Posted on: Sunday, August 24, 2003

Future of visitor industry lies in China, experts say

By Deborah Adamson
Advertiser Staff Writer

When Hawai'i looks at its tourism industry, Mainland and Japanese visitors are often the focus — as they should be. The two groups represent the bulk of tourists to the state.

But with Japanese arrival numbers showing little sign of recovery, could other foreign travelers help take up the slack? If the past decade is any indication, the answer seems to be no for nearly all countries.

The exception is China, the only country that has grown steadily in arrivals. Although the actual numbers are small — China sent 39,000 visitors to Hawai'i in 2002 — the potential is enormous. As many as 400 million China tourists could afford foreign travel by 2020, dwarfing the numbers in Japan.

"That's a huge market," said Sumner LaCroix, chairman of the University of Hawai'i economics department. "Japan is not the future of Hawai'i tourism. China is the future."

To be sure, any tourism windfall from China remains years away, and there are major obstacles, chief of which is tourists obtaining a U.S. travel visa. But if the trend from the past decade is any indication, Hawai'i would do well to step up efforts to market to the Communist nation, as the number of visitors from other foreign lands has fallen in the past decade.

Visits by Canadians, who represent the next-largest group of foreign arrivals after Japan, have declined. Last year, 190,000 Canadians came to the Islands, compared with 193,000 in 1992.

Next year, the hope is for 210,000 Canadians to visit, said the state Department of Business, Economic Development and Tourism. But their numbers have yet to rebound to the 250,000 peak in 1999, said Eugene Tian, chief of the department's tourism research branch.

Other foreign arrivals also have been on the decline: Australians, Europeans, South Koreans, Taiwanese and Singaporeans. Arrivals fell in part because planes to the Mainland don't refuel in Hawai'i as often because of technology improvements, Tian said.

Meanwhile, the number of Chinese visitors has grown exponentially since 1992. Ten years ago, only 11,000 visited, Tian said.

"The ability to travel comes as income increases," said Tianshu Chu, a research fellow at the East-West Center. "Twenty years ago, most Chinese were living at the subsistence level. They couldn't afford to travel."

The world's most populous country with 1.3 billion people has revved up its economic engine. This year, China's economy is expected to grow by 7 percent, compared with 3.2 percent for the United States, according to the forecast of Sung Won Sohn, chief economist of San Francisco-based Wells Fargo.

In the past 20 years, per-capita income in China has quadrupled, to about $1,000 a year, Chu said. That may not be much to Americans, but it is enough to meet basic needs in China.

Hawai'i wouldn't be targeting the average Chinese but the nation's richest 3 percent to 4 percent, Chu said. That means between 39 million and 52 million people. "That's a medium-size country," Chu noted.

An estimated 350 million to 400 million Chinese will have the income to afford foreign travel by 2020, LaCroix said. The Chinese are expected to have incomes similar to that enjoyed by South Koreans, whose per-capita income last year was $9,930, according to the World Bank. That's close to Portugal at $10,840 and Greece at $11,660.

Moreover, the accession of China to the World Trade Organization should further pave the way for increased prosperity in that nation.

Marketing to wealthy people in China may seem like a stretch to many in Hawai'i for whom the prevailing image of China is of an agrarian society. But LaCroix believes that view will change, as did Japan's after World War II.

"Back in 1955, (would you have believed it) if someone told you the Japanese would buy major hotels here in the 1980s?" he said.

Visas, flights obstacles

Back then, Japanese tourists also had trouble getting U.S. visas, LaCroix said. Travel restrictions were lifted after Japan became a leading economic power.

Getting a travel visa to the United States has always been difficult for Chinese, but restrictions tightened after Sept. 11, said Maydene Simmons, vice president of developing international markets at the Hawai'i Visitors & Convention Bureau.

"The future is definitely in the Chinese market," she said. "Someday, for sure, but not right now."

In June, Gov. Linda Lingle said efforts were being made to fast-track travel visas.

Despite fears that Chinese tourists might end up staying illegally, Chu said the richest travelers generally would not be tempted. "People who can afford to travel here are already very comfortable in China," she said. "Why would they stay here and get the lowest-paying jobs? It doesn't make sense."

Hawai'i's efforts to attract Chinese tourists also would be helped by direct flights, she said. There are none now, according to the visitors bureau. China Eastern Airlines has the right to fly to Hawai'i, but route plans were impeded by visa issues.

Historical ties

Right now the majority of Chinese tourists head for Japan, Thailand and South Korea, Chu said. But Hawai'i is attractive to them for historical reasons, not just as "paradise," Chu said.

Sun Yat Sen, the "Father of the Chinese Revolution," spent several years in Hawai'i raising support for his political activities. He had family in Hawai'i and attended Iolani School from 1879 to 1882.

An activity that might appeal to the Chinese would be historical tours about Sun Yat Sen's time here. "When the Chinese come to Hawai'i, they cannot find anything about Sun Yat Sen," Chu said. "He is a world figure. He was the first to establish a republic (in China) and overthrow an empire. It's one of the most important events in Asia."

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.