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Analysis

Japan, at the dawn of its golden days

The WTO estimates that 28.7 million foreign travelers came to Japan in 2017, an increase of 334% since 2010. It is now the 12th most visited country in the world. In comparison, Italy, which shares an identical surface area, ranks 5th with 58.3 million, while France, still the champion of tourism, is slowly approaching the 90 million visitor mark.

Over the last century, France and Japan experienced similar phases of growth and development. With a highly organized feudal system, they shaped a land and societal rules that still exist. Both have a massive influence on their global region (Europe and East Asia) despite great suffering at the end of the Second World War. After losing some credibility in the face of the rise of American and Soviet imperialism, both have gradually shifted from their status as inspiring cultures to that of cultural exceptions.

In the West, Japan is characterized as a country marked by paradoxes, even contradictions because of its modernity and traditions. The Japanese and the French therefore appear to be far apart. But between them reigns a common cultural strangeness. Some of their similarities are illustrated by the great influence of art and the school of thought in their respective societies and their desire to shape a true “way of life”, the various complexities and abundance of their cuisine, a certain etiquette observed by most inhabitants and the unconscious acceptance that their nations are no longer what they once were. Carte touristique du Japon

According to the 2017 Travel & Tourism Competitiveness (T&T) report, Japan leads the Asia-Pacific region, climbing five rungs to 4th place worldwide. International tourists continue to visit Japan for its unique cultural resources and business travel (4th). Japan has some of the world’s most developed transport infrastructure systems and ICT networks (both 10th), which ensure seamless internal connections and access to online information and services. Air connectivity is also well developed (8th) and offers quality service (24th).

In addition, Japan is, overall, open to T&T activities with relatively welcoming trade and investment agreements (35th) although it has a strict visa policy (112th). Moreover, although it is an industrialized country, Japan does not neglect its travel and technology industry. It invests nearly 4.5% of its budget in activities related to the sector and has implemented effective marketing campaigns (27th).

Japan has also succeeded in becoming more cost competitive (94th, up 25 rungs) thanks to a substantial reduction in fuel prices and taxes on air travel, which significantly reduced the cost of travel in the country despite a slight increase in the average cost of accommodations. Improving price competitiveness has been the main driver of Japan’s overall performance, combined with improvements in the promotion of cultural resources and the preservation of natural resources.

Nevertheless, environmental sustainability remains the area where Japan has not yet achieved better results. High particulate emissions (93rd), overfishing (71st) and the increase in the share of threatened wildlife (129th) are serious concerns for both tourism and the country’s sustainability and biodiversity. Top 5 in the Travel & Tourism Competitiveness Index 2017 Ranking

By way of comparison, France holds second place, resisting the repercussions from the terrorist attacks of 2015 and 2016. Although this resulted in losing ground (five rungs) in terms of safety and security, international arrivals remained stable.

Cultural resources (3rd), transport (7th) and air travel (13th) continue to boost France’s competitiveness in T&T. The decline in security and the use of natural resources (13th, down 5 places) was more than offset by a significant decrease in hotel prices and ticket taxes, which improved T&T price competitiveness by 21 places. France has improved its environmental sustainability (17th place, up 6 places), by reducing the direct environmental footprint of sectoral activity and signing more environmental treaties. The business environment also favored investment in the sector with lower construction costs (85th place, up 24 places) and more effective settlement of private disputes through the judicial system (27th place).

Although France has lost revenue in the transport and technology sector over the past two years, it has continued to strengthen its competitiveness fundamentals in this sector, making it more resilient to shocks and preparing it for further growth in the future.

Japan is increasingly attractive

In 1995, 3.3 million travelers went to Japan. That year, it was the 34th most visited country in the world, behind Bulgaria, Ukraine and Belgium. In 2005, 6.7 million people spent at least one night on Japanese soil, placing it 32nd on the list. Five years later, it has risen by one more rung, with total arrivals of 8.6 million foreigners.

In March 2011, the country was hit by the nuclear disaster at Fukushima, which resulted in a decrease in the number of visits to 8.4 million. In spite of this event, annual arrivals rose to more than 20 million, making Japan the fastest growing destination of the decade. Annual arrivals of foreign tourists in Japan

In recent years, global tourism has been booming, driven by the increasing financial accessibility of flights and the rise of the Chinese middle class. But Japan easily surpasses its rivals. Thailand, which is one of its closest competitors in terms of growth, has seen arrivals from overseas increase by 123% since 2010.

Most visited destinations by number of international tourist arrivals (in millions)

First slowdown in tourism since 2013

During the last half of 2018, the number of foreign tourists in Japan fell for the first time in more than five years. An earthquake and a typhoon temporarily interrupted travel and the number of tourists fell by 13.9% in September 2018, according to the Japanese National Tourism Organization. This double blow was the latest in a series of natural disasters, ranging from floods to heat waves that hit the country in summer 2018, a phenomenon that had already weighed on tourism growth (-5.2% in July 2018 and 4.3% in August 2018). This is the first year-on-year increase since January 2013. In the same month, the number of visitors from China, which accounts for the largest share of tourists in Japan, fell by 3.8% while tourism from South Korea fell by 14%.

This slowdown is a concern for the Japanese government, which has made tourism a key component of Japanits economic policy. Indeed, Prime Minister Shinzo Abe aims to attract 40 million foreign tourists on the eve of the Tokyo Olympic Games in 2020. By way of comparison, France wants to reach 100 million tourists by 2020. It should be noted that Japan is also hosting the Rugby World Cup in September 2019.

Paradoxically, several experts acknowledge that tourist arrivals suffer during the summer of the Olympic Games. Indeed, many potential tourists give up on a stay because they fear that the hotels will be full or too expensive. However, the destination benefits from its media exposure. This was the case for Beijing, as well as for Barcelona (1992), London (2012) and certainly for Paris (2024).

What is the country’s appeal?

1. Visa Facilitation

In 2013, the country relaxed visa restrictions for visitors from Thailand, Malaysia, Indonesia, the Philippines and Vietnam. Since 2015, Japan has been slowly easing restrictions on Chinese citizens. In 2018, it became easier for India and Ukraine to get there. A total of 66 nationalities can now visit the country as a visa-free tourist.

2. The expansion of Chinese tourism

In 2000, the Chinese made 10.5 million trips abroad. In 2017, they recorded 145 million trips abroad, an astonishing 1,280% increase in 17 years. In less than two decades, China has moved from being a country for tourism to being a tourist supply market, leaping ahead of the United States. In 2014, China overtook South Korea as Japan’s leading tourist supply market and now provides more than six million visitors annually. By way of comparison, just over a million people travel to Japan from the United States each year. Leading travel destinations (fastest growing since 2010)

3. The devaluation of the yen

One US dollar was worth about 80 yen, on average, in 2012. The value of the US dollar has increased to 98 yen in 2013, 112 yen in 2014 and more than 120 yen in 2015. It is currently around 110 yen. The British pound goes even further, with a pound currently worth about 147 yen, compared to 129 yen in 2012.

What might turn tourists off?

1. Customs repression

Tourism in Japan could be affected by the repression by Chinese customs authorities of returning travelers carrying high-end goods. Companies such as cosmetics manufacturer Shiseido have fallen on the stock market, fearing that Chinese consumers will give up on their travel and spending plans.

2. Overtourism

Rapid growth means strained infrastructure and overcrowding in major cities and leading attractions around the world. Tension is rising between local populations and visitors in destinations such as Barcelona, Venice, Amsterdam, Dubrovnik, Madrid and Mallorca.

Similar problems have also been observed in Japan. In 2018, the Japan Times published an article on what the country’s media call “kankō kōgai”, or “tourist pollution.” Kyoto is the main battleground, they say, with residents claiming that the city is so overrun that they can no longer use local buses or get a reservation at their favorite restaurants. The city’s “miyabi”, a refined atmosphere unique to Kyoto, has been destroyed, they say.

3. Japan’s tourism strategy

In anticipation of the 2020 Olympic Games, Japan is at a pivotal moment where an effective strategy to attract international tourists could have a significant impact on the country.

From 2019, the Japanese government will charge foreign visitors a tax of 1,000 yen (8 euros) to stimulate tourism infrastructure. Meanwhile, the Japanese tourism agency is frantically encouraging tourists to leave the Golden Route between Tokyo and Kyoto and Osaka to explore the remotest parts of the country.

The luxury sector seems to be leading the charge in terms of drawing travelers out of major cities. Several major groups, including Hyatt, Four Seasons, Marriott and Hilton, will open restaurants in less popular destinations by 2020.

Meanwhile, the new Japan Luxury Travel Alliance, comprising Kyoto, Sapporo, Ishikawa Prefecture and the city of Nara, recently launched a marketing campaign to spread the wealth of Western tourism in the country.

This campaign seems to have some impact, but most travellers (especially new ones) still want to discover the skyscrapers of the main cities. Aside from an increase in the popularity of the islands, visitors tend to be too concentrated in large cities: Tokyo, Osaka and Kyoto accounted for 46% of tourist stays in 2017.

Instagram is particularly popular with those looking for destinations off the beaten track. Nagato, located at the southern tip of the main island of Honsha, welcomed more than one million visitors in 2017, or 36 times more in just three years. After CNN profiled the city as one of the “31 most beautiful places in Japan”, images of the local sanctuary began to flood Instagram. The archipelago has proven to be one of Instagram’s most active markets, with the number of users more than doubling in the last two years to more than 20 million. In 2017, Instagram collaborated with the JNTO by introducing a new hashtag #UnknownJapan, which allowed more than 5 million foreign visitors to share their posts.

Okinawa

Located at the southern tip of the island, Okinawa is an island destination that has often been compared to Hawaii. The number of visitors has soared in recent years, rising by 10.5% in 2016 year-on-year to a record 8.77 million, according to data from Okinawa Prefecture. Hawaii, by way of comparison, welcomed 8.93 million tourists in 2016, an increase of 2.9% comparing 2015.

Okinawa Airport is now the sixth busiest airport in Japan with nearly 20 million passengers in 2016, mainly from Tokyo; arrivals from Seoul have increased by 73% and from Taipei by 28%, according to the Japanese Ministry of Transport, Infrastructure and Tourism.

Major hotel groups have opened and continue to open new properties in Okinawa in recent years:

  • Hilton Okinawa Chatan Resort (2015)
  • Hyatt Regency Naha Okinawa (2015)
  • Sheraton Okinawa Sunmarina (2016)
  • Hyatt Regency Seragaki Island Okinawa (2019)
  • Hilton Okinawa Sesoko Resort (2020)
  • Four Seasons Resort and Private Residences Okinawa (2023)

Disney and Universal Studios Japan also plan to use Okinawa as a base for new park themes.

Towards diversification foreign clientele

What is necessary to be a destination open to all yet proud of its unique character? Maybe diversify the visitors’ source countries?

As the middle classes develop, Japan will become a natural destination for other Asian economies. But the country must diversify beyond Asia and open up to the richest tourists, targeting Europe, which represents only 5% of total visitors in 2017, or North America which provides only 6%.  Number of foreign visitors to Japan in 2017

Recognizing that the language barrier may deter those who do not speak Japanese, the government is putting up more signs in English. Similarly, Japan has decided that from 2020 onwards, all secondary school graduates should have a moderate command of English. Locally, the travel industry is responding by providing menus and instructions in several languages and tourist guide regulations are more flexible.

Although Japan has a myriad of welcome initiatives, it should refocus on its number one selling point, which is “exotic but safe”. At a time when a sense of security and safety seems to be a rare commodity, even in developed countries such as France, Japan is a sanctuary.

While large Japanese cities guarantee modern facilities, Japan still has a lot else to offer. However, to exceed expectations beyond exoticism and security, a sustainable and flexible tourism infrastructure must be put in place.

Breakdown of hotels (by category and by region in 2018)

In France, there is no shortage of major projects with the large-scale renovation of the Stade de France, the extension of metro line 17, the construction of the Gare Pleyel, the realisation of the CDG Express and the renovation of the Gare du Nord. Although the Japanese transport network is renowned for its efficiency, it is sometimes difficult to find affordable hotels or rentals. The forthcoming Olympics, used as a leverage effect for investments, should also allow the creation of a new hotel supply and a new service offer around the globe.

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