Japanese travel to Hawaii peaked in 1997 at 2.152 million arrivals. In that year, an average of eight of every ten foreign visitors to Hawaii and nearly three of ten among all visitors (U.S. and foreign) were Japanese. At Japan’s airports, one of eight among Japanese overseas travelers was going to Hawaii.
Thirty years earlier, only a trickle of Japanese visitors came to Hawaii.
Lonny Carlile reports 69,000 Japanese visitor arrivals in Hawaii for 1969.³¹ Indeed, until 1964 the Japanese government did not even allow its own citi-zens to take vacation trips abroad. Japanese could go abroad for business but not for pleasure. The prohibition was put in place primarily because the Japanese government did not want its citizens to fritter away hard-to-come-by U.S. dollars on luxuries like foreign vacations when those dollars were needed to pay for essential imports like modern machinery to spur eco-nomic growth. After the Tokyo Olympics in 1964, the Japanese government lifted the ban but still kept in place restrictions on the amount of dollars Japanese could exchange to spend on overseas vacations. For example, the permissible amount between 1964 and 1968 was 500 per person. In 1969 it was raised to 700; a year later it was raised again to 1,000. After 1976, all currency restrictions were eliminated.³² The introduction of the jumbo jet in 1970, which enabled the movement of large groups of travelers at a time, made it possible to put together economical and convenient prepaid group
package tours to foreign destinations. Prepaid package tours became enor-mously popular with the increasingly affl uent and time-constrained, hard-working Japanese.³³ Faced with embarrassingly large yearly trade surpluses and foreign political pressure, the Japanese government did an about-face in the ’80s and began to urge its citizens to travel abroad. All of these factors, accompanied by the rapid appreciation of the yen (relative to the dollar), produced an explosion of Japanese travel abroad.³⁴ In 1964, the Japan Minis-try of Transport reported 127,749 overseas departures from Japan. A decade later, the number of Japanese departures had increased by a factor of eigh-teen to 2.3 million. The number more than doubled to 4.7 million departures by 1984, and fi ve years later it more than doubled again to 9.7 million.³⁵ Japa-nese tourists were eagerly sought by tourist destinations around the world because they tended (though becoming less so) to be relatively big spenders.
By 1989, Japan became the world’s biggest spender on international tour-ism, surpassing the United States and Germany.³⁶ In 1992, Japanese visitors accounted for one-fourth of all visitor arrivals in Hawaii but over one-third of total visitor spending.³⁷ Until around 2000, Hawaii was the most popular international destination among Japanese tourists.³⁸
Why did the Japanese like Hawaii so much? Kazuhiko Shiraya, president of the Japan-Hawaii Tourist Association, off ered the following reasons:³⁹
• Perfect tropical weather year-round.
• The natural beauty of white sand beaches, ocean, and blue skies.
• The time and distance factor—Hawaii is not too far from Japan.
• The range of accommodations available, from deluxe to economy.
• A lack of crime and violence.
• The fact that Japanese is spoken at many hotels, restaurants, and other businesses and attractions.
• Hawaii’s famous hospitality, the “Aloha Spirit.”
Shiraya observed that by the 1990s, Hawaii’s early advantage over other des-tinations had diminished.⁴⁰ Weather was no longer as important as before because the Japanese now had more fl exibility to choose when they travel.
Other destinations such as the Gold Coast of Australia and the Caribbean also off ered natural beauty. The quality of tourist accommodations was get-ting higher elsewhere. Crime and violence in Hawaii were rising.⁴¹ Other destinations were training their tourism employees to speak Japanese. And while the Aloha Spirit was still alive and well in the outer islands, that was
not always so in Honolulu. He suggested that Hawaii needed to develop new attractions to keep the Japanese coming. Eff orts to entice the Japanese to visit the Neighbor Islands have achieved only limited success.⁴² They in-cluded the introduction of direct fl ights by Japan Airlines from Japan to Kona (Big Island) in June 1996.
Japanese travel to Hawaii declined every year between 1997 and 2003, bottoming out at 1.340 million arrivals, a decline of nearly 38 percent from the peak of 1997. The total number of Japanese overseas departures also fell between 1997 and 2003, but the decline was not nearly as much percentage-wise and not in every year. The reasons for the sharp decline of Japanese travel to Hawaii remain somewhat of a mystery. In 2005, the number of Japanese visitor arrivals in Hawaii grew again to reach 1.517 million.⁴³
The growth of Japanese tourism in Hawaii was accompanied by at least two waves of tourism-dominated Japanese investment, one in the late ’60s and early ’70s and another in the late ’80s.⁴⁴ In 1962, Japanese tycoon Kenji Osano made headlines locally when he purchased the Moana and the Prin-cess Kaiulani Hotels for 19.4 million. He was also the owner of the Kyo-ya Restaurant in Waikiki.⁴⁵ By 1991, all but two of Hawaii’s major hotels were purchased or fi nanced, at least in part, by Japanese investors.⁴⁶ Unlike the generally welcome reception waiting for Japanese tourists, Japanese take-over of existing Hawaii tourism businesses and, in particular, undeveloped land, golf courses, and residential housing, stirred up much controversy and public resentment, despite the fact that the State government had worked vigorously to attract Japanese capital to Hawaii. Rumors spread quickly that the Japanese would be bringing in their own workers and local workers would not be able to fi nd employment. There was also speculation that profi ts from Japanese businesses in Hawaii would be taken back to Japan and that Hawaii would not gain much from the investment other than rev-enue from the 4 percent excise tax.
Careful research showed that in 1972, Japanese owned ninety-four busi-nesses in Hawaii, which represented only 0.6 percent of all busibusi-nesses in the state and less than 5 percent of all “outside” businesses in Hawaii. Japanese business interests controlled less than 3.8 percent of all corporate assets in Hawaii.
Despite their marginal role in the overall economy, the 1972 study re-vealed that residents tended to view Japanese investment more negatively than investment from the other forty-nine states.⁴⁷ Opposition to Japanese investment was strongest among Native Hawaiians and Pacifi c Islanders.⁴⁸
Some 90 percent of those who viewed Japanese investment negatively also believed that Japanese fi rms tended to discriminate against non-Japanese in their hiring. Indeed, the study found that Japanese fi rms (tourism and nontourism combined) tended to hire workers of Japanese ancestry in dis-proportionate numbers. For example, while the Japanese-Americans repre-sented 26.8 percent of Hawaii’s population, they comprised 70.3 percent of the employees of Japanese-owned fi rms. By contrast, Hawaiians comprised 17.2 percent of the state’s population but only 1.7 percent of the employees of Japanese fi rms in Hawaii.⁴⁹
But a 1975 study of employment patterns by ethnicity found much higher representation of Hawaiians and part-Hawaiians in Hawaii’s tourist indus-tries. On Oahu, 15 percent of hotel employees were Hawaiians (and part-Hawaiians); on the Neighbor Islands, it was 24 percent. About the same percentages apply in “other” visitor industries.⁵⁰ Hawaiians made up 16 percent of the food service workers, 25 percent of nonfood service/house-keeping workers, 19 percent of clerical employees, and 12 percent of the managerial and professional employees.⁵¹ Advancement of Native Hawai-ians in management ranks appears not to have improved since the 1970s study.⁵² The president of the Hawaii Hotel Association noted in October 2005 that Native Hawaiians comprised only a scant 10 percent or so of all decision makers in tourism.⁵³
Public criticisms of Japanese investment receded after each investment boom was over. Fortunately, there was neither time nor the will for lawmak-ers to enact laws to curb the infl ow of foreign direct investment to Hawaii.⁵⁴ Numerous real estate antispeculation tax bills were introduced in the State Legislature during the late 1980s and early 1990s, but none passed.⁵⁵ The State’s approach was to try to mitigate the problems that arose from foreign direct investment but not to curb the infl ow of capital into what is widely regarded as a capital-short state. Following the burst of the Japanese eco-nomic bubble in 1991, Japanese investors began to liquidate their tourism-related investments in Hawaii, often at distress prices. Between 2001 and 2004, the dollar volume of Japanese-owned hotels sold totaled more than
1.3 billion.⁵⁶ The liquidation is still in progress. While the Japanese are a much smaller player in the Hawaii hotel business today, the remaining owners still control some of the most prized hotels, such as the Halekulani in Waikiki.