According to the DVD commentary, the idea of Butters needing to go back to his homeland is based on the Star Trek episode "Amok Time", as well as the "going native" format films, the most recent being Avatar.
Hawaii was chosen as the setting as Parker lives there for parts of the year.
A big issue while writing the episode was to avoid focusing on the "native Hawaiians" owning timeshares, since that was a major plot device in the sixth season episode Asspen.
In Principal Victoria's office, there is a photo of her and Rosie O'Donnell on her bookshelf. This is a tie to the episode "Trapper Keeper" (S4, E12), where Rosie is featured as the aunt of kindergarten student Filmore Anderson.
Kenny's letters home are a reference to Captain James Cook's famous letters which were written while exploring the Hawaiian islands in the 1770s.