ISLAND VOICES
A green light for Chinese tourists to Isles?
By Christopher Edmonds and Sumner La Croix
Two recent developments indicate the United States and China are moving closer to allowing large numbers of mainland Chinese tourists to enter this country through group-visa and package-tour arrangements.
In January, the two countries agreed to ease restrictions on individual tourist and business visas, allowing stays of up to 12 months with multiple entries. Previously, such visas were restricted to six-month stays. This agreement is not expected to increase tourism from China significantly because group tourism from mainland China remains prohibited.
Last December, however, high-ranking officials from the two countries signed a memorandum of understanding declaring their intention to establish the United States as an approved destination status (ADS) country. This development is more important because it signals our country's intention to open its doors to millions of Chinese package tourists wishing to visit Hawai'i or the U.S. Mainland.
The Chinese National Tourism Administration regulates group tourism from China via its ADS agreements. Countries with ADS agreements can arrange group tours from China in cooperation with government-approved tourism agencies in select mainland China cities. Group tourism is particularly important for tourists from developing countries as it can lower travel costs and offer other advantages. These ADS agreements greatly facilitate tourist travel by allowing travel agents to arrange for visas — thereby freeing tourists from the long and costly process applying for individual visas — and to make hotel and other reservations.
Prospects for a U.S.-China ADS in 2005 are improving due to strengthening ties and the rising trade surplus between the two countries, and because of China's increasing willingness to set up ADS agreements globally. Would ADS generate big increases in the number of mainland Chinese visiting Hawai'i and the U.S. Mainland? In Australia, one of the first countries off the continent of Asia to receive ADS, the number of Chinese tourists increased by about 50 percent annually during the three years following the agreement. South Africa experienced a 39 percent rise in Chinese visitors following its ADS agreement. Other countries that were designated ADS in the mid-to-late 1990s, including Korea, New Zealand, Singapore, Thailand and Vietnam, have also seen sharp increases in tourism by mainland Chinese tourism.
Given the limited history of tourism flows following the granting of ADS and the overall fluidity of overseas tourism by Chinese, making precise estimates of likely increases in Chinese visitors to Hawai'i is impossible. The latest figures from the World Tourism Organization place the number of mainland Chinese visiting Hawai'i in 2002 at 39,000 and visiting the United States at 226,000, but these numbers include visitors for all reasons (business, tourism, visiting relatives, etc.) while ADS affects only tourist travel.
Three countries granted ADS in the late 1990s (Australia, Korea, and New Zealand) have statistics published on mainland Chinese tourist arrivals. These countries experienced post-ADS growth rates that were an average 23 percent higher than before ADS. A comparable post-ADS "bounce" in Hawai'i would imply that Hawai'i could expect post-ADS growth rates of 40 percent per annum (an estimated annual growth rate in tourists of 17 percent plus the average post-ADS bounce of 23 percent) in tourists from mainland China during the first few years of ADS. This means Hawai'i could expect to have roughly 40,000 tourists from mainland China by 2009, were ADS to take effect in 2005.
However, there are good reasons not to expect huge numbers of Chinese tourists to visit Hawai'i immediately after a U.S.-China ADS is concluded:
• The number of Chinese travelers overseas remains small by global standards.
• Chinese tourists to the United States will likely have to leave deposits equivalent to $12,000 with their government to guarantee their return (this is the case for Chinese visiting EU countries) — so only a small fraction of the population could afford such travel.
• Chinese wishing for tropical beach vacations can already choose cheaper visits to China's Hainan Island, neighboring Thailand and Vietnam, Australia, or the Northern Mariana Islands (a U.S. commonwealth granted ADS in December).
• There are direct flights from major Chinese cities to Chicago, Los Angeles and New York City, but not to Honolulu.
Nonetheless, Chinese tourists visiting Hawai'i are likely to be a source of economic growth in coming decades given rising Chinese incomes, the expected appreciation of the country's currency, and its huge population. Hawai'i's international reputation and status, its success in attracting Japanese visitors, its historical and cultural ties to China, and our sizable Chinese-speaking resident population are all factors that will spark tourism to Hawai'i.
In the short to medium term, the effect of ADS on Chinese tourism to Hawai'i will depend upon: the state of Hawai'i's linkages with authorized travel agencies in China; starting direct flights between Honolulu and high-income Chinese cities; and developing promotional materials sensitive to the interests of Chinese tourists.
Sustaining growth in mainland China tourism to Hawai'i in the longer run will depend upon how well the Hawai'i Tourism Authority, tourism businesses and the public can leverage and enrich the state's cultural, demographic and historical ties with China.
Christopher Edmonds is a fellow in the East-West Center's Research Program. Sumner La Croix is a professor in the economics department, University of Hawai'i-Manoa, and senior fellow at the East-West Center. They wrote this commentary for The Advertiser.
