Japanese Tourism Flows One Year On from the Disaster

On 11 March 2011, a 9.0 magnitude earthquake struck off the northeastern coast of Japan, triggering a 10 metre high tsunami which engulfed towns and villages along the coast. The tsunami also caused the meltdown of three reactors at the Fukushima Daiichi Nuclear Power Plant. The government confirmed that the disaster led to 15,844 deaths, 5,890 injured, 3,541 people missing and 125,000 buildings being damaged or destroyed. Euromonitor International examines the impact of the disaster one year later on tourism flows and evaluates the tourist industry’s prospects.

Dramatic decline in arrivals in 2011

2010 marked a record high for inbound tourism to Japan, with 8.5 million arrivals. However, the events of March 2011 caused that number to decline by 28.1% in 2011, slightly higher than the 21% drop predicted by Euromonitor International in its worst case scenario. Tweet this stat! Arrivals continued to drop every month throughout the year compared to the same period in 2010. Business travel, however, declined by just 14% compared to the 31% drop in leisure travel. Some leisure travellers continued to worry about a nuclear disaster while most were deterred by the strong yen, which appreciated by around 10% against the US dollar in 2011.

In July 2011, the Japanese government began issuing multiple-entry visas to Chinese tourists. The requirements for this visa are unique. Compared with the standard visa permitting a stay of up to 15 days, the new visa allows the holder to stay for up to 90 days as well as permits re-entry into Japan within the permitted duration. The unique requirement is that a visit to Okinawa is compulsory for at least one night. This new multiple-entry visa is only issued to professional people with a high level of income. Chinese tourists, in particular, were fearful of a nuclear disaster and the number of Chinese arrivals continued to fall month by month, with drops of more than 40%, throughout 2011 until September. It was only in November when the number of Chinese tourists experienced an increase compared to the same month in 2010. This was likely helped by the new multiple-entry visa but also a weak comparison as the number of Chinese arrivals plunged in November 2010 amid heightened diplomatic tension in the wake of the Chinese fishing boat collision incident.

Japan Arrivals by Country 2010/2011

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Source: Euromonitor International

Japan Arrivals by Business vs Leisure 2010/2011

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Source: Euromonitor International

China, South Korea and Taiwan to drive arrivals

Euromonitor International predicts that the number of arrivals will surpass its 2010 record figure in 2014. This will be driven by strong growth in arrivals from China, South Korea and Taiwan. Combined, the three countries will account for 65% of the growth in arrivals, with China leading the way. This recovery will be driven by leisure tourists, the number of which is expected to increase by 67% over 2011-2016. The relaxation of visa requirements for Chinese travellers and promotional campaigns from the Japan National Tourism Organization are likely to drive more leisure tourists to Japan in the future.

Japan Forecast Arrivals 2011/2016

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Source: Euromonitor International

Slight decline in domestic tourism in 2011

During the first two months after the earthquake, the nation voluntarily withdrew from leisure activities as a mark of respect for those who had died and were suffering due to March’s disaster. Public festivals, music concerts and sports matches were cancelled while people also restricted their social activities, cancelling holidays and tending to stay at home. This practice, called Jishuku in Japanese, gradually faded. In fact, travel companies experienced booming sales of domestic holidays in August as many people had cancelled their holidays during the Golden Week period (29 April-5 May in 2011) and so had extra time and money for holidays in August. As a result, in 2011, the number of domestic travellers fell by 5.1% on the previous year, to 283 million. The leisure category experienced a heavier decline of 5.4% than the 3.6% drop registered by business.

However, many people remained wary of leaks from the Fukushima Daiichi Nuclear Power Plant, and the popularity of the Tohoku area did not recover during the year. In 2011, the number of domestic travellers to Tohoku fell by 47.2% on the previous year, while Chugoku, Kinki, Tokai and Kyushu, which are relatively far away from Tohoku, enjoyed a growing number of travellers. Kanto, where Tokyo is located, saw a decrease of 4.1%.

Domestic Trips by Destination in Japan 2010/2011

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Source: Euromonitor International

Stagnation predicted for domestic tourism

Domestic tourism in Japan will continue to steadily recover following the March disaster, with the number of domestic travellers set to rebound to 305 million in 2016. Tweet this stat! Domestic trips will not recover to their 2010 level until 2014, but it is important to note that the peak year for domestic trips was 2006, reaching 338 million.

There are a number of factors that will continue to prevent domestic tourism from making further inroads. Around half of travellers only stay one night and 25% of travellers only two nights, so there are few domestic tourists taking long holidays. Japanese travellers feel that travel accommodation and transportation within Japan are relatively expensive so they are travelling internationally, particularly thanks to the strong yen, on package holidays to China and South Asian countries. Another factor is the declining population, which means that there are fewer people to take domestic trips.

Tohoku will show a significant increase of 64.3% over 2011-2016, to 26 million domestic travellers in 2016. However, this is still four million below the number of domestic visitors to Tohoku in 2010 before the earthquake hit the region.

Domestic Trips by Purpose of Visit in Japan

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Source: Euromonitor International

Strong recovery in departures in 2011

Jishuku also impacted outbound tourism, but the decline was not as severe as that seen in incoming tourism. Unsurprisingly, the heaviest decline was seen in March when departures fell by 9.1% compared to March 2010. The declines ceased in July during the summer holiday season. As a result, total departures only fell by 1.2% in 2011, much better than the best case scenario of a 9% decline predicted by Euromonitor International. The increasing strength of the yen helped boost departures. Furthermore, Thailand began to recover after political upheaval in the country had led to a decline in number of Japanese tourists since 2008. Thailand is a popular country among both Japanese leisure tourists, thanks to its rich culture, food and easy to access from Japan, and business travellers. Many companies see business opportunities in Thailand which is enjoying strong GDP growth and has a low employment rate.

Departures by Destination from Japan 2010/2011

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Source: Euromonitor International

Strong growth expected for departures but threats loom

Supported by growth in the over 60s age group, with these being the core international travellers, the number of departures will likely show healthy growth, increasing by 20% to reach 19.7 million trips in 2016. This will also be helped by the strength of the yen and the launch of new low-cost carriers such as Peach Aviation (ANA affiliated), Air Asia Japan (ANA affiliated) and Jetstar Japan (JAL affiliated).

However, there are two headwinds that may undermine growth in departures – a decline in the population and a stagnant economy. A decline in the population means that there are fewer people to take trips, while Japan’s economic malaise has caused people in their 20s to shun international travel for financial reasons.

Departures by Purpose of Visit from Japan 2011/2016

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Source: Euromonitor International