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The Honolulu Advertiser
Posted on: Friday, August 12, 2005

Tourism industry's hopes rise with yuan

By Vivien Lou Chen
Bloomberg News Service

Hawai'i tourism officials are hoping more visitors from China will get to see this view of Waikiki Beach. The state is working on making entry into Hawai'i easier for Chinese tourists, who have gained spending power from Beijing's decision to revalue the yuan.

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Keith Vieira, Starwood Hotels & Resorts Worldwide Inc.'s director of operations in Hawai'i, looks across the Pacific toward a promising new source of tourist dollars for the Islands: China.

"We have a lot of hope for the Chinese market," Vieira said from the beach and golf resort of Princeville, Kaua'i. Chinese visitors now make up less than 1 percent of the guests who stay at the company's 14 Hawai'i hotels, while the Japanese represent a third, he said.

Hawai'i's $10 billion-a-year tourism industry, emerging from a six-year decline in Japanese visitors, may get a boost as Chinese tourists gain spending power from their government's July 21 decision to let the yuan rise against the U.S. dollar. State officials are lobbying the U.S. and Chinese governments to ease visa restrictions for visitors and say they are seeing progress.

"Tourism is our star export," representing 20 percent of Hawai'i's economy, said Pearl Imada Iboshi, economic research administrator for the state's Department of Business, Economic Development & Tourism. "China is a very important market for us."

Hawai'i will be among the first beneficiaries of China's move to revalue the yuan simply because of proximity, said Iboshi and Paul Brewbaker, chief economist for Bank of Hawaii.

In June, Hawai'i became the second U.S. state, after Nevada, to open a Beijing office aimed at luring new business.

Hawai'i is the most isolated population center in the world, lying 4,900 miles from China and 2,390 miles from California.

State officials expect a record 7.3 million visitors this year, mostly from elsewhere in the U.S. Tourists from the Mainland helped the Islands overcome a 40 percent decline in visitors from Japan between 1997 and 2003.

About 1.48 million Japanese visited Hawai'i last year, representing 21 percent of the total. They spent an average of $249 per person a day, state figures show.

Hawai'i had only 34,172 Chinese tourists in 2004, said Michael D. Merner, managing director of the Hawaii Tourism Asia marketing service in Shanghai that targets high-spending travelers. That's less than half of 1 percent of all the Islands' visitors.

"China will certainly be a huge growth market for Hawai'i" once the visa issues are resolved, Merner said. "This is partly due to the enormous size and rapid growth of China's total outbound market."

In the first six months of this year, 15 million trips were made out of China, almost matching Japan's outbound travel for all of 2003, he said. More than half those trips were to Hong Kong and the rest of Southeast Asia.

"Currency will always be the No. 1 determinant of when and where people travel," said Starwood's Vieira. "If you lay enough strong factors together, such as a strong economy and strong currency, your incidence of travel will grow significantly. While there are restrictive travel visa requirements, we are hopeful there are things that will benefit us."

U.S. policies enacted after the Sept. 11 attacks make it harder to obtain a tourist visa. Chinese applicants are required, among other things, to complete an in-person interview at the U.S. embassy in Beijing or at a local consulate.

Hawai'i officials say they face another significant roadblock to boosting Chinese tourism. The U.S., unlike Canada, Australia and India, doesn't have "approved destination status" from the Chinese government that would permit groups of leisure travelers to visit.

The U.S. and China took one step forward last year by agreeing to allow qualified Chinese citizens to re-enter the U.S. multiple times for up to one year.

"The Chinese are ready, willing and eager to see the United States," U.S. Rep. Ed Case, a Democrat from Hilo, said in a telephone call from China, where he was meeting with U.S. consuls general in Beijing, Shanghai and Chengdu about the visa situation. Nonetheless, "the hurdles are there" and "I'm not sure the U.S. is sufficiently committed" to getting approved destination status, he said.

While U.S. consulates are making progress in expediting visa applications, "I don't think we'll be changing the overall substance of our visa application process," Case said.

In June, Gov. Linda Lingle made her first trip to China, where she met with the country's National Tourism Administration to discuss barriers to boosting the volume of visitors. Hawai'i is in regular contact with the U.S. Homeland Security Department and Commerce Department through e-mails, letters and meetings to find ways of easing travel into the U.S., said state tourism liaison Marsha Wienert.

"It could take as little as a year or as long as 10 years before there is a substantial number of Chinese tourists in Hawai'i," Wienert said.

Japanese visits to Hawaii started to decline in 1997, in the wake of the Asian financial crisis. The Sept. 11 attacks and the Asian outbreak of severe acute respiratory syndrome in 2003 held down the number of Japanese visitors to the islands until last year.

Brewbaker said China "could easily rival Japan as the largest foreign component of the Hawai'i tourism market." Resolving the visa issues between the U.S. and China is a "fairly distant prospect" that may take up to a decade, he said.