Hawaii and China: Marketing the Center of the Pacific

Tropical breezes, piña coladas, and fragrant flowers have long seduced American, Japanese and Korean travelers into visiting the Hawaiian islands. But with the Chinese economy continuing to grow, Hawaii’s state tourism agency is shifting its focus, and its budget, to attract more Chinese tourists. How will they do this, and more importantly, should they do this?

As described in a recent post from Pacific Business News, the designated destination marketing contractor for China, Travel Link Marketing, will pour the bulk of their resources into China’s top three richest cities: Beijing, Shanghai and Guangzhou (near Hong Kong). Outside of the top three cities, TLM will focus on 11 second-tier cities that have one-stop flight connections to Honolulu. Their goal is to position Hawaii as a primary destination worthy of an 7-8 day stay. At present, Chinese tourists are usually only staying 1-2 nights in Hawaii as a part of a larger, American mainland excursion.

To support this marketing effort, China-based TLM wants Hawaiian hoteliers to shift their focus away from the Japanese and Korean markets and to give priority to Chinese visitors. This includes hiring a separate Chinese sales team, hiring at least one Chinese receptionist and to reallocate their marketing budget. With Chinese spending in Hawaii projected to increase 29.2% from US$358 million to US$441 million this year, it makes sense, doesn’t it?

It all depends on your level of optimism for the continued strength of the Chinese economy. Is the country destined for a “Lehman Brothers moment?’ A great blog post from The Economist discusses the potential for continued Chinese economic growth. While a labor shortage and an increase in credit-fueled spending may unbalance the economy, the dramatic moves by China’s central bank in 2007 and 2008 to avert a slowdown demonstrates Beijing’s ability to provide a massive stimulus when the occasion warrants it.

My advice for the those in the travel industry looking to tap into the surging number of Chinese tourists would be to increase your Chinese marketing expenditures, albeit cautiously, and certainly not at the expense of attracting South Korean and Japanese tourists. My reasoning lies in the Jasmine Revolution, or the Arab Spring, that began in Tunisia on December 17th, 2010. Increasing incomes in China will lead to increasing demands for political reform, and as long as social media sites like Google+, Facebook and Twitter are blocked in China, pressure will continue to build under the lid.

For the stability of the global economy and the travel industry, I hope that China’s economy will avoid a recession and a repeat of Tiananmen Square. However, the one distinct similarity between Capitalism and Confucianism is that they both move in cycles. The question is: When will be the inflection point?

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