Dollar's slide may boost Hawai'i's tourist economy

By Lynda Arakawa
Advertiser Staff Writer

The weakened U.S. dollar may be a concern nationally and globally, but the stronger yen and euro are good news for Hawai'i's visitor industry.

Japanese visitors, such as this family shopping at Ross on Ward Avenue, are finding that U.S. prices are cheaper as the dollar continues dropping against the yen and other currencies such as the euro. Advertiser library photo

A stronger yen means Hawai'i hotel rooms, flights, goods and services are cheaper for the Japanese, which encourages them to visit here and spend more.

Tourism officials and others also say the strength of the euro helps draw more Mainland visitors to Hawai'i, particularly from the Eastern region of the United States, because European vacations have become more expensive.

"So in both of those respects it cuts very well for Hawai'i," said Leroy Laney, Hawai'i Pacific University economics and finance professor.

The number of Japanese tourists in October rose 8.5 percent over the same month last year, helping to increase hotel occupancy in luxury and upscale properties. Japanese visitors spend the most among tourists each day, averaging about $246 per person so far this year.

East Coast visitors are another heavily sought market for the state because they tend to stay longer and spend more than the average Mainland tourist. Eastern U.S. tourist arrivals in October grew 14.6 percent over last year.

The dollar's weakness is a significant factor in attracting visitors from the U.S. East to the state. Hurricanes in Florida and the Caribbean as well as the perception of Hawai'i as an exotic yet safe destination also play a large part in travel decisions.

On the downside, the stronger yen and euro could make Japanese and European goods more expensive for U.S. residents and businesses.

Bob Taylor, president and CEO of jewelry manufacturer and retailer Maui Divers of Hawai'i, said he has seen an increase in Japanese business this year. There are more Japanese visitors and they are likely spending more because of a stronger economy and currency, he said.

Per capita spending by Japanese customers in the past couple of months at the Maui Divers Jewelry Design Center, the company's biggest operation, has risen about 5 percent to 8 percent compared to the same time last year, Taylor said. That figure is a good indicator of overall company sales, he said.

Halekulani has enjoyed an increase in Japanese and U.S. East visitors as well, said hotel general manager Peter Shaindlin.

The strengthening of the yen "comes at a great time, in my opinion," Shaindlin said, because it follows the recovery after the crisis caused by the outbreak in Asia of severe acute respiratory syndrome, or SARS, and the start of the Iraq war.

The euro's strength is also significant as Halekulani begins marketing efforts in Western Europe, he said.

Visitors from Australia, while a relatively small market for Halekulani, have doubled, partly because of the strengthening of Australia's currency, which has surged 11 percent in the past three months.

"The timing on all three is fabulous and our only slight challenge is it's more expensive to market there, but we believe proportionately the return is still worthwhile," Shaindlin said.

It may be too early to tell how the dollar's weakness is affecting other retailers.

A handful of clerks and store owners in Ala Moana Center recently said they haven't seen much of a difference.

Rene Wayne, a supervisor at Prada, noted that Japanese sales didn't go up as much as she expected. But she said November is usually slow because no major Japanese holidays or events fall in the month.

Mitch Hee, a salesman at Hermes, said that he has noticed more Japanese shoppers but that it's difficult to tell whether they are spending more.

DFS Hawai'i stores are working on new signs to draw more customer attention to the strong yen, said Sharon Weiner, DFS Hawai'i group vice president. The company runs duty-free shops at Honolulu International Airport and in Waikiki.

The Japanese account for about 95 percent of DFS Hawai'i sales.

"We're not really seeing as much of an impact (on spending) as we thought we would see at this rate," Weiner said.

"It's too early to tell, I think, at this point. The yen has only been at this very strong place for a few weeks. And it's been in very good territory all year from our point of view, if you look at it in the long term.

"We see certain break points. When the yen-dollar ratio goes down below 115, there will be an increase in buying. So maybe they're waiting for it to get down below 100. Maybe the range of 100 to 110 isn't enough of a difference to trigger people to buy more."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com or at 535-2470.