Hawaii officials push
to kill roadblocks
to Chinese tourism

Keith Vieira, Starwood Hotels & Resorts Worldwide Inc.'s director of operations in Hawaii, 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 in an interview from the beach and golf resort of Princeville, Kauai. Chinese visitors now make up less than 1 percent of the guests who stay at the company's 14 Hawaii hotels, while the Japanese represent a third, he said.

Hawaii's $10 billion-a-year tourism industry, emerging from a six-year decline in Japanese visitors, is hoping for 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. But a lifting of the restrictions is far from certain, and could take several more years.

Hawaii will be among the first beneficiaries of China's move to revalue the yuan simply because of proximity, said Paul Brewbaker, chief economist for the Bank of Hawaii in Honolulu. In June, Hawaii became the second U.S. state, after Nevada, to open a Beijing office aimed at luring new business.

Small arrivals

Hawaii 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 U.S. mainland helped the islands overcome a 40 percent decline in visitors from Japan between 1997 and 2003.

Hawaii 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 Hawaii" 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.

Biggest factor

"Currency will always be the number one 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, 2001, terrorist attacks in New York and Washington 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.

Hawaii 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 reenter the U.S. multiple times for up to one year.

'Ready, willing, eager'

"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. consul generals 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.

Rivaling Japan

"It could take as little as a year or as long as 10 years before there is a substantial number of Chinese tourists in Hawaii," said Hawaii tourism liaison Marsha Wienert.

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

China's central bank allowed the yuan to rise 2.1 percent from its previously fixed rate of 8.3 to the dollar, in response to criticism from the U.S. and Europe that an undervalued currency gave the nation an unfair trade advantage. The yuan will fluctuate against an undisclosed basket of currencies, ending a decade-long peg to the dollar. The bank said it won't revalue the yuan again in the "foreseeable future."

"Hawaii's goal is for high-end, high-volume tourism from China, period," Rep. Case said. "If we continue to push our consulates, give them the resources they're lacking now, and push for approved destination status, which I intend to do, we can do it in, say, two to five years."