Probably a lot of people noticed that the example configuration with the following url never works unless you know how to work with hsqldb.
<property name="connection.url">jdbc:hsqldb:hsql://localhost</property>

Then I read the documentation and hsqldb supports the In-Process (Standalone) Mode which is recommended by hsqldb for testing environment. As described in the documentation, I tried,

<property name="connection.url">jdbc:hsqldb:file:testdb</property>

This will not persist anything between store to list. When the connection is closed everything is gone. After reading several other postings in different places I tried,

<property name="connection.url">jdbc:hsqldb:testdb</property>

Now, everything work fine I can go through the tutorial without any problem.

I think tutorial should recommend this way unless my work around works because of the bug in hsqldb or hibernate.