Reinventing Hawaii’s Visitor Industry – Locally

3p is proud to partner with the Presidio Graduate School’s Managerial Marketing course on a blogging series about “sustainable marketing.” This post is part of that series. To follow along, please click here.

By Tia Ferguson

Social marketing uses the application of marketing principles and techniques to influence a target demographic to voluntarily accept, reject, modify, or abandon a given behavior. Social marketing efforts are designed to ultimately benefit the targeted individuals as well as society as a whole.

This post uses the four cardinal P’s of marketing – Product, Price, Place and Promotion, to encourage public officials and the resident population to pursue investment in (and thus ownership of) the accommodations sector of Hawaii’s visitor industry, and to convince visitors to support the effort by patronizing locally owned visitor accommodations establishments.

The Product being marketed is often is a desirable belief or behavior.  Before introducing the product the social marketer must first convincingly articulate a legitimate need and/or issue that the product resolves.

That Hawaii’s visitor industry represents the state’s economic backbone is a common, if not pervasive, assumption amongst island residents and visitors alike. As it turns out, it is also untrue. Revenues generated by Hawaii’s visitor industry only constitute 21 percent of the state’s GDP. As a function of its nonresident ownership structure of the accommodations segment of the visitor accommodations industry in Hawaii, less than 10 percent of the revenue generated by this segment of the visitor industry remains within the state.

My research findings suggest that vacation rentals and other such offerings are the most realistic and promising mechanism for stopping this economic leakage. The reason for this is simple; rather than the revenue stream being sucked up by a multinational hotel corporation or largely drying up after the sale of a unit, cash flows from locally owned vacation rental units are sustained and remain within the local economy, allowing for the accumulation of wealth within the state.

Price measures product cost in units of time required, effort and behaviors that have to be given up in exchange for the product in addition to its dollar value. A generally accepted rule of thumb is that if the price is greater than the product’s value (whether perceived or actual), it is unlikely that the product will be accepted.

The economic impact of such ownership is measured by a mathematical formula known as the local money multiplier (LMM). Application of the LMM shows that, despite identical pricing structures, a locally owned vacation rental unit that rents for $150 a night contributes fully $236 dollars more to the local economy than does a hotel unit that also rents for the same rate but is owned by a corporation based outside of Hawaii.

The Promotion can be executed through public campaigns, billboards, mailings, events and community outreach.

Further, the demand for alternatives to hotel and resort visitor accommodations in Hawaii has exhibited remarkable growth. In the six years preceding their closure, transient vacation rentals in Maui County exhibited a 79.3% increase in share, compared to a 10.3% growth in visitor arrivals during the same period. Additionally, online platforms, such as San Francisco-based startup Airbnb, have revolutionized the ease with which vacation rental seekers connect transact with vacation rental owners.

My outward campaigning effort to do something about this exploitative economic structure officially launched when I took my research to the Maui County Council and members of the State Legislature.  The purpose of meeting with these public officials was to discuss if and what policy frameworks might be developed that would enable local residents to capture their fair share of the visitor industry wealth.

Place involves identifying the most effective technique for delivering a particular product to the target consumer.

A key take-away from one of these conversations was that my best chance for generating a political response to my findings would be achieved by creating a community-based ‘groundswell’ – both at home and abroad.  In practical terms, it was suggested that I write a letter to the editor or viewpoint article about the subject. So I did. Thank you for reading it.

Tia Ferguson is a lifetime Maui resident. She holds a BA in Public Policy from Duke University, and is currently an MBA candidate at Presidio Graduate School in San Francisco.