, the visitor industry shone in the limelight as we packed the council chambers with over 50 of our members.  Representatives from hotels and resorts across the board, from major brands to smaller independent operators stood in opposition with me, and 22 joined me in laying out our ardent disagreement with the council’s proposed real property tax increases in Resolution 19-55 (Council Draft 1 & Floor Draft 1). 
 
As a quick recap, the Honolulu Mayor proposed a $1.00 per $1,000 hike to the hotel and resort real property tax classification this year, to help fund his $2.8 billion operating budget.  This was the only business-related classification that was targeted for an increase in the RPT rate.
 
We galvanized the industry to submit testimony at the first Committee on Budget hearing earlier this month, where the Budget Chair proposed a reduced $0.50 per $1,000 increase, with the explanation that they would reduce it to zero if they could find a way to balance the budget without the increase (read HLTA Breaking News – April 5th for the full story). During this same hearing, another councilmember offered a floor draft that would seek increasing the RPT rate to $0.75 per $1,000.  Both drafts were up for action and consideration this past Wednesday at Honolulu Hale.
 
During the council hearing, Budget Chair Joey Manahan opened the measure’s deliberations by re-committing the resolution back to the committee on Budget for further discussion under his proposed CD1 ($0.50 increase).  This could have ended the discussion on the RPT increase for the day, but we as an industry would not leave without voicing our concerns.  Over the next 1.5 hours, members from the lodging industry: from area executives, to hotel owners, and even members from the finance, housekeeping, and security departments, touched on the many reasons why we as an industry should not be singled out for tax increases.  We not only explained how these increases hurt our ability to operate, reinvest in our infrastructure, and expand on employee opportunities, but we painted a wonderful picture on how we as an industry give back to the community - and additionally, to the City & County of Honolulu.
 
As both a former City Council Chair, and a former Mayor of the City & County of Honolulu, I asked a very direct question: why are they looking for more funds, when they should be trimming the fat off the budget first, detailing how they spent last years dollars and focus spending on basic city services. Having done the City’s operating budget for a number of years, I pointed to areas in which they should be making appropriate cuts before looking externally to generate more revenues.  Additionally, with hotel and resort valuations increasing with double-digit percentages year-after-year, the city is already collecting tens of millions in additional revenues organically. 
 
Prior to the movement from Reso 19-55, the Budget Chair commented that he would still like to further discuss the new rate in his committee and discussion centered on the perception that the industry is doing well for itself, and evidence of that fact is the salaries of top global executives who own many of the hotels not only in our state, but around the world. We couldn’t correct or rebut as we needed to be called upon by the Council to do so. Fortunately, Waikiki interim Councilmember Michael Formby, stepped up and declared  “we should not be hitting the hotels, who do so much for the community and its people… it’s almost like we (government) are trying to pit the local residents against the hotels, and that isn’t right.” 
 
Additionally, Councilmember Formby stated that “we don’t complain about the lodging industry when they are bringing in tens of millions of dollars into our state, such as the $70 million Turtle Bay renovation project.”  He closed out his statement by strongly voting no to the tax increase proposal, and reiterated that at the end of the day we should be looking at the big picture.
 
As an organization, and as an industry, we will continue to push for no tax increases as we kick our opposition campaign into high gear.  The resolution now heads back to the Budget Committee, where it will be heard on May 14th and ultimately back to the Full City Council for a final decision on June 5th.
 
Later in the day, the council put forth for second reading Bill 89 (2018) and Bill 85 (2018), both looking at imposing regulations for the short-term vacation rental market.  I went on record to state that we as an industry support Bill 89, as it takes a hard look at stopping the illegal expansion of transient vacation rentals (whole homes), but would allow for a controlled expansion of registered bed & breakfast units (units that are owner-occupied or have a manager on property). 
 
We also support the intent of Bill 85 (2018), although draconian, as it takes a strong stance against any expansion of short-term rentals.  I pointed to two caveats in my testimony to the Council: one, that we would like to see a fair, separate real property tax classification for transient vacation rentals, and two, the city needs to seriously consider the current state of its Department of Permitting and Planning in regards to its ability to implement these new rules and regulations.  Currently, the DPP is not up to par and needs to be adequately funded, staffed, and fortified before taking on the big task ahead as outlined in these measures.
 
After a long afternoon of testimony, the Council passed both measures out from second reading and back to the Committee on Planning, which will be hearing the bills on Tuesday, April 23rd. 
 
If you have any questions on these measures, please feel free to reach out to me or my Senior Director of Government & Community Affairs, Jared Higashi at jhigashi@hawaiilodging.org. 

Strike Out Domestic Violence

​Last year, Oahu introduced its inaugural Visitor Industry Charity Walk bowling tournament.  In partnership with Salem Media, we raised $10,000 to support homelessness efforts!
 
Friday April 12th, we again teamed up with Salem Media to fundraise money through our Strike Out Domestic Violence event, and successfully raised another $10,000! My sincere thanks and appreciation to General Manager Dita Holifield and her team at Salem Media Hawai‘i for helping us put on such a successful evening.
 
Additionally, I would like to extend a heartfelt mahalo to the following HLTA Members who came out to enjoy a night of bowling, pupus from The Alley, and to support the Oahu Charity Walk:
 
The Waikiki Resort Hotel, Hyatt Regency Waikiki Beach Resort & Spa, Castle Resorts & Hotels, Waikiki Beach Marriott Resort & Spa, ‘Alohilani Resort Waikiki Beach, The Surfjack Hotel & Swim Club, The Honolulu Star-Advertiser, HLTA Engineers Advisory Council, and Duke’s Waikiki.

Thanks to your efforts, we are $10,000 closer to our $500,000 plus goal for Oahu. 
 
As Saturday, May 18th draws nearer, I hope that you are all registering or donating to support Charity Walk!  This year, we also hope to break the Guinness World Record for most walkers wearing slippers in our first ever Hawai‘i’s 1K Slippah Walk: for more information on how to get involved or to contribute, please visit www.charitywalkhawaii.org or contact my office at (808) 923-0407.

LOTTE Golf Championship

​The 2019 Lotte Championship “swung” into Ko Olina on April 14th for its eighth annual golf event, featuring an International field of marquee female professional golfers. This Ladies Professional Golf Association (LPGA) tournament is broadcasted on The Golf Channel and its affiliates, is shown in 159 countries, and reaches nearly 389 million households.
 
For the past eight years, Hawaii Tourism Authority’s support of the tournament has been an integral part of the ongoing success.  Lotte, the title sponsor, has committed its sponsorship investment for this event to remain in Hawaii through 2020.
 
My Senior Directors and I were in attendance for the Welcome Gala at the Four Seasons Resort O’ahu at Ko Olina Monday evening in which I joined with Governor Ige to give opening remarks on behalf of the Hawaii Tourism Authority and the tourism industry. Mahalo to Lotte Chairman Ding-bin Shin and LPGA Commissioner Michael Whan for organizing such a wonderful weeklong event. 
 
HLTA’s principal involvement with Lotte was to help HTA  to increase and enhance the tournament’s community outreach programs. Working with HVCB, it was decided that West Side high schools should be more involved with the Lotte Tournament.  At our behest, grants were established for Waipahu, Campbell, Kapolei, and Waianae high schools to aid students in the athletic programs; develop special need student programs; enhance current pathway in tourism, hospitality, engineering and culinary programs; and enhance student involvement and development with media/video productions.  Needless to say, the Principals of the aforementioned schools were very grateful and appreciative. 
 
The community outreach partnership also invited four talented high school student golfers to play in the ProAm Tournament, with LPGA Professional Golfer Mariajo Uribe.  I would like to send a personal congratulations to Shannon McCafferty from Waianae High School, Kaito Frazier from Kapolei High School, and Reyan Lee from Waipahu High School:  these outstanding students shot 14 under par, and won the ProAm event with a score of 58!
 
Additionally, we set up an opportunity for Waianae High School’s Searider Productions to assist with the filming and interviewing of players and the public during the First Tee Golf Clinic.
 
As we head into the weekend, we wish all those involved with and competing in the 2019 Lotte Championship a very successful event.