MARKET INSIGHT: INTEGRATED RESORTS: JAPAN
Japan struggles with the
2021 saw a huge drop down to 245,800 due to a surge in infections. Last year saw some recovery with 3.8 million visitors in 2022.
Te Japan National Tourism Organisation predicts 20 million visitors will come to Japan this year following three years of ‘suppressed demand’ although it is thought international travel demand won’t recover until about 2025 at least.
Te government initially predicted that 2020 would see 40 million tourists with the Tokyo Olympics scheduled and by 2030 the country would welcome 60 million tourists with ¥15 trillion in travel expenditure. However, as the pandemic began Japan closed its borders to visitors in a stringent Covid restriction policy which has lasted more than two years.
Japan implemented some of the world’s strictest pandemic control rules. Most tourist attractions in Japan were closed during the first wave of infections in spring 2020 and then closed again during subsequent waves.
In October 2022 the country relaxed its restrictions for foreign residents and business travellers but introduced a limit on daily foreign arrivals which was initially 20,000, later increased to 50,000, plus visa requirements and a rule requiring travellers to book via travel agents. Tey divided other countries into three risk categories to determine whether visitors could bypass quarantine measures.
The government initially
predicted that 2020 would see 40 million tourists with the Tokyo Olympics scheduled and by 2030 the country would welcome 60 million tourists with ¥15 trillion in travel expenditure. However, as the pandemic began Japan closed its borders to visitors in a stringent Covid restriction policy which has lasted more than two years. Japan implemented some of the world’s strictest pandemic control rules. Most tourist attractions in Japan were closed in spring 2020 and then closed again during subsequent waves.
Tourism arrivals fell by more than 90 per cent in 2020 practically wiping out inbound tourism and in 2021 amid a surge in infections a near- blanket ban was introduced even seeing overseas Japanese workers and students effectively locked out of the country and unable to return.
As an insular and culturally conservative country, it instigated what some said was an ‘overly aggressive’ approach to its borders.
Japan has also only just lifted its three-year docking ban on international cruise ships which sees around 2.5 million visitors alone coming to shore annually whilst Narita International Airport saw around 15.42 million terminal passengers last year - still a far cry from the 44.3 million pre-Covid in 2019 but an increase from 5.24 million in 2021.
Te knock-on effect has also taken its toll. Hotel employment fell by 22 per cent between 2019 and 2021 whilst shops and hotels have been hugely impacted. Closures have meant hospitality workers who were out of work have since found positions elsewhere and there are now staff shortages.
REPERCUSSIONS AND RECOVERY
Tere has been huge pressure on the government to lift restrictions to help the country recover from the pandemic. Japan is the world’s third biggest economy but has seen a slower recovery post Covid than most other countries. Te drop in tourism coupled with falling exports, an increased consumption tax, reduced customer spending, weak yen, and growing national debt, are all issues.
Prime Minister Fumio Kishida has said his top priority is now formulating new economic measures and rebuilding the economy. His focus is also on increasing military spending and child-care benefits in a bid to boost declining birth rates in Japan.
Fumio Kishida assumed office in October 2021. He previously served as Minister for Foreign Affairs from 2012 until 2017 and as acting Minister of Defence in 2017.
Following the resignation of Yoshide Suga in September 2021 just a year after elections, Kishida defeated Taro Kono to become the leader of the Liberal Democratic Party replacing Suga.
Suga replaced Abe after he was forced to retire due to ill health. He took over at an extremely difficult time as Japan dealt with the pandemic.
Kishida has been supportive of the country’s efforts to open a casino market. He chaired the Policy Research Council of the LDP when the party passed its IR Implementation Act in 2018.
At the moment Japan is in a state of limbo. Despite becoming the world’s third largest
economy during the last few decades the country has been struggling with a sluggish economy. Te bubble era of the mid-1980s is long gone and after the Tokyo stock market collapsed in the early 1990s property prices fell and have yet to recover.
Japan struggles with the desire to return to its heyday years of prosperity versus its resistance to change and an attachment to its past. It has an ageing population with a third of the population over 60, a drop in birth rate, and a huge public debt issue.
Te IMF predicts Japan’s economy is expected to grow at 1.8 per cent this year. Te country narrowly averted a recession at the end of last year. Private consumption makes up more than half of the country’s GDP, and this is currently weak only growing by 0.3 per cent last year.
After touching a 41-year high of 4.2 per cent inflation in January, core consumer inflation is above three per cent as companies hike prices in response to the rise in raw material costs.
In an effort to boost household purchasing power, the government is urging firms to increase workers’ wages whilst a subsidy package was introduced in October last year for petrol and utility costs in a bid to counter rising inflation.
Japan’s labour unions meet every spring at the ‘shunto’ talks to discuss improvement in working conditions. Tere’s a preliminary agreement to raise overall wages by 3.8 per cent – the most since 1993. Tis should also help the labour shortages which are said to be impacting more than half of the companies in Japan.
desire to return to its heyday years of prosperity versus its resistance to change and an attachment to its past. It has an ageing population with a third of the population over 60, a drop in birth rate, and a huge public debt issue. The IMF predicts Japan’s
economy is expected to grow at 1.8 per cent this year. The country narrowly averted a recession at the end of last year. Private consumption makes up more than half of the country’s GDP, and this is currently weak only growing by 0.3 per cent last year.
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