Asia woes
may further hurt isle
Japanese tourist market

The Japanese have become
thriftier, more cautious and
often go elsewhere

By Russ Lynch
Star-Bulletin

Economic turmoil in Asia threatens to cut further into Hawaii's lucrative Japanese tourism market, according to visitor industry executives and economists.

Even without currency devaluations that have made several Southeast Asia countries a bargain for the increasingly price-conscious Japanese, events at home are making the Japanese more cautious -- and thriftier -- travelers, say those in the industry.

"We know we've got a problem," said John Reed, president of DFS Hawaii, which relies heavily on the Japanese not just for its duty-free shops business but for a number of retailing enterprises.

"Things change," he said. Total outbound travel from Japan is down. "And we're getting hit particularly hard in Hawaii," Reed said.

"There's no question there's a slowdown. Hawaii has been losing market share (to other destinations) for a long time.

"In the short term, we have to promote a lot more in Japan and be more competitive. For the long term, essentially we have to improve the attraction, improve the product," Reed said.

The number of Japanese visiting Hawaii so far this year is nearly the same as last year, but their spending habits have changed.

"They are spending less," Reed said. The Japanese today, for example, spend less on gifts to take home and more on themselves.

The average Japanese tourist spent $294 a day in Hawaii last year, and that was a sharp 17.6 percent drop from the $356 a day in 1995, according to the Hawaii Visitors and Convention Bureau. That downward trend appears to be continuing this year.

Joseph Toy, director of hospitality consulting at Coopers & Lybrand and chairman of a Pacific Asia Travel Association research committee, said, "We've seen changing travel patterns" throughout Asia.

"A lot of things we see in Hawaii, other destinations are experiencing. Hong Kong has seen a drastic reduction in Japanese travel," Toy said. Part of that is due to the high price of hotel rooms, and part is due to Hong Kong losing some of its fascination since it became part of China.

But a shift like that doesn't necessarily translate into more business for Hawaii, he said.

One example of Japanese visitors' increased attention to price is their recent shift away from traveling at major Japanese holiday times, when air fares and Hawaii hotel rates are at their highest.

In addition, they are taking trips closer to home, Toy said.

Japan Airlines said its traffic to Hawaii in the first half of its fiscal year, April through September, matched last year's.

"At the beginning of the year, there was a bit of a downturn," said Geoffrey Tudor, public relations director at JAL's corporate headquarters in Tokyo.

But JAL spent $7 million promoting Hawaii, and that brought the numbers back up, he said.

JAL's total outbound traffic from Japan is down slightly due to economic factors, he said. However, some destinations - Hong Kong, for example - are down much more than others, and traffic to some places is higher.

"Honolulu is our biggest overseas tourist destination," Tudor said, with 70 flights a week in the summer, 69 a week in the winter and many extra flights in holiday periods.

Consultant David Ramsour, former chief economist at Bank of Hawaii, said Hawaii will have to push hard to keep its Japanese tourism from really slipping.

"There are several areas that mean the next year will require some aggressive marketing, unlike the past when we just waited for arrivals to grow on their own," Ramsour said.

He mentioned the currency devaluations in non-Japanese parts of Asia that will raise the price of tickets to Hawaii from those countries.

The Japanese economy is in for another year of slow growth, Ramsour said.

"Total arrivals from Asia will be down or, if nothing else, flat for 1998 unless we have some very aggressive marketing," he said.

"The only advantage we have -- and I think it is significant -- is that it's cheaper (for the Japanese) to get here and it's shorter to get here" than many other destinations.

But Southeast Asia's currency devaluations, while hurting its residents' ability to travel overseas, is making the area more attractive to Japanese tourists, Ramsour said.

Ray Kitsu, director of Asian sales for the Sheraton hotels in Hawaii, said he has seen an increase in nervousness among the Japanese, more worry than before about their jobs and how freely they should be spending.

"The consumer, who is the one we're interested in, is very insecure," Kitsu said.

The Japanese are now interested in saving more and spending less, he said.

It is harder than ever to project what is going to happen because the Japanese now leave it until the last minute to decide to take a trip and make bookings, Kitsu said.

Leroy Laney, chief economist at First Hawaiian Bank, said the Japanese economy is very weak. He said visitor industry sources tell him that fewer Japanese are traveling overseas for vacations.

Thailand, Malaysia, Indonesia and the Philippines have devalued their currencies. "The few Japanese travelers that are going to leave Japan will be tempted to go to bargain destinations in Southeast Asia," Laney said.