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The Honolulu Advertiser
Posted on: Saturday, May 27, 2006

Tourists abound, but not big-spending kind

By Lynda Arakawa
Advertiser Staff Writer

At the Hawaiian Quilt Collection, Maiko Yamashita of Tokyo, left, bought more than $1,000 worth of cushion covers from salesclerk Hiroko Udagawa yesterday. Yamashita bought the items as gifts for family and friends who will be attending her wedding today.

Photos by BRUCE ASATO | The Honolulu Advertiser

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Japanese tourists in Waikiki find that the yen-dollar exchange rate has made prices less favorable to Japanese shoppers this year.

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Where have all the Japanese tourists gone?

They've gone to South Korea, China and other destinations because they're cheaper, and that's a problem for Hawai'i's tourism industry, which covets the high-spending Nihon-jin.

After a dismal first three months, the number of Japanese visitors declined 5.2 percent in April compared with April 2005, according to state figures released yesterday. State economists, who initially projected moderate growth this year over last, now forecast a 2.7 percent drop in Japanese visitor arrivals this year.

To be sure, the Islands are awash in visitors. The growth in Mainland tourist arrivals this year has more than offset the fall in the Japanese market. Total visitor arrivals in April were up 10.7 percent; total visitor spending was up 14.9 percent.

But Japanese visitors spend on average $87 to $113 per day more than tourists from the Mainland.

A high proportion of Japanese visitors means Hawai'i can meet its tourist spending goals with fewer people, less strain on the state's infrastructure and less crowding on the beaches.

"There's no question there's a concern," said state tourism liaison Marsha Wienert. "We've had a lot of discussion in regards to what is going on that is causing this decrease."

The most often-cited reasons are higher airfares, more expensive hotel rooms and a less favorable yen-dollar exchange rate for the Japanese. While Hawai'i gets more expensive, the competition, especially from Asian destinations near Japan, has become more sophisticated in its marketing.

Airlines have been adding surcharges of up to $200 a ticket on flights from Japan to Hawai'i to make up for the increasing cost of jet fuel, said Akio Hoshino, senior vice president of JALPAK International Hawaii Inc.

Hawai'i hotels are increasing their room rates as the supply shrinks caused by renovations and conversions to time-shares and condominiums and demand remains strong.

The yen averaged 110 to the dollar last year, and so far this year, it takes an average of 116 yen to buy a dollar, making it more expensive for Japanese to visit and shop.

"The Japanese love Hawai'i," said Leon Yoshida, president of Sawayaka Hawaii Inc. a Japanese tour operator. "So they'll be back, but the pricing is too high right now."

Wienert said the challenge for Hawai'i is to convince the Japanese that the Islands are worth the higher costs.

"We as a destination need to be more aggressive in training those travel agents in Japan on how to convince them to spend a little bit more for the quality vacation," Wienert said.

There are other problems, including the availability of seats or "lift," as it is known in the industry.

Japan Airlines suspended two of its eight scheduled daily flights to Hawai'i in October. But Wienert said that's not the root cause of the decline in visitors, noting that JAL has said it would add extra seats if the demand is there.

To some, including Gilbert Kimura, JAL director of passenger sales and public relations, the issue is "Been there; done that." Many Japanese already have visited Hawai'i and are looking for new places.

"They're going to more exciting destinations China with the Great Wall, Vietnam and all those new destinations," Kimura said. "Hawai'i has always been Hawai'i. Beautiful weather, aloha spirit and blah blah blah. ... We really need to be more aggressive and showcase Hawai'i in a different way."

Wienert agrees that fatigue may be an issue. More than half of Japanese visitors have been to Hawai'i before, she said, citing state surveys that found an increasing number of Japanese visitors said they would not be returning within the next three years because they want to visit someplace different.

"Japanese have become very astute travelers, and their quest for travel has increased dramatically," she said.

"There's definitely a lot of competition in the marketplace in Japan. China is aggressively marketing in the Japanese marketplace. There are many new Asian destinations opening up."

"The question would be why aren't we generating more new visitors to replace those that want to see something different. And what does it take in the marketplace to actually do that?"

No one can pinpoint one primary reason for the drop in Japanese visitors. Unlike past dips in the market, this one can't be blamed on a slow Japanese economy, or terrorism or SARS.

"It's a mixture of many different things," Wienert said. "Everyone's talking on a continuous basis in regards to what's going on."

Starwood Hotels & Resorts in Hawai'i is working with Japanese tour operators to offer additional promotions targeting niche markets, said Keith Vieira, senior vice president and director of operations for Starwood in Hawai'i and French Polynesia.

"It all starts with marketing," Vieira said. "If you create more demand, people are willing to pay higher prices to come to Hawai'i. The airlines will put more seats."

Vieira said Starwood's satisfaction studies of its guests don't indicate that Japanese are growing tired of Hawai'i.

"We just see the world being competitive. We've seen many, many choices. We've seen the Internet providing all kinds of access to travel information," he said.

"The Japanese are very adventurous in looking at where they want to visit. So you have a lot of marketing noise in the marketplace, and all the more reason why you need a strong marketing organization working with our tour wholesalers."

Frank Haas, director of tourism marketing for the Hawai'i Tourism Authority, said credit card issuer JCB last month launched a yearlong Discover Aloha Hawaii promotion offering discounts and other premiums, and the U.S. Department of Commerce is starting a "Visit USA" campaign in July that will include Hawai'i.

The state Tourism Authority's research shows that the demand for Hawai'i remains strong, Haas said.

The state's marketing efforts have focused on giving the Japanese more reasons to come back, other than just beaches and shopping.

Yoshida, the tour operator, said airlines and hotels are participating in promotional campaigns for the summer, which should attract more Japanese.

"June is picking up again," Yoshida said.

"So I think we can get back on track, but not as much as we used to do last year."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.

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