Hainan on its way to becoming an international resort destination

Back in December 2009, the Chinese government announced an ambitious plan for Hainan, the country’s only tropical province. It was to become “an international resort destination on par with Hawaii” by 2020.

Sure enough, this beautiful island in the South China Sea, boasting everything from volcanic mountains and tropical rainforests to pristine sandy beaches and hot springs, has seen its tourism sector boom. Last year the number of hotel rooms doubled and Hainan welcomed more than 36m visitors. According to the World Travel and Tourism Council, the sector will register double digits growth every year until 2020. But so far a key ingredient of the government’s goal has been largely missing: the international visitors. Travel to the island is a mainly domestic affair. Over 97% of visitors last year were Chinese and, accordingly, most of its attractions are geared towards them.

This is something that Lu Zhiyuan, director-general of Hainan’s tourism development commission, wants to change. “By 2009 we achieved the goal for the island to become a major domestic destination, now we want to expand internationally,” he says during an event to launch an international competition for couples to win a “dream honeymoon” trip to Hainan (the bridal business is big: more than 500 wedding organisers operate on the island).

Aside from blushing brides, business travel is a particular focus. Hainan, home to about 9m people, is the largest of China’s special economic zones, which have more free market-oriented policies than the rest of the country. In April, the local government unveiled a slew of new measures to boost foreign trade further. According to Mr Zhiyuan, it is working to ease visa requirements for expats and to establish international schools for their families. ACanadian international school was opened in 2011 in Sanya, the southernmost city on the island.

It is trying to appeal in other ways too. The number of five-star hotels has nearly doubled in the past three years to 33. Many of the top international brands now have a presence, including Starwood, Marriott, Hilton and InterContinental Hotels Group. In 2011 the events business received a boost when a large convention centre costing $230m opened in Haikou, the island's capital. Hainan hosted over 10,000 conferences and events last year including corporate shindigs for brands like Samsung and BMW. It is also the permanent base for the annual Boao Forum for Asia, which mimics the World Economic Forum in Davos.

Still, most events are regional in scope and do not attract many foreigners. Thus, the number of international arrivals—fewer than half a million in 2013—pales in comparison with the 3m who visited Hawaii, the American island it cites as its role model. Indeed Hainan’s international arrivals, most of whom come from Russia and neighbouring Asian countries, actually fell by 7% in 2013, compared with 2012, according to a report by Euromonitor International, a market research firm.

One reason for such modest demand is that Hainan is simply out of reach for many. Only six international airports are directly linked with the island and the sole non-stop European flight is from Moscow. The journey from London, with a transfer in Beijing, takes more than 16 hours. Just 6,000 Britons visited Hainan last year, and most those already live in the region.

Mr Zhiyuan concedes that “the lack of foreign flight connections is hindering the international expansion”. Therefore, he says, the local government is giving 300m yuan ($50m) in subsidies to airlines flying to Hainan. It is also easing visa procedures. Residents of over 100 countries, including America and Britain, are now able to get a visa upon arrival the airport, the only province in China to allow such a practice.

Attracting more international travellers is important for China’s tourism sector, particularly as the country registered a 3% decline in the number of foreign visitors last year according to Euromonitor. But selling China as a land of tropical beaches and surfing vacations will be tough. Before it dreams of emulating Hawaii, Hainan must compete against more established neighbours like Thailand, Vietnam and Malaysia. That will not be easy.

SOURCE: Economist