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Rebound in Japanese arrivals not a lost cause

By Walter A. Dods Jr.

Walter Dods

During the recent Japan-Hawaii Economic Council meeting in Yokohama, Japanese tourism executives, social scientists and diplomats listed many reasons for the steady decline in Japanese visitors since 1994-95:

• Japan's economy. Although fallout from 9/11 is no longer a major factor, long-term economic trends in Japan don't suggest that significant growth is likely soon. One expert conceded that Japan has an "economic cancer." Unemployment and bankruptcies are at record highs. The Tokyo stock market is at a 19-year low. Job-sharing, firings and cutbacks in hours are now commonplace in Japan's former "employment-for-life" culture.
• Japan's demographics. An aging populace and a declining birth rate means that Japan's population will begin falling in 2007. That means fewer potential visitors for decades to come.
• Competition. We're No. 4. China, South Korea and the U.S. Mainland all get more Japanese tourists than Hawai'i, which once topped the list. Surveys show that Hawai'i is the most desired destination for Japanese, but fewer of them are getting on a plane for Honolulu.
• Flight of the "office ladies." Young female office workers, once a mainstay of Japanese visitor traffic to Hawai'i, now look to other destinations to relax, such as Bali and Thailand. (I was astounded to hear that many office ladies spend up to $2,000 a year on cell phones — more than enough for a trip to Hawai'i. Maybe we should market a tour package that includes a cell phone.)

Shuzoh Ishimori, an expert in tourism and social research at the National Museum of Ethnology, noted that an international survey shows formerly top-ranked Japan now ranked 26th among 47 nations in competitiveness. Japan was dead last in entrepreneurship and scored near the bottom in corporate and government flexibility, transparency in financial reporting and university education.

The 1990s have been dubbed "Japan's Lost Decade." To avoid losing another decade (or more), Toshihiko Fukui, head of the Fuji-

tsu Research Institute, said radical economic restructuring is needed soon — especially dealing with bad bank loans. It won't happen overnight. And it will be painful for Japan's people (and, in the short run, for Hawai'i tourism).

Fortunately, there are things Hawai'i can do to help our visitor industry now and in the future. Here are suggestions from the 70 Japanese executives who attended the Yokohama conference:

• Get help from Washington. The United States disbanded its Travel and Tourism Administration in 1996 and is not doing enough promoting to attract visitors. That must change, in the interest of Hawai'i and the nation as a whole. I know our congressional delegation feels strongly about this and stands ready to help.
• Refresh our tourism plant. Japanese tourism leaders say some Hawai'i hotels don't measure up to competition elsewhere; many badly need renovation. Fortunately, help is on the way in the form of projects on the drawing boards for Waikiki, such as Hilton and Outrigger developments.
• Market to promising segments. Japanese officials urged Hawai'i to change the focus of its tourism marketing to reflect new realities; that's something we can control. To counter the loss of office ladies, we must target other population segments including seniors (the fastest-growing bloc), families (now one-third of the market) and mother-daughter pairs. For example, Hong Kong is aiming at the Japanese "silver" market with a "Nostalgic Hong Kong" campaign.
• Here comes the bride! More than 50,000 Japanese couples marry abroad each year. Half of them come to romantic Hawai'i — typically bringing eight or nine family members and friends. Other destinations are now appealing to this market, so we need to keep promoting it. (Unfortunately, Japan's declining birth rate means fewer marriages in the years ahead.)
• Live aloha! Japanese expect to find the aloha spirit everywhere they go in Hawai'i. When they don't find it, they tell their friends. At Yokohama, Kaua'i Mayor Maryanne Kusaka spoke eloquently of programs on her island to drive home the message "Aloha, It's Kaua'i's Spirit."

How can Hawai'i compete with Asian destinations for Japanese visitor business? Recast our image? Cut prices?

As we search for new ways to market our Islands, I hope Hawai'i will heed the advice of former Gov. George Ariyoshi, who cautioned the Yokohama conference against "fundamentally changing how we position ourselves.

"Shouldn't we build on our existing image and strengths?" Ariyoshi asked. "Do we want to constantly increase numbers of visitors or should we pay more attention to our carrying capacity as a state?"

In that vein, Ariyoshi said focusing on Hawai'i's "added value," rather than just lower prices, may be the best way to increase tourism revenues without overwhelming the Islands.

Prince Takamado, cousin of the emperor, reminded the economic council that our islands and theirs have deep ties dating to the first emigrants who sailed from Yokohama in the 19th century to make lives in Hawai'i.

Today, about one of four Islanders has some Japanese ancestry. Americans of Japanese ancestry are among our leaders in government, in business, in education and in community service. Today, the economy of modern Hawai'i relies heavily on ties with Japan forged through business and tourism.

Mike Mansfield, the great U.S. senator who later became our ambassador to Japan, once said our countries have "the most important bilateral relationship in the world."

Through good economic ties and bad, there will always be friendships and relationships between Hawai'i and Japan. Eventually, Japan's economy will bounce back.

After the difficult 1990s, our own decade of economic stagnation ended in Hawai'i. Before 9/11, our economy was growing faster than that of the rest of the United States.

Now we are bouncing back again, despite the drag of lower arrivals from Japan.

The present gloomy cycle certainly will end in Japan also, sooner or later. Japan has incredible resources.

With strong-willed leadership, recovery will come and Hawai'i will benefit. It won't happen overnight, but it will happen.

Walter A. Dods Jr., chairman and CEO of First Hawaiian Bank, recently headed a delegation of 65 Island business leaders to the 30th meeting of the Japan-Hawaii Economic Council in Yokohama.