Hawaii’s beaches take backseat to shopping malls for Chinese visitors

Minutes after arriving at the Hilton Hawaiian Village, a group of Chinese travelers who had earned an incentive trip to Oahu were already peppering their guide with questions about the best shopping and golf courses on the island.

While Hawaii is most famous for its sun, sand and surf, only one repeat traveler — Haiming Wang, general manager for Motorola’s radio division — inquired about directions to the nearby beach. While Wang was planning to make time in the busy four-day schedule to visit the ocean, he thinks few of the 50 or so travelers who accompanied him will make it their top priority.

“When Chinese people visit island destinations in Southeast Asia, like Phuket or Bali, they plan to go to the beach and they like to relax. On their first trip to the U.S., they won’t spend a lot of time at the beach,” Wang said.

Instead, most will visit attractions like Pearl Harbor, the Polynesian Cultural Center and shop.

“They told me they want to buy everything,” said Cindy Gong, regional sales manager of Asia for Hilton Hawaii. “They already know all about Ala Moana and DFS.”

At Royal Hawaiian Center it’s not unusual to see Chinese shoppers buying one or more Swiss-made luxury or designer watches at prices ranging from $5,000 to more than $100,000, said Sam Shenkus, marketing director for The Festival Cos., which markets the center for Kamehameha Schools.

“There’s no doubt shopping is the No. 1 activity,” said CJ Chen, managing director of Hawaiiwedding.cn, which provides Oahu wedding services to a growing niche group of Chinese travelers. “Even my honeymooners will spend two of the five days that they are here shopping. And, let me tell you, they are extremely brand conscious. They don’t want anything made in China, and they only want the best.”

It’s this kind of retail consumption that has made Chinese tourists the highest daily spenders in Hawaii and the top international spenders to the U.S. The outpouring of Chinese money helped set a record for spending by foreign visitors to the U.S.: $168.1 billion in 2012.

The job of the Hawaii tourism industry is to make sure the islands are getting at least their fair share of all that Chinese business. Recently New York and California have been outperforming Hawaii, said David Uchiyama, vice president of brand management for the Hawaii Tourism Authority.

“We have greater potential than we are seeing right now,” Uchiyama said. “We see growth in other U.S. markets from China, and they already have direct (air) service. Even if you take the percentage of business travel out of California and New York, you see plenty of leisure growth.”

An easing of restrictions in 2008 allowed Chinese travel agents their first opportunity to market leisure travel. Since then the burgeoning China market has had a fragile start in Hawaii.

While the Chinese outbound travel market grew to 83 million last year, only about 115,927 made their way to the Hawaiian Islands. This year only about 144,910 visitors from China are expected to visit the isles, spending an anticipated $348.5 million. Chinese visitors spend an average of $397.70 per person per day in Hawaii, making them the highest-spending group. Japan, the second-highest-spending group, averaged only $290 per day.

Much excitement was generated in Hawaii’s visitor industry when China Eastern, with the backing of Ctrip and Utour China travel sellers, became the first carrier in 2011 to offer direct service from China.

“We need to get these visitors here in order to show the airlines that there is sufficient demand to add more flights,” Uchiyama said. “Once there are more direct flights, more higher-end customers, who are used to being able to get things when they want them and on their terms, will come.”

China Eastern now offers three direct flights weekly between Honolulu and Shanghai. However, a promised fourth flight has yet to materialize, and despite HTA’s efforts other carriers haven’t added direct service from high-demand cities like Beijing and Guangzhou.

“We’ve already downgraded our China targets twice,” Uchiyama said. “We reduced it in 2012 because we weren’t seeing the increase in air service that we had projected. Similarly, this year we thought we would have a fourth direct weekly flight by April, and now there is concern that we won’t get it until the end of the year.”

The result is that most of the travelers coming to Hawaii are on package tours, which tend to cater to China’s emerging middle class rather than its newly minted millionaires. To some degree these middle-class Chinese travelers to Hawaii have replaced the prior wave, which because of the restrictions tended to be more affluent.

While most of Chen’s honeymooners are splurging on beachfront hotels, he said it’s still not unusual to see other Chinese travelers stay in less expensive hotels so that they can spend more in Hawaii shops.

“They’ll stay in two-star hotels and then go buy out Coach,” he said. “Or they’ll go and spend all day at Waikele outlets. They still spend a lot, just differently.”

Since China’s luxury taxes add about 30 to 40 percent to the price of branded goods, Chen said what looks to be a Hawaii spending spree may actually be more about bargain hunting.

Still, as Hawaii’s relationship with Chinese tourists evolves, more emphasis should go toward educating them that the destination’s real value is its diversity of unique experiences, said Liwei Kimura, director of business development for the China market for Starwood in Hawaii.

“I would rather that we not grow arrivals as fast as we are pushing ourselves and instead try to focus on how we can present our destination as a better experience,” she said. “We’ll end up with the same, if not better, economic impact.” ___