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Chinese shop for hotels

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  • STAR-ADVERTISER / FEB. 27, 2010
    Chinese investors are starting to show an interest in buying hotels in Hawaii and have looked at properties in Waikiki. Below, Hongbin "Robin" Wang, owner of China-based Snowbank Inc., a sports travel company, and Half Shell, a surfing clothing line, was in Honolulu last week scouting out hotels to possibly purchase and enjoying the surf.

Chinese business owner and surfer Hongbin "Robin" Wang said he was looking for waves to ride and hotels to buy during a trip this month to Hawaii.

Wang, who owns three China-based companies — Half Shell, Snowbank and Fitbank — sells sportswear and organizes sporting trips. Last year, he organized a sport s leisure trip to Hawaii for mainland Chinese visitors and based on the positive experience returned to check out the isles’ investment potential.

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

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 said.

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 said, adding that while Hong Kong investors ebbed and flowed in 1997 and other boom periods, mainland Chinese investors were never prevalent in Hawaii.

During his seven-day stay on Oahu, Wang and his wife, Qian "Olivia" Lin, discussed purchasing a Waikiki hotel with the managers of a three-star leasehold hotel on Kalakaua Avenue with more than 600 rooms. They said they will return to Hawaii with financial backers by the Chinese New Year to look at that property and others.

While Hawaii is trying to capitalize on China’s booming economy, which just overtook Japan’s as the second largest in the world, investors like Wang have not been prevalent in the Hawaii market due in part to restrictions that make it hard for Chinese to visit the state. Those include visa issues, a lack of direct flights and monetary policies.

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 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.

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.

"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.

But Wang and other investors are optimistic that the gates will open and that once they do, visitors will frequent the isles.

"We hope in 10 years that as many Chinese travelers will be coming to Hawaii as Japanese," he said.

Atherton, of NAI Global, said 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.

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," said Matt Delaney, the former chief executive office of Marc Resorts who 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.

"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," Hamasu said.

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, 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 said. "It will come with the Chinese, but it’s just going to take time."


U.S. West $133.30 2,718,818 1,383,921
U.S. East $165.60 1,561,468 829,524
Japan $268.30 1,168,080 570,390
Canada $143.00 346,583 215,783
China $285.60 41,924 30,542

Source: Hawaii Tourism Authority STAR-ADVERTISER

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