Beachboy Armando Aguilar walked past racked boards Sunday. He works for C&K Rentals, one of the Waikiki beach concessionaires, which also owns the boards. Hawaii's tourism-focused businesses are adjusting to new kinds of visitors.

Tourism dollars
shift to western U.S.

Familiar brands will
likely benefit, while luxury
goods face a tough market

By Tim Ruel and Russ Lynch |

The shift of Hawaii's tourism dollars to growth from the U.S. mainland and decreases from Japan will benefit companies that have familiar brands and pay attention to trends, but is bad for many luxury retailers, analysts said.

Visitors spent $10.1 billion in the islands last year, down from $10.9 billion in the previous year, a new state report says.

Spending by visitors from the western United States grew last year, while a drop in visitors from Japan and from some U.S. areas caused total spending to decline.

U.S. West tourists spent $3.51 billion here last year, a 1.5 percent increase from $3.46 billion last year, according to the Annual Visitor Research Report by the state Department of Business, Economic Development and Tourism.

Spending by the Japanese dropped 6.3 percent to $2.22 billion from $2.37 billion, while spending from the U.S. East fell 11.3 percent to $2.66 billion from $3 billion.

U.S. West visitors spend the least of all of Hawaii's markets on a per-person per-day basis, but their sheer number has given them a firm grasp on Hawaii's purse strings.

That's good news for well-branded restaurants and retailers, such as Outback Steakhouse and Borders Books & Music, said Wendell Brooks III, vice president of commercial properties for Chaney Brooks & Co. Familiarity draws spending, he said.

That doesn't mean local-favorite restaurants like Sam Choy's and Roy's will be left out, Brooks added. "The westbound visitor is more apt to experiment on their dining choices," he said. The Japanese, in comparison, appear to come to Hawaii to eat Japanese food, Brooks said.

Brooks speculated that off-the-beaten-path restaurants and retailers would benefit from westbound visitors, who are more likely to rent a car than get on a tour bus.

Those who are hurting from the transition are luxury retailers, said Fred Noa, of CB Richard Ellis Hawaii.

Among those facing a tougher market are stores focusing on high-end apparel, leather and shoes, Brooks said.

Some retailers are adapting, Noa said. "I think we're starting to see retailers kind of reinvent themselves or reposition themselves to capture those westbound dollars."

Examples are Reyn's and Hilo Hattie's, which have watched for appealing designs and paid attention to contemporary styles, Brooks said.

Other retailers have been lost in the shuffle. McInerny, founded in 1857, plans to close in January, blaming a loss of Japanese spending combined with increased competition from discount outlets. McInerny's model of selling brands produced by other companies worked a decade ago, but not today, analysts said.

Last year's visitor spending of $10.1 billion was well short of the record $11.1 billion chalked up in 1997. Given the worldwide tourism plunge that followed the Sept. 11 hijackings, overall Hawaii visitor statistics for 2001 showed remarkable resilience, said the DBEDT report.

Per-person, per-day spending was $169, up a dollar from the 2000 average of $168.

Japanese tourists continued to outspend others, at an average of $241 per person per day. Visitors from elsewhere in Asia spent an average of $175 a day, followed by Oceania (Australia, New Zealand and the Pacific Islands) at $169 and Latin America at $163. Americans trailed all those, with visitors from the U.S. East spending an average $160 a day and U.S. West travelers spending an average of $150 a day. Canadians spent $152 each per day.

Tourist arrivals bounced back after Sept. 11, from a 25.6 percent year-over-year drop in September, to a dip of 11.4 percent in December, leaving the full year down 9.3 percent compared with 2000.

The comprehensive report shows how the western states helped lessen the economic damage. Arrivals from those states were down only 2.5 percent for the year.

After Sept. 11, a larger share of arrivals from most areas had been to Hawaii before. For the first time, Japanese repeat visitors outnumbered Japanese trying the islands for the first time, the report said.

In all, 51.5 percent of Japanese arrivals in 2002 had already been to Hawaii at least once. Of the total arrivals from all sources, 61.1 percent were repeat visitors, up from 59 percent in 2000.

Monthly arrival reports so far this year have held steady, still below last year's but not by a huge amount. For the six months through June of this year, visitor arrivals were down 8.8 percent from the same time last year.

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