Japan After the Quake
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|Martin Barillas||March 21st 2011|
Cutting Edge Senior Correspondent
Fears emerged in tourist-dependent Hawaii following the devastating earthquake and tsunami that hit Japan on March 11. Just hours after the monumental quake in Japan, tens of millions of additional dollars in damage to homes, businesses and boats crashed onto the national economy after a tsunami roared ashore last week. Tourism is the single biggest industry in the Hawaiian archipelago, and hotels, restaurants, tour operators and other businesses dependent on Japanese tourism were concerned that the devastation in Japan would also strike their pocketbooks.
Gov. Neil Abercrombie predicted the economic consequences would be severe for Hawaii, which is already dealing with a projected shortfall of nearly $1 billion over the next two years due to a bearish economy in the US generally. "It's going to be terrible. It's going to be rough," he said following the quake. "It's something that we have to come to grips with."
Some Hawaiian tourism representatives contacted by The Cutting Edge News seem ill-prepared and ill-equipped for the unexpected drop-off. A few were unable to even respond to inquiries.
Visitor arrivals from Japan, Hawaii's second-largest tourist market outside North America, dropped 86 percent immediately following the 9.0 temblor on March 11, according to worldwide media reports. Most of the cancellations came from group tourism, including business meetings and incentive travel.
Underscoring that Hawaii is heavily dependent on Japanese visitors, State Representative Marcus R. Oshiro, a Democrat from Honolulu, confirmed that in the short term, Hawaii will be severely affected by the earthquake and tsunami. "It may be anywhere from $15 to $20 million in state revenues lost just from that tourist market.”
Hawaii had been enjoying something of a rebound in tourism as hotels were reporting occupancy levels in the 90 percentile range.
But Japanese tourism is not what it once was: In 2010, 1.2 million Japanese visited Hawaii, almost half down from a peak of 2.2 million visitors in 1996. The downturn reflects the effects of the worldwide recession but also changing travel tastes of Japanese tourists. By any measure, howeveer, Japanese citizens are a critical part of the tourism industry, which is a fulcrum of the state’s economy. Yet, tourism officials have been slow to develop marketing campaigns to attract vacationers from other areas, including appealing to American travelers who don't happen to live on the West Coast. That may be because Americans spend less when they visit Hawaii.
A typical visitor from the Western United States spent $146 per day last year, while a Japanese tourist spent $274, state officials said. Indeed, while Japan ranks third in the number of visitors it sends to Hawaii, following the Western and Eastern United States mainland, Japanese tourists are much more aggressive spenders and thus contribute disproportionately to the economy. They spend far more money per day on food, hotels and shopping, particularly luxury goods. Visitors from Japan brought about $1.9 billion into Hawaii in 2010, or about 17 per cent of the $11.4 billion overall visitor receipts. There are 13 daily direct flights from Japan to Hawaii, bringing in between 3,000 to 5,000 tourists. Hawaiian Airlines just announced a robust new schedule of direct flights from the Pacific island chain to Japan.
Following statements by President Obama that the US had little to fear from radiation leaking from the Fukushima reactors in Japan, Gov. Abercrombie declared that Hawaii was “back in business,” reassuring potential tourists that no dangerous levels of radiation had been detected on the archipelago. However, two prominent hotels have been closed temporarily because of tsunami damage—the Four Seasons Resort Hualalai and Kona Village Resort. “In comparison with the incidents that happened in the past this is of course much more severe,” said David Uchiyama, vice president of brand management for the Hawaii Tourism Authority. “I anticipate we’ll see again some initial drop-off,” he added, lasting about three to six months, but predicted that the market will then gradually come back.
The Hawaiian people, aware of the cultural and economic connection to Japan, have been moved to respond to the island nation’s time of need as government and civic leaders have been engaged in fundraising for relief efforts. Japanese immigrants arrived first arrived in the Aloha State more than a century ago to work in the fields, while their children and grandchildren have since risen to prominence. About a quarter of the state's population identified themselves as being of Japanese descent, according to the 2000 Census. Telephone service providers are offering free phone calls to Japan. The US Navy's Pacific Fleet, based in Hawaii, is also helping in relief and rescue operations.
Cancellations from Japan after the quake were immediate, resulting in the loss of thousands of visitor arrivals. H.I.S. Hawaii, a travel agency that handles about a fifth of all Japanese travel to Hawaii, saw new bookings drop by half and cancellations triple in the first three days after the March 11 earthquake. However, the cancellation rate dropped to less than 10 per cent starting March 16. Tourist businesses are hopeful that the market will bounce back soon once life returns to some semblance of normality in Japan.
Hawaii similarly experienced sharp declines in the number of Japanese travelers following the deadly 1995 Kobe earthquake and the 9/11 terror attacks. While people of other cultures try to return to normal as soon as possible following a tragedy, travel industry experts say the Japanese tend not to travel or at least postpone in sympathy. So far, airlines are reporting that no significant drops of passengers from Japan have been noted. Japanese visitor arrivals to Hawaii dropped nearly 16 percent a month after the 6.8 magnitude Kobe quake in January 1995 but by year's end were up nearly 13 percent compared to 1994 levels, the Tourism Authority said.
CEO Mark Dunkerley of Hawaiian Airlines said cancellations have been "pretty modest." Bookings are mostly handled by travel partners in Japan and they "continue to demand the level of service that we've already been providing and intending to provide in the coming months." Hawaiian Airlines, which launched its first daily flight between Honolulu and Tokyo's Haneda International Airport in 2010, said it has no plans to change or delay its scheduled launch of daily nonstop service between Honolulu and Osaka in July 2010.
Japanese tourists are woven into the fabric of Hawaii’s economy. Menus are invariably printed in both English and Japanese. Packages of dried seaweed can be found next to potato chips in stores. Despite the concern on the part of business, there is uncertainty as to the duration and effects of a downturn in Japanese tourism, however. Tourism experts say that Hawaii will probably not know for at least a month before it can realistically gauge how severely Japanese travel plans have changed. Even before the Japanese earthquake, a decline in state revenues had been projected in a report to Gov. Abercrombie. The decline may increase the projected shortfall to $964 million, from $698 million. According to an article in the New York Times, Paul H. Brewbaker of the State Council on Revenues said, “Japan is an important market for us. And obviously a cataclysmic event has occurred,” but while Japanese are important, they not as critical as they once were here. “We love them,” he said. “But there’s just not as many as there used to be.”
Japanese visitor arrivals to Hawaii dropped nearly 16 percent a month after the 6.8 magnitude Kobe quake in January 1995 but by year's end were up by 12.6 percent compared to 1994 levels, a spokesman for the Hawaii Tourism Authority declared. The Hawaii Tourism Authority had projected about $2 billion in revenue from Japanese visitors in 2011, a figure that is expected to take a significant hit, said Uchiyama of the Hawaii Tourism Authority. Uchiyama fears that following the March 11 tsunami, he does not expect the industry to bounce back as it did in 1994. "This is definitely a larger catastrophe," in article in the Los Angeles Times stated.
While government and industry officials are stressing that Hawaii is “open for business,” the tourism industry is looking at various markets and alternatives. Jürgen Thomas Steinmetz, president of the privately held Hawaii Tourism Association (HiTA), has made some waves in Hawaii in recent years. He has continously criticized the government-run Hawaii Tourism Authority for not diversifying enough beyond traditional markets such as the U.S. West Coast and Japan. Steinmetz said that the tsunami and its aftermath should impel Hawaii to seek new markets in countries whose citizens are not required to bear a visa to enter the U.S., such as most of Europe, Singapore and Brunei. According to Forbes magzaine, Steinmetz believes that Europe is a particularly promising opportunity, “Europeans not only love to travel but get a lot of vacation time. Where Americans might stay for days, European tourists can afford to think in terms of weeks.” China and India are also promising markets in Steinmetz’s view.
This would mean that Hawaii would need to become more aggressive in touting its wares. According to Steinmetz, while Libya and Afghanistan were represented at the world’s biggest travel industry show, Hawaii did not have a presence comparable to France’s tiny Seychelles Islands, which had dozens of representatives. President Obama, Hawaii's native son, has returned frequently to the islands during his term. A shift in his geopolitical focus for the US towards Asian countries besides Japan could also serve to bring new visitors to the archipelago that has long served asa jumping-off point for the entire Pacific Basin.
Cutting Edge Senior Correspondent Martin Barillas also edits Speroforum.com.