Rebound in foreign travel to U.S. expected by 2006

By Kelly Yamanouchi
Advertiser Staff Writer

The forecast by the U.S. Commerce Department is bullish on travel to the country for the long term, while predicting tourism this year will remain weak. International arrivals are expected to increase only 1 percent in 2003 compared with 2002. A 2 percent decline is projected in travel from Asia.

"Considering the ongoing challenges we face in this industry, many of which remain outside our control, it is time for us all to move past any benchmark, like 2000 levels, and simply work toward maintaining annual positive growth," said Douglas Baker, Commerce Department deputy assistant secretary.

About 42 million international visitors came to the United States last year. A recovery to the high levels of 2000 before the Sept. 11 terrorist attacks is expected to come three years from now with a projected 51 million international travelers.

Visitors from Canada and Mexico as well as Europe would lead the recovery, the department said.

But a similar rebound in travel from Asia is not expected to materialize as quickly. And that is sobering news for Hawai'i, where international visitors come largely from Japan and where there is some worry whether a permanent decline is in the works.

When it comes to domestic visitors, the state is ahead of other markets, said Rex Johnson, Hawai'i Tourism Authority executive director. "International is a bit shakier. It depends on a whole lot of factors which I think very few of us have answers to right now."

Among them are geopolitical and economic issues, and SARS or severe acute respiratory syndrome. Another factor dampening international travel is the continuing threat of terrorism.

On Tuesday, the U.S. government raised the country's alert status to orange, indicating a "high" terrorism alert. The change concerns some in the travel industry, although Gov. Linda Lingle maintained the state's terrorism alert at a lower level.

Local tourism executives said the negative effect of such alerts on consumers' willingness to travel may be diminishing.

When the alert system was first implemented then raised to a higher level, "we saw dips in both occupancy and arrivals, but for very brief periods of time," said Joseph Toy, president of Hospitality Advisors LLC, which tracks hotel occupancy.

As the alert level has risen and fallen, "we've seen less of an impact and people are more aware of the fact that this issue is not going to go away," Toy said.

A larger, unanswered question is how the threat of terrorism will affect travel in the long term, Toy said.

International travel is especially critical to tourism businesses that have depended on high-spending visitors from Japan and other countries. And it is also important for the country's travel trade surplus.

Tourism officials hope to spur Japanese travel with a memorandum of understanding signed by Commerce Secretary Don Evans and Japanese government officials in April 2002.

In a meeting on O'ahu last August, the two sides agreed on an initiative to expand tourism to both countries. The officials discussed encouraging U.S. business travelers to spend an extra day or two in Japan for tourist activities and improving safety and security for visitors to the United States.

Hawai'i would be a primary beneficiary of the initiative if travel rebounds.

"The number of Japanese visitors to the U.S. overall is going to be very highly dependent on how Hawai'i recovers in terms of Japanese visitor arrivals," Toy said. Travel to Hawai'i has made up about half of all Japanese travel to the United States.

But Toy said the Commerce Department's forecast for a 17 percent increase to 4.2 million Japanese visitors to the United States by 2006 "might be a little bit aggressive."

"Three years out, is there an expectation that the Japanese economy will recover sufficiently? That's still very uncertain," Toy said.

"Japan has been languishing for the last 12 years with three recessions possibly going into the fourth."

For that reason, Hawai'i industry officials remain uncertain of when their current troubles will pass.

"The fear of SARS is having a significant effect right now," said Keith Vieira, senior vice president in Hawai'i for Starwood Hotels & Resorts. He said hotel occupancy in Waikiki is 20 percent lower than it should be. "We don't know how long it's going to last."

"We'd like to assume there will be nothing happening in the next four years. If there's no incidents, yeah, I think we can get back to the 2 million level," roughly the number of Japanese who came to Hawai'i in 1998, Vieira said.

"We have no choice but to make it happen. But it will be a challenge."

The Hawai'i Tourism Authority is still aiming for 1.5 million Japanese visitors this year. But officials are also looking to other Asian countries to boost the travel trade.

The Commerce Department forecasts a 19 percent increase in travel from South Korea and a 21 percent increase from China by 2006 compared with 2002 levels, although travel from China is significantly limited by visa restrictions.

Vieira called the projected increases "minuscule."

"I hope by 2006 we get four or five times growth from those countries, at least," Vieira said.

Reach Kelly Yamanouchi at 535-2470 or kyamanouchi@honoluluadvertiser.com.