We Have the Welcome Mat Out, but Fewer Asians Are Coming to Visit

After booking 900 Indonesian tourists in December and seeing only 200 show up, Ritwan Mursalim didn’t think things could get much worse. But they did. Earlier this year, only 400 out of 4,500 Indonesians who booked vacations through American Vacations Inc. made the trip to the United States.

The severity of Indonesia’s economic crisis forced the West Los Angeles company into quick action. American Vacations, which specializes in bringing Asian tourists to the states, laid off four of its 11 employees and is planning to move to a more visible location.

“We never expected this to happen,” said Mursalim, marketing manager for American Vacations, which is experiencing the first major downturn in its seven-year existence. “We know this thing is going to take two to three years before it recovers. We’ll have to find a way to survive.”

The Asian financial crisis is taking a toll on Southern California’s $30-billion tourism industry. Some industry analysts believe businesses that depend on Asian travelers could see a downturn of 20% or more this year and could still be feeling a pinch into the next century.

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The Southland’s booming economy, however, could minimize the losses for many, thanks to rising corporate and leisure travel to California.

But for those who depend on Asian travelers for their livelihood, the turn of events has been painful. Since last fall’s monetary meltdown, tour operators who specialize in travelers from Asian countries have seen bookings evaporate to virtually nothing. But mainstream businesses have been stung as well.

Big hotels near Disneyland are reporting fewer bookings from Asia, which means fewer people visiting the Anaheim theme park too. Retailers from South Coast Plaza in Costa Mesa to Rodeo Drive in Beverly Hills are seeing a slump in sales as the number of big-spending Japanese tourists tails off.

Japan Travel Bureau, the largest seller of U.S. tours from Asia, saw 20% of its bookings to Los Angeles canceled from October through January, a drop not seen since the Northridge earthquake and the riots earlier this decade, said Frank Murakami, who heads the firm’s Los Angeles office.

As a result, many tourist-related businesses are struggling to cope.

* Hebaragi & Lemi Bus Inc., a Los Angeles charter service that caters to South Korean and Japanese tourists, has sold seven buses from its 40-vehicle fleet to pay debts. Business is off 70%, and the company, looking for ways to offset lower revenue, now charters trips to Las Vegas. But that has not generated enough revenue to overcome the loss of foreign travelers, Vice President Charles Oh said.

* The Doubletree Hotel Anaheim, about 2 miles from Disneyland, said the number of guests is off by at least 5%. “We’ve seen a significant falloff of Asian tourism,” said Emmett Steed, regional managing director for Promus Hotels, which owns the Doubletree. “Volume-wise, I don’t think it will be completely absorbed” by tourists from elsewhere. At two other Anaheim-area hotels, the Sheraton and Marriott, management has ramped up marketing efforts in Europe, Canada and South America.

* Gucci’s Beverly Hills store on Rodeo Drive has seen a 30% to 40% decline in the number of well-heeled Japanese tourists, said Greg Stewart, the store’s manager. At South Coast Plaza, the same number of tour buses are bringing fewer Japanese shoppers, said Werner Escher, a mall official.

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The Japanese account for about 1 in every 4 travel dollars spent by foreigners in California. For each day that the Japanese cut back vacation plans, the nation’s tourism industry loses $133 million, according to CIC Research Inc., a firm that compiles tourism figures for state and local governments.

“You’re losing some big spenders, and that will take the cream off the market,” said Jack Kyser, chief economist at Los Angeles County Development Corp. He added that those who do visit may be staying in cheaper hotels than in the past.

Tourism-related businesses in Southern California are hoping that a number of new attractions--the new Getty Center in Brentwood, the Long Beach Aquarium and Disneyland’s remodeled Tomorrowland--will lure enough travelers from elsewhere to offset the slump.

But analysts warn that it’s too early to tell if non-Asian tourists can make up for the shortfall.

Nearly a year of economic chaos has created the worst conditions in Asia in at least three decades. In a situation bearing some resemblance to the U.S. savings and loan crisis of the 1980s, a host of financial institutions have failed, the result of poor lending practices.

The conditions have produced dramatic events. More than 500 people have died in Indonesia in riots as people demanded economic and political reforms. South Koreans have donated gold jewelry to help the government pare its massive debt. And in Japan, a businessman who had fallen $3 million behind in loan payments hanged himself in shame, as did two of his closest friends, apparently out of loyalty.

It is the prolonged downturn in Japan that is of greatest concern to U.S. companies in the tourism business, however.

Business bankruptcies in Japan soared to more than 16,000 last year, the highest number in 11 years. Those companies accrued the highest level of debt since the end of World War II, according to Teikoku Databank Ltd.

If the West Coast’s tourism companies are feeling pain, Japan’s are hurting more. Seventy-nine travel agencies went bankrupt there last year, each losing at least $10 million. And in a survey in February of Japan’s 50 largest travel agencies, sales of overseas tours were off 6.2%, and foreign travel fell 8.6%, according to Travel Journal International.

More than 70 banking and finance operations have closed down across Asia, unemployment has jumped sharply in South Korea, and major airlines have been retrenching, paring routes and delaying or canceling new aircraft deliveries.

That means Asians will not be flocking to other popular Western destinations as they have in the past, analysts said.

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In Hawaii, for example, the number of South Korean and Southeast Asian visitors is projected to drop 80% to 90% this year. The number of Japanese tourists--who once accounted for about a third of the Aloha state’s visitors--has been declining for several years. The number is expected to shrink again this year.

“There’s a conservatism from the Japanese we haven’t seen before,” said Clive Jones, an analyst at Economics Research Associates.

Indeed, the Asian tourist pullback is being felt even in Las Vegas casinos. Mirage Resorts Inc. said earlier this month that a reduction in the number of Asian high-rollers who play baccarat was a major reason that its first-quarter profit was off 30%.

American Vacations has survived so far by going after travelers from other countries, such as Hungary, Germany and Russia. Later this year, the company will expand into South America.

The new business has not made up for what was lost in Asia, but Mursalim said the company has learned a lesson from adversity.

“No matter how good business is in one country,” he said, “we have to diversify.”

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Threat to Tourism

California’s travel economy is healthy for now ...

From 1993 to 1997, travel-related spending in California grew steadily, creating nearly 100,000 new jobs. State and local tax revenue generated through tourism increased more than 30%:

Spending

(In billions)

1997: $61 billion

Jobs

(In thousands)

1997: 673,000

Tax revenue

(In billions)

1997: $3,6 billion

... but fewer Asian travelers are expected in near future

The number of business and tourist travelers visiting the U.S. from five Asian nations is expected to remain below 1997 levels through 2000. Asian travelers to the U.S.; totals for 1998-2000 are projected:

Japan

South Korea

Thailand

Malaysia

Philippines

Source: California Division of Tourism; CIC Research; U.S. Immigration and Naturalization Service. Researched by JANICE JONES DODDS / Los Angeles Times