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Published on : Monday, April 18, 2016
China may be the story for the great outbound travel boom, but its neighbour Japan is the home for inbound visitor growth. Despite being one of the world’s most populous nations, with a high GDP and rich culture, Japan has hardly registered with visitor arrivals. That is quickly changing. Between 2010 and 2015 Japan added 11 million annual visitors. Japan ended 2015 with 19.7 million visitors, five years ahead of its goal to have 20 million visitors in 2020. Tokyo has now doubled its goals: by 2020, Japan wants another 20 million, and then 30 million more in the next decade after that. Before the end of the decade, Japan expects to crack the list of 10 most popular countries for tourism. By 2030, it could be in the top five.
China and other Asian markets are driving most of the growth: in early 2016, they account for 87% of visitor arrivals, up from 62% in 1998. Long haul markets to Europe, North America and Australia/New Zealand have experienced a corresponding decrease. Japan’s new tourism goal is to rebalance and gain stronger growth from these long haul markets. Yet the capacity is not there.
Overall long haul capacity has been reduced over recent years. Virgin Atlantic and Austrian cancelled service while Iberia and LOT enter, yet Air France-KLM and Lufthansa are making steep reductions. American Airlines has added a flight but Delta is withdrawing more long haul capacity in 2016 than any airline. Japan may consider re-evaluating the joint ventures it has approved, or to be more liberal with fifth freedom rights.
In 2011 Japan set out to grow tourism rapidly, as one initiative to improve the economy. In 2010 Japan received only 8.6 million visitors but had planned to grow that to 20 million by 2020 and 30 million by 2030. Those targets proved to be too conservative.
Demand was restrained by onerous visa procedures for Asian countries. Reducing or liberalising those in mainland China and Southeast Asia ushered in growth in visitor arrivals and for airlines in the marketplaces. Other improvements – wifi access, foreign languages, tax-free shopping – were softer touches while all markets benefitted from a weakened Japanese yen. Japan benefitted from improved relations with China, which made Japan an unpopular destination for a while.
Once Japan was essentially willing to let more visitors enter, visitors arrived in numbers well above Japan’s expectations. Japan nearly reached its 2020 goal (20 million arrivals) five years early, with 19.7 million visitor arrivals in 2015. There was talk of Japan boosting its 2020 goal to 30m, but the plan announced at the end of Mar-2016 was to double the goals: from 20 million to 40 million visitors for 2020, and from 30 million to 60 million visitors in 2030.
Japan will need to add 4 million visitors a year through 2020, a shocking sum from the perspective that Japan crossed the 4 million mark in 1997, and then 8 million in 2007. The growth of the past decade must be achieved annually for the next five years. Barring any major incident, Japan can be comfortable (but has work ahead). The additional visitors in 2015 were 6.3 million.
Japan intends to further relax visas for China, the Philippines, India, Russia and Vietnam. Most of the increase in visitors means growth for aviation, but Japan is also eyeing a larger cruise industry. (There are also efforts to boost outbound flows, which will be overshadowed by inbound arrivals).
In 2014 and 2015 it was mainland China that made the largest contribution to increased visitors. Of the additional visitors to Japan in 2014, 36% were Chinese. In 2015, it was 41%. There is further growth to unlock, but also a need to diversify.
The post-2020 environment may need revising. After adding 4 million visitors for the rest of this decade, Japan will need to add half as many (2 million) for the following decade. This will occur after the 2020 Olympics, which Japan hopes will significantly boost its profile.
There are questions about what a tourism industry can, or wants to, handle. On the soft side, there are growing concerns within Japan that the tourism influx is disturbing the quality of life. Elsewhere, Japan’s 60 million target for 2030 would rank it one of the world’s most popular tourism destinations.
Based on UNWTO’s 2014 rankings, only three countries – France, the United States and Spain – had more than 60 million visitors in 2014. This ranking has undergone limited changes, reflecting the disruption Japan wants to bring but also the challenge ahead to have a tourism industry that can go from being insignificant to one of the world’s most powerful.