Japanese enterprises get ready for highly anticipated comeback of tourism

Japan is now among the last rich economies of the world which still have strict border control, and the country is also a cost-effective and alluring resting-place for travelers from abroad. It became all the more pertinent for more than 4000 entities that faced serious difficulties at the beginning of 2020, when retail operating hours were curbed and the country forbade crossing its borders for tourism.

According to data obtained from Nomura Research Institute, in pre-pandemic 2019 the total amount of spending by foreign visitors was estimated to be 4.8 trillion yen, or $33.5 billion. Now it’s important for businesses of Japan to understand what amount of this sum will be spent this time, and how soon it will happen. The country has led the World Economic Forum’s Travel & Tourism Development Index in 2022, and its airline businesses are already expanding their lists of international flights. 

But there is still some ambiguity left. A partial revival of tourism in June, which was conducted with several restrictions, didn’t result in attracting any significant traffic. It created hurdles for tour operators and other tourism-related enterprises in correct assessing of demand. Some companies have enlarged their personnel in expectations of high demand, while others are waiting for evidence that spending on expansion is worth it. The situation is additionally complicated by shortage of employees, as many ex-workers of the industry has left it during the pandemic and are now currently employed in other spheres.

Internal trips are also on the rise, as many people are using the possibility to travel while the prices are low and there are no lines. The tourism sector was flourishing in Japan when the pandemic started, and in 2019 the number of incoming tourists was record high. A limited number of foreigners, who were allowed to visit Japan last year, spent 120 billion yen, which is a small part of the amount spent in the industry three years ago.

Last week, ANA Holdings Inc. stated that they are about to increase international flights and staff to comply with anticipated growth in demand.

Even if there is a full opening of the country’s borders, there’s still little chance that the pre-pandemic performance will be achieved by the Japanese tourism sector, at least until China permits crossing of its borders, which are currently closed due to Chinese Covid Zero policy. More than one third of tourism spending in Japan was attributed to visitors from China before the pandemic.