Tourism tries to meet Japanese on a budget

By Michele Kayal
Advertiser Staff Writer

Top players in the Japan-Hawai'i travel market have begun revamping their business strategies, reflecting a growing concern that a new breed of price-sensitive customer may be bypassing the islands for less-expensive destinations.

Some stores in Waikiki post the dollar to yen exchange rate to help Japan tourists know how much they spend. Eugene Tanner • The Honolulu Advertiser

Northwest Airlines, the No. 1 U.S. Japan-Hawai'i carrier, will also bid on those cost-conscious travelers, pulling 37 business class-style seats out of the 747s it flies on the routes to make room for an additional 118 economy class seats. The total number of seats on Northwest's three daily Japan-Hawai'i flights will go from 349 to 430.

"There is softness in business-class travel between Japan and the United States," said Northwest spokesman Doug Killian, "but leisure travel has held up well. Tailoring the aircraft to the market will help even more."

Loss control

Over the past four years, Japanese travelers have continued to venture overseas despite economic worries, but they have increasingly sought lower-cost destinations like Korea and Guam. The number of Japanese visitors to Hawai'i has dropped 16 percent during that time to 1.85 million last year, and the ones who do come are spending far less lavishly than in the past.

This year, tourism executives have abandoned hope of increasing Japanese spending, and are shooting to have a loss of merely 1.7 percent from last year.

But while the Japanese have become more cost-sensitive, hotel room rates in Hawai'i have increased more than 10 percent in the past two years. Japan Travel Bureau's new strategy will offer a wider range of less expensive off-the-beach properties during slow periods, like June and September, said JTB Hawai'i chief executive officer Takashi Kitamura.

Kitamura said the company will also discount beachside hotel rooms by as much as 25 percent during those times. In the past, once JTB priced a package, Kitamura said, that price held for at least six months.

"JTB has good clients that can afford to stay at a beachside hotel, but we have to expand our business to the lower side, using the Kuhio hotels too," Kitamura said. "Usually we don't have enough tours using off-beach hotels. Sometimes we need to offer tours using off-beach hotels, too. That's our new attempt."

To make pricing adjustments more quickly and to respond more deftly to market trends, he said, JTB will move its top Hawai'i position back to Tokyo where the executive will be closer to decision making at corporate headquarters.

Kitamura will return to Tokyo to accept a promotion later this month, and the chief executive officer position that he occupied in Hawai'i will be filled by an executive vice president.

Pay less, spend more

JTB estimates the June price reduction spurred a 5 percent spike in business this month. And local retailers said lower-priced tours would be a boon to them, and could even influence Japanese visitors to spend more.

"It's analogous to people going to Las Vegas," said DFS group vice president Sharon Weiner. "You take the least expensive tour you can take, but that means you have more to spend on gambling or shopping when you get to Vegas. It will get people here, and they'll have more disposable income when they get here."

The Hawai'i Tourism Authority has made visitor spending the cornerstone of the state's tourism policy. For 2001, the Authority projects a decline in Japanese spending, but is working to hold it below two percent. Some Authority members said the new packages at JTB are not out of line with that goal.

"We have to remember that the (Authority's) plan isn't based on staying in luxury hotels, it's based on staying an additional night and buying additional activities," said Shari Chang, senior vice president for sales and marketing at Aloha Airlines and an Authority member. "As long as they still keep that in mind, we still have the opportunity to reach our goals in that market."

Societal shift

Others, however, pointed to changed patterns of Japanese spending at home and abroad, and said they were unconvinced that discount-oriented visitors would spend more once here.

University of Hawai'i economist James Mak said that since the mid-1990s discount shopping has grown in Japan — and has even lost its stigma — while shopping in traditional department stores has declined. And many of the items found in Hawai'i, he said, can now be found in Japan.

"At one time in Japan, cheap was synonymous with low quality," he said. "In Japan today, and since around 1995, that is no longer the case. You find more Japanese tourists frequenting our Goodwill stores. You see Japanese tourists buying things in there. It's consistent with what you're seeing in Japan."

Staff writer Glenn Scott contributed to this report.

Michele Kayal can be reached at mkayal@honoluluadvertiser.com.