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The Honolulu Advertiser

Posted on: Sunday, August 24, 2003

Japanese arrivals likely to increase for rest of the year

By David Butts
Advertiser Staff Writer

Travel agents, expecting more Japanese visitors beginning this fall, are hoping airlines will add flights. The Hawai'i Tourism Authority, meanwhile, is counting on its marketing to help attract more visitors.

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One photograph — of the last SARS patients leaving a hospital in China — captures both the promise and the challenge of creating a lasting rebound in Japanese tourism to Hawai'i.

The end of the SARS scare, the conclusion of the Iraq War and signs of an improving economy point to an increase in Japanese arrivals to the Islands for the remainder of this year, compared with dismal spring and early summer numbers. Tourism executives anticipate a low 1.3 million Japanese visitors for the year, but 500,000 will come in the last four months.

"The recovery is pretty good," said Ryokichi Tamaki, vice president of Jalpak International Hawai'i Inc., a major Japanese travel agency. "September looks very good. Lower than last year, but close. October, based on honeymooners booking, is good. November is slow, but New Year's and (the December Honolulu) Marathon are good."

Still if Hawai'i is ever to return to the peak of Japanese tourism, when 2.2 million came in 1997, the state will have to find ways to counter the growing allure of destinations such as China, Australia, Thailand and Bali. Like Hawai'i, those destinations will benefit from an easing of travel anxiety and a recovery of the Japanese economy. So it will ultimately be up to the Hawai'i travel industry to find ways to persuade Japanese tourists to select the Islands.

"Even in good times, Hawai'i has to be re-pitched every two years or so, and these days there are some very active national government tourist offices making very strong efforts in the Japanese market," said Geoff Tudor, spokesman for Japan Airlines in Tokyo.

While no one is claiming Japan is on the brink of good times, there are some hopeful signs that the economy is gaining momentum.

The world's No. 2 economy grew at an annual pace of 2.3 percent during the second quarter in real terms, almost matching the 2.4 percent rate in the United States. To last, the recovery must ignite consumer spending and end five years of deflation, which has left Japan's $4.2 trillion economy $100 billion smaller than it was in 1996.

"We are clearly seeing that Japan's economy is on a recovery track," said Ku Shin, who manages about $2 billion in global assets at Banc One Investment Advisors Corp. in Columbus, Ohio. "But it's still questionable if we are going to see sustainable growth."

Exports, rising because of the end of war in Iraq, may get a further lift from President Bush's $330 billion in tax cuts, which are fueling U.S. consumer spending. The world's largest economy buys more than a quarter of Japan's exports.

"The tax cuts in the U.S. should be a plus for Japanese exports starting in July, and will continue to be positive in the second half," said Shoichi Yamasaki, an economist at Sumitomo Life Research Institute Ltd.

Another reason for optimism: The jobless rate fell for the first time in four months in June, dropping to 5.3 percent from 5.4 percent as companies such as Canon, the world's third-largest maker of digital cameras, and Yahoo Japan Inc. added half a million new jobs. Wages rose in May and June after a two-year decline, suggesting that consumer spending may take off.

Consumer spending increased 0.3 percent in the second quarter over the first quarter, according to the government's gross domestic product figures this month.

"The job market has clearly improved," said Kenji Ozaki, a spokesman at Pasona Inc., Japan's biggest job-placement agency. "We're seeing an increase in demand not just for temporary workers, but for full-time staff as well."

Whether that translates into more visitors to Hawai'i will depend in large part on how confident the Japanese are about traveling.

"The economy is much less a factor than getting them to travel after SARS and the Iraq war," said Sharon Weiner, a member of the Hawai'i Tourism Authority.

On that score there does seem to be some improvement. "I think we bottomed out in May," Weiner said. "If we do the right job of marketing in Japan, we should see a resurgence in that market."

But before the Japanese can come in larger numbers, they need the planes to bring them.

Earlier this summer Japan Airlines and Northwest announced flight cuts. In all, there is likely to be 8.6 percent less seats coming from Japan this year compared with last year, according to an analysis of OAG airline schedules by the Hawai'i Visitors & Convention Bureau.

That leads to the blame game played by executives in Waikiki and their counterparts at the airlines. The Waikiki types say they would be doing great if only the airlines would increase the number of seats. The airlines say they would gladly increase seats if the demand was there.

"We are an isolated island in the middle of a big ocean," said Jalpak's Tamaki. "We need airlift."

If more Japanese start coming this fall, Tamaki and others are hoping the airlines will begin to add flights.

"Our best guess is the airlines will put on extra sections," said Weiner, who expects that flights from Japan will be near 100 percent capacity by December.

"It's up to us to create the demand," Weiner added. "That's the job of (Hawai'i Tourism Authority) marketing."

Bloomberg News Service contributed to this report.