Hawaii’s state auditor said in a report issued Tuesday that regulating the growing destination club industry is not necessary. Helium Report, in its 2008 outlook, had predicted that regulation would be a non-issue. In the article, Helium Report co-founder and chief analyst Jamie Cheng cited a move towards greater financial transparency and self-regulation of clubs as sufficient measures to curb the need for government regulation. Said Cheng, “Without a major club flub, there is no red herring that would prompt a serious push towards regulation.”

The report from State Auditor Marion Higa said the Senate bill calling for new rules was “not necessary to protect consumers and should not be enacted.” Several destination clubs, including Exclusive Resorts, Ultimate Resort, Quintess, LRW and High Country Club have homes in Hawaii.

The Hawaii State Senate looked at the regulation issue last year, drafting a bill that called for new rules, much like those in place for the timeshare industry, that would regulate destination clubs. The Senate turned to the state auditor to determine if any regulation was in fact necessary. Hawaii is the first state to look at regulating destination clubs.

As Hawaii began to consider regulations last year, the Destination Club Association joined a working group that came up with the Senate bill, which called for increased financial disclosure among the clubs. For its part the DCA, following the bankruptcy of Tanner & Haley, has pushed for greater financial transparency.