Hainan, often called 'China's Hawaii', is starting to show its potential for tourism, benefiting as it does from balmy weather, sandy beaches and numerous convention venues. But it faces an array of problems that do not plague the other Hawaii – ranging from transport bottlenecks to government meddling and fall-out from an economic slowdown in nearby Hong Kong.
Tourism already accounts for 16 percent of the gross domestic product of Hainan, an island that otherwise depends on agriculture and processed agricultural goods. In the first half of this year, the island attracted 5.97m visitors, up 7.3 percent from the same period last year, according to the provincial tourism bureau. Most of these were domestic travellers, not big-spending foreigners.
Moreover, the number of visitors from Hong Kong has fallen off 30-40 percent – a trend that is worrying officials. "There was a big drop in the number of travellers from Hong Kong," says Chen Yue, deputy director of the Hainan Tourism Bureau, speaking from Hong Kong where he was looking into ways to turn the situation around.
The drop in Hong Kong visitors was partly offset by a sharp rise in arrivals from South Korea, while there is still some cause for optimism in attracting visitors from Japan and even Russia. For all these travellers, the biggest attraction is the resort of Sanya, at the island's southern tip. "In 1995, even domestic travellers hadn't heard of Sanya," says Melody Xu, assistant general manager of the city's Palm Beach Resort. "Things are different now."
The growth of tourism in Sanya has outpaced that of the island as a whole. The total number of visitors to the resort reached 1.39m in the first half of 2002, up 17 percent, according to the Sanya Tourism Bureau.
Sanya has several beaches but the city's focus is on developing Yalong Bay, which boasts white sand beaches, crystal clear water and a growing list of top hotels. In 1996, it lured the Gloria Hotel Group, followed by the Holiday Inn and a number of domestic hospitality firms. Hotels managed by Sheraton, Hyatt and Shangri-La are all in the planning stages or under construction.
Sanya has attracted investors – as well as visitors – from all over the Mainland. Numerous retreats and guest houses have sprouted up along the city's ocean front. Even the People's Armed Police have put up a swanky hacienda-style retreat for the nation's weary militiamen. However, although the market is growing, it is not growing fast enough to keep pace with all of the new entrants. "The pie is getting bigger but not that much bigger," says James Sun, assistant manager at the Gloria Resort in Yalong Bay. "We are losing market share."
Sanya has other problems too. Hainan was hit hard by a nationwide cutback in the number of late night flights following two recent air disasters, which were ascribed to an overstretched aviation sector with too many tired pilots and exhausted air traffic controllers. While neither accident took place in Hainan, the island had more than its share of late flights to let holidaymakers stretch their weekend getaways. Industry analysts say Sanya airport had 70 flights cancelled in June and only now is service returning to normal.
Other problems, such as a weak legal system and lack of official transparency, are hampering development. At Yalong Bay, for example, the beach is supposed to be public property. But on the beach, right in front of the Holiday Inn, investors in a popular tourist attraction known as Underwater World have built showers and changing rooms for its customers.
Executives at other hotels say there are too many instances of petty harassment from government agencies and semi-official organisations. The Handicapped Association, for example, has been checking to see if hotels comply with local hiring quotas for the handicapped, with a failure to meet the quota resulting in a fine. "We would be happy to hire more handicapped people but it is a question of what the individual can do," says one exasperated executive, who added that the fines were imposed by the association – which had no power to do so – and not by the government.
Other petty shakedowns of foreign hotels include a fire department requirement that hotels buy its oxygen masks for each room and an insistence by the police department that they supply staff uniforms.
Sanya, like much of Hainan, has experienced several bouts of get-rich-quick real estate speculation. These speculative bubbles alarmed Beijing, which eventually clamped down on credit. As a result, many seaside villas and guest houses were abandoned before they were finished. Numerous half-finished buildings stand as empty eyesores while others have been taken over by the army as barracks or by out-of-town workers with no place to live.
The Palm Beach Resort, which bought and remodelled an existing hotel, finished off adjacent buildings that it had no intention of using. That at least meant the seaside view was unspoiled by derelict buildings.
In a more positive vein, hoteliers are eyeing the island's resorts as a perfect venue for conferences and corporate meetings, perhaps the most lucrative part of the tourism market. Corporations don't mind paying higher room rates than those charged to individual travellers. Moreover, conference delegates usually spend more time in the hotel itself, meaning more money is spent there on food and entertainment.
Hotels are reaching out to foreign and domestic companies in Beijing, Shanghai and Guangzhou, making the case that Hainan is an ideal place for corporate meetings – and a not-too-expensive perk for employees. "Everybody is looking at this part of the market," says Sun at the Gloria Resort.
Boao, in the northeastern part of the island, specialises in this end of the market. It is home to the high-profile Boao Asia Forum, a conference that has received top-level support from the government. Jiang Xiaosong, the businessman behind the project, has close personal ties to President Jiang Zemin, who has attended the forum himself, along with Premier Zhu Rongji. Promotional brochures feature other senior officials who have made the journey, including parliament chief Li Peng and Vice Premier Qian Qichen.
Boao's development company has already pumped Yn1.5bn into the project and is building a permanent conference hall. "We're only one-tenth finished at this stage," says company spokesman Wu Huahan. The group's long-term plan calls for 25 hotels and six golf courses on the 42 sq km site.
The Boao forum has spawned some other projects of note. Businessman Pan Shiyi has built the Boao Canal Village nearby, an enclave of striking modernist glass and stone villas. Many of these have been sold but some are expected to function as serviced apartments or a boutique hotel. "We think there's a lot of potential in Boao," says Zhao Jiping, who is supervising the project.
Boao is on an estuary and does not have ocean beaches to rival Sanya's. But it is only an hour and a half's drive from the provincial capital Haikou and is fast establishing itself on the tourist itinerary. "This is lovely," says an enthusiastic traveller by the name of Wang, a government official from Changchun in northeast China. "I'm definitely impressed."
Many domestic visitors come for the thrill of seeing a place where the nation's movers and shakers have stayed. This may not be enough to bring in foreign tourists, however. The Boao Golden Coast Hot Spring Hotel and the Boao Jinjiang Hotel, both managed by domestic companies, are not exactly packing in the crowds. Local tourists may stop for a bite to eat at a seaside restaurant and enjoy a boat ride around the forum complex, but staying at one of these upmarket hotels – where rooms can cost Yn700 per night – is another matter.