WORLD PROPERTY CHANNEL ®

Waikiki, Hawaii

Chinese investors see a brand new market opening up for them in Hawaii's hotel industry and Chinese tourists are eager to visit the state as well, but both groups are hamstrung by a bureaucratic bottleneck in obtaining travel visas, according to the Honolulu Star-Advertiser.

A lack of direct flights and monetary policies have also slowed the Chinese presence in Hawaii, both as investors and tourists, the newspaper reports.

Waikiki has been one of several locations the Chinese are looking at.

To get visas to the United States, Chinese must be interviewed in person at a U.S. visa office. The full application process can take months, and many applicants are rejected. The Star-Advertiser reports the Hawaii Tourism Authority expects visa and flight challenges will cause visitors from China this year to fall about 18 percent below their target to 63,300. Next year, HTA has forecast Chinese visitors will rise about 34 percent to 85,000 if charter flights come.

"Visas are still the biggest problem for Hawaii's visitor industry. They are a much bigger problem than direct flights," said C.J. Chen, chief executive officer of BCM International, a Web design, translation and marketing company that works with the isle visitor industry.

Chason Ishii

Visas are the No. 1 hurdle for the real estate market, as well, said Chason Ishii, president of Coldwell Banker Pacific Properties.
 
"It doesn't make much sense to make an investment if they can't come and utilize it on a consistent basis," Ishii said.

Gov. Linda Lingle, who has prioritized easing travel restrictions and direct flights, has said she wants to make another trip to China to get these issues resolved before her term expires in December.

Chen said resolution needs to happen soon.

Hawaii Gov. Linda Lingle

"China's outbound tourism market is exploding and it's shocking how slowly Hawaii is getting Chinese tourists," he said, adding that visitors prefer destinations that don't require visas.

Honolulu-based commercial real estate firm Colliers Monroe Friedlander has worked with three groups this year who are looking to invest in hotels for Chinese tourists, said Mike Hamasu, director of the firm's research and consulting.

"This is a new trend," Hamasu told the Star-Advertiser. He adds that while Hong Kong investors ebbed and flowed in 1997 and other boom periods, mainland Chinese investors were never prevalent in Hawaii.

Mike Hamasu

Chinese business owner and surfer Hongbin "Robin" Wang recently organized a sport s leisure trip to Hawaii for mainland Chinese visitors. He returned to check out the isles' investment potential.

Wang, who owns three China-based companies -- Half Shell, Snowbank and Fitbank -- sells sportswear and organizes sporting trips.

"The luxury travel market is booming for the Chinese outbound market," Wang told the Star-Advertiser  through an interpreter. "We have hopes that if we invest in a hotel, more Chinese will come to Hawaii."

Steve Atherton

NAI Chaney Brooks, a Honolulu commercial real estate company, has made presentations to mainland Chinese investors who own hotels, businesses and factories, said Steve Atherton, NAI Global's Singapore-based managing director for the Asia Pacific and Middle East.

Some Chinese investors are looking at hotels because they "believe that there is a wave of tourists that will be flocking to Hawaii in the very near future from China," Atherton told the Honolulu newspaper.

Atherton, of NAI Global, says prices for hotels in Hawaii appear cheap to Chinese investors. "Like the Japanese of the 1980 bubble era, their 'comparables' will be China assets or 'compared to Shanghai, this is cheap.'"

Significant softness in Hawaii's commercial sector is part of the draw.

Matt Delaney

More than 10 Hawaii hotels have been unable to meet their financial obligations, with more to come, Hamasu said.

"You can buy hotels cheaper than you can build them,"  Matt Delaney, the former chief executive office of Marc Resorts, told the Star-Advertiser. Delaney now runs Hawaii Human Resource Inc. and is chairman of The Hawaii Group.

During the height of Hawaii's visitor industry from 2003 to 2007, hotels were selling for $500,000 to $1 million per room, he said. Now, some can be bought for $200,000 to $300,000 per room, Delaney said.

Dave Erdman

"If investors want to get in on the ground level and capitalize on the financial problems of a hotel, it's a good time to jump in,"  said Hamasu of Colliers Monroe Friedlander.

As a result, Chinese investors may come before visitors, said Dave Erdman, PacRim Marketing's president and chief executive officer.

"This is how the Japanese market and interest in Hawaii initially grew in the 1980s," he said. "Travelers followed investors."

Sachi Braden

Sachi Braden, owner of real estate firm Sachi Braden Hawaii, recalls that while the Japanese were interested in Hawaii real estate in the 1970s, the market did not grow until visas were waived and travelers could bring more money out of the country.

"After the restrictions were lifted, we had the first Asian boom," she told the newspaper.  "It will come with the Chinese, but it's just going to take time." 

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