With loss of best guests, tourism community is divided

By David Butts
Advertiser Staff Writer

Last week only half the usual number of Japanese tourists pulled up to the Sumo Connection in stretch limousines to have their picture taken with the mother of Sumo Grand Champion Chad Rowan.

The number of Japanese tourists has dropped significantly since Sept. 11. Deborah Booker • The Honolulu Advertiser

Many O'ahu business owners in a similar position are asking, "What's up with the Japanese?"

Mainland visitors are back near their pre-Sept. 11 levels, but the Japanese numbers have been stubbornly stuck at about 50 percent of last year's.

Two months ago Gov. Ben Cayetano flew to Japan to kick off the state's $7-million emergency marketing campaign and get the high-spending Japanese tourists back. The effort hasn't resulted in a flood of arrivals yet. The state had only 16,075 visitors from Japan in the last week of November, down from 35,627 a year ago.

Opinions on why, and what should be done, split along predictable lines.

Those who depend on Japanese tourism want the state to do more marketing in Japan, more effectively. Those who depend more on Mainland tourists — including many Neighbor Island businesses — would prefer the money be spent on attracting more traffic from North America. Those running the marketing campaign say the effort is right on target. And proponents of economic diversity question whether the state should be putting any money into an industry that is already well developed.

It's not just a Hawai'i problem. Japanese tourists are shunning most foreign destinations. Arrivals in Australia are down 25 percent. Singapore is off 51 percent. Even Okinawa, where about 25,000 U.S. troops are based, has seen a sharp drop in visitors.

The threat of terrorism is a powerful deterrent in risk-adverse Japan. And the Japanese economy has sunk into a recession for the third time in the past decade.

Some critics of the state's marketing plan, including Aloha Airlines executive Shari Chang, question advertising at a time when so many Japanese seem to have become immobile.

"Don't waste it in a time period that is not doing any good," said Chang, a member of the Hawai'i Tourism Authority and 30-year veteran of marketing in the state. "The money may be more wisely spent initially on the Mainland, and then shift the money to Japan."

Tony Vericella, president and chief executive of the Hawai'i Visitors & Convention Bureau and architect of the state's marketing plan, bristles at the suggestion that Japan should get fewer advertising dollars just because the Japanese aren't traveling in large numbers.

"If people think the results aren't adequate, they don't know the market," Vericella said. "Their culture reacts differently."

Vericella predicts that Japanese arrivals will not fully recover to 2000 levels until the end of next year. That doesn't mean the marketing campaign is not having an impact, he said. It's important to lay the groundwork for a recovery now.

The Visitor's & Convention Bureau is working with Japanese travel agents, 1,000 of whom will be visiting the state this week, to ensure that Hawai'i remains at the front of the Japanese tourists' minds. Vericella noted a series of televised specials about Hawai'i that appeared on the Fuji, Asahi and NHK networks as a result of the bureau's promotion efforts.

The Honolulu Marathon was another success, Vericella says. "In the first week of October people thought there may be 2,000 people from Japan," he said. But with marketing efforts by the state and Japanese companies, particularly sponsor Japan Airlines, the number may hit 10,000, he said.

Dana Alden, chairman of the marketing department at the University of Hawai'i, said that to do anything less than a major campaign in Japan would be a mistake.

"Advertising and marketing generally have a lag effect," he said. "They don't result in immediate response. Maintaining a brand's image and equity over the long haul is why you invest in advertising.

"I thought their multi-pronged approach, the personal message coupled with advertising, made sense," Alden said.

But Senate Tourism and Intergovernmental Affairs Committee Chairwoman Donna Mercado Kim said she had been critical of the effort from the beginning. "The thing I said right off the bat is, I thought we need to be more creative in getting the message out."

Kim suggested a campaign similar to the $15 million that New York City spent recently to air national television ads featuring Woody Allen, Robert De Niro, Billy Crystal, Kevin Bacon and other famous New Yorkers encouraging visitors. Hawai'i has Willie Nelson, Jim Nabors and Bette Midler, who might help, Kim said.

Jan Rowan suggested broadcasting testimonials from Hawaiian celebrities familiar to Japanese. Her son, who wrestled as Akebono, enjoying a Hawaiian beach might do the trick — or Salevaa Atisanoe, who wrestled as Konishiki.

If that doesn't work, perhaps it's best to just wait, Kim said. "If we have done all the things that are right, and they are still not coming, you have to ask, is it the right timing?"

Others say the $7 million may be better spent promoting economic diversity.

"What Sept. 11 emphasized for Hawai'i is we need to diversify the economy," said Tony Clapes, a Honolulu-based lawyer for high-tech companies. "Japanese people know where Hawai'i is. They know what it is. They don't need to be advertised to to have that kind of understanding. We should be spending our advertising dollars on diversification."

Waikiki hotel and retail managers say just the opposite. If anything, they want the state to pick up the pace.

"We need to do more," said Bob Coe, president of DFS Hawai'i. "Las Vegas is 90 percent occupied. New York is fighting back. We have to fight."

DFS depends almost exclusively on Japanese tourists, who spend an average of $234 a day in Hawai'i, compared with $157 for Mainland guests. In October DFS laid off 70 employees and reduced hours for many of the rest.

Coe is joined by Peter Schall, the Hilton Hawaiian Village's senior vice president and managing director, in supporting a strong marketing effort now.

Otherwise, they argue, competing tourists destinations, such as the lower-cost Asian resorts, gain ground.

"Other destinations are trying very hard to nibble away at the business we have tried to cultivate," Schall said. "Everyone is out there marketing. If we let up, those other destinations are going to be more overpowering. We need to be in front of the people all the time."

The drop in Japanese arrivals has contributed to more than 35,000 applications for state unemployment benefits since Sept. 11, and a decline of about $150 million in state revenue for the year. Japanese tourists account for about a quarter of visitor spending in the state, or $2.4 billion annually, about 6 percent of the state's $39 billion gross state product.

Mainland tourists also are important, certainly, but it is the Japanese who spend most lavishly. "You probably needed two domestic customers to do the same retail buying as one Japanese," Schall said.

However, to get people moving, Japanese travel agents have had to offer steep discounts. One advertised a five-day package to Hawai'i for $315. Such deals may appeal to bargain hunters who might not be willing to part with a lot of yen.

Jan Rowan found that out recently when a Japanese couple wanted to take their picture with her. She always suggests a $1 tip per person for photos. The couple discussed the price between themselves and decided they could do without the memento.