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Hawaii's $18 billion tourism industry is the latest victim of the US-China trade fight

Key Points
  • The ongoing trade war between the world's two largest economies is threatening to cut off a once-steady flow of Chinese tourists to Hawaii.
  • As of June, Chinese visitor arrivals have dropped by about 36% compared with the same period last year, according to figures provided by the Hawaiian Tourism Authority.
  • In 2018, nearly 10 million travelers from around the world visited the Aloha State's sun-soaked islands, generating $18 billion in tourism. About 20% of those visitors travel from Asia.
The pool at Turtle Bay Resort on Oahu's North Shore.
Amanda Macias | CNBC

KAWELA BAY, HI — A growing cloud of economic anxiety is looming over Hawaii, as the ongoing trade war between the world's two largest economies threatens to cut off a once-steady flow of Chinese tourists.

As of June, Chinese visitor arrivals have dropped by about 36% compared with the same period last year, according to figures provided by the Hawaiian Tourism Authority.

"Hawaii would like to capture more of this lucrative market, but two federal issues diminish our growth opportunities: visa requirements and the Trump administration's antagonistic trade policies. As long as the U.S. puts restrictions on travel and takes on a more combative political posture, the Chinese will choose to vacation elsewhere," Hawaii state Sen. Glenn Wakai told CNBC.

"The Chinese have an appetite to travel, and they do so with fat wallets. Hawaii would like to lay out the welcome beach mat, but we cannot do so if the federal government doesn't unlock the door," he added.

The Asian market is a vital tourism sector for Hawaii, Wakai said.

"One out of every four jobs in Hawaii is directly related to tourism, so any negative impact on demand from Asia could cripple Hawaii's economy," he said.

Last month, President Donald Trump and Chinese President Xi Jinping agreed on the sidelines of the G-20 summit in Japan to restart negotiations and not impose new tariffs on each other's goods. Trade talks collapsed in May, with intellectual property theft proving to be a major sticking point between the two parties.

"We can't let politics get in the way, because at the end of the day, tourism is a major economic revenue generator throughout the world," Mufi Hannemann, president and CEO of the Hawaii Lodging and Tourism Association, told CNBC when asked about the trade war between Washington and Beijing.

Hannemann said that in the past few years there has been a decline in Chinese visitor numbers to Hawaii but that the Trump administration's current policy "only exacerbates the situation."

A view of a beach at Oahu's Kualoa Regional Park.
Amanda Macias | CNBC

In 2018, nearly 10 million travelers from around the world visited the Aloha State's sun-soaked islands, generating $18 billion and employing more than 200,000 people. About 20% of those visitors traveled from Asia, with Japan, Korea and China providing the lion's share.

And while Chinese tourists represent less than 2% of Hawaii's total visitor count, they stay longer and spend more money compared with other Asian travelers. On average, a Chinese tourist stays a little more than eight days and spends approximately $350 a day when vacationing in Hawaii.

"The Chinese certainly have a reputation of being high-end travelers. They like to eat at fine restaurants, they visit upscale shops, and they're adventurous too, since they tend to book excursions and like to move around the island," Hannemann said.

"There is also a lot in Hawaii that lends itself to be very Chinese-friendly in terms of the culture we have here," he said. "It's a place that they can easily identify with, and we offer everything that they like to see when they travel except for gambling. So, it's a market that we know, and the money that is generated from their visits to Hawaii is something that we take very seriously."

"I'm hoping that cooler heads will prevail over this," he added.