Disaster May Deal Blow to Tourism in Hawaii

Even before Japan was hit by an earthquake and a tsunami, Hawaii had been struggling with a budget shortfall that seemed suffocating for a state this small: close to $1 billion over two years.

The tour and hotel cancellations began within hours, and they have been continuing — a reminder of how dependent Hawaii is on tourists who make the nine-hour trip here from Tokyo. State officials, well aware of the history of Japanese tourism fallout after other calamities — including the Kobe earthquake in 1995 and the swine flu epidemic in 2009 — are now bracing for a sharp drop in tourism and the revenue it produces.

“We are heavily dependent on Japanese visitors,” said State Representative Marcus R. Oshiro, a Democrat from Honolulu and the chairman of the House Finance Committee. “There is no doubt in my mind that at least in the short term, we are going to be severely impacted by the earthquake and tsunami. It may be anywhere from $15 to $20 million in state revenues lost just from that tourist market.”

Japanese tourism is not what it once was: Last year, 1.2 million Japanese visited Hawaii, down from a peak of about 2.2 million visitors in 1996. The downturn reflects the effects of the worldwide recession but also changing travel tastes of Japanese tourists. But by any measure, Japanese citizens are a critical part of the tourism industry, which is a critical part of the state’s economy.

Japan ranks third in the number of visitors it sends to Hawaii, following the Western and Eastern United States mainland, but 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. A typical visitor from the Western United States spent $146 a day last year, while a Japanese tourist spent $274, state officials said.

Their presence still could be seen in the teeming beachfront bars and lobbies of luxury hotels this week; many Japanese tourists were stranded, awaiting flights home that had been temporarily grounded. Menus at hotel restaurants are almost invariably written in Japanese and English, and stores sell packages of nori, dried seaweed, next to potato chips.

Local officials stress that they do not want to compare their situation to the horrors that Japan is experiencing, but the impact on state revenues, they say, will be a serious blow.

This setback came as Hawaii, after suffering through a long decline in tourism, had been experiencing something of a resurgence, its beaches and hotels suddenly full of visitors escaping the brutal winter that had gripped much of the mainland. It also came as Gov. Neil Abercrombie, a Democrat who took office in January, and the Legislature have been struggling to produce a budget that would deal with steadily declining revenue.

For all the cries of alarm, there is considerable uncertainty about how bad and long lasting any tourist drop-off might be. Paul H. Brewbaker, the chairman of the State Council on Revenues, said it would probably be a month before the state could realistically gauge how Japanese travel plans had changed.

Even before the Japanese earthquake, the council had projected a decline in projected state revenues in a report to Mr. Abercrombie. The decline, the council said, would increase the projected shortfall to $964 million, from $698 million. Mr. Brewbaker said it was too soon after the disaster to try to adjust that number.

“Japan is an important market for us. And obviously a cataclysmic event has occurred,” he said. “The aftershocks, so to speak, are still unfolding. I’ve learned from the past that one week is too early, and maybe one month later is enough to calibrate these things.”

He said that Japanese tourists, while important, are 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.”

But David Uchiyama, vice president of brand management for Hawaii Tourism Authority, said tourism officials, who have been closely monitoring developments, had already logged reports of Japanese tourists putting off trips.

“We’ve already seen group cancellations,” Mr. Uchiyama said. “We are watching our individual package tours, and we are seeing the booking pace slow for that type of business.”

He said after the Japanese earthquake of 1995, the state measured a 12 percent decrease in visitors from Japan; during the height of the swine flu, it was close to 30 percent, he said. “Some lessons can be taken from this,” he said. “But the severity of the current situation is a little greater than we’ve seen in the past, and the extended concern over the nuclear plant is going to kick in.”

Mark B. Dunkerley, the chief executive officer of Hawaiian Airlines, which last year initiated direct flights to Haneda International Airport in Tokyo, said that his airline had noted “a modest single-digit drop-off in bookings” since the disaster, but that it had no idea what to expect.

“There is no template on this,” Mr. Dunkerley said.

Leroy Laney, a professor of finance and economics at the Hawaii Pacific University, said history suggested that an event like this would produce a noticeable decline in the number of Japanese visiting. “It will be significant,” Professor Laney said. “That market tends to be an all-or-nothing kind of market. I think it will be a very large percentage of them for a long time to come.
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