A Cautious Reopening on a Bumpy Road
After more than two years of stringent border controls, Japan has finally begun to welcome back international tourists. However, the path to recovering its once-booming tourism industry is proving to be fraught with challenges, as a combination of global economic headwinds, regional geopolitical issues, and domestic struggles cast a shadow over the nation’s reopening.
While the government took a significant step in June 2022 by allowing guided package tours, the initial results have been modest. According to the Japan National Tourism Organization (JNTO), the country welcomed approximately 145,000 foreign visitors in July 2022. This figure, while an improvement from the height of the pandemic, represents a staggering 95.2% decrease compared to the same month in 2019, a record year that saw 31.88 million visitors and 4.8 trillion JPY in tourism spending. The slow start highlights the deep-seated challenges that lie ahead.
Global Headwinds Dampening Travel Enthusiasm
Several international factors are contributing to the sluggish recovery. The ongoing conflict in Ukraine has led to a sharp increase in fuel surcharges, making air travel significantly more expensive. This is compounded by rampant global inflation, which is squeezing household budgets worldwide and forcing many potential travelers to reconsider or downsize their vacation plans.
The Double-Edged Sword of a Weak Yen
The Japanese yen has fallen to multi-decade lows against the US dollar, which in theory should be a major draw for international visitors, making Japan a highly affordable destination. For tourists from North America and Europe, their home currency now stretches much further, offering incredible value for accommodation, dining, and shopping.
However, the weak yen also drives up costs for businesses within Japan that rely on imported goods, including energy and food. This can translate to higher operating costs for hotels and restaurants, partially offsetting the benefits for tourists. Furthermore, it makes outbound travel prohibitively expensive for Japanese residents, stifling a key part of the travel industry ecosystem.
Regional Challenges: The Missing Piece of the Puzzle
A full recovery for Japan’s tourism sector is intrinsically linked to the return of visitors from neighboring East Asian countries, who constituted the majority of inbound tourists before the pandemic.
The Great Wall of China’s Zero-COVID Policy
The most significant missing piece is the Chinese market. In 2019, visitors from mainland China accounted for roughly 30% of all international arrivals and a larger share of total spending. However, Beijing’s strict zero-COVID policy, involving city-wide lockdowns and severe international travel restrictions, means that this crucial source market has effectively vanished. Until this policy is relaxed, a return to pre-pandemic tourism levels remains a distant dream for Japan. Tense political relations with South Korea have also been noted as a potential factor influencing travel patterns in the region.
Domestic Woes: A Crippling Labor Shortage
The challenges are not only external. The Japanese tourism and hospitality industry is facing a severe labor shortage. During the pandemic, countless experienced workers in hotels, restaurants, transportation, and tour operations were laid off or left the industry for more stable employment.
Now, as the country tries to ramp up its capacity, businesses are struggling to rehire staff. This shortage limits the ability of hotels to accept full bookings and restaurants to operate at full hours, creating a bottleneck that prevents the industry from capitalizing on even the current limited demand. Many industry leaders are calling for a clear and decisive roadmap from the government on a full reopening to incentivize workers to return.
The Path Forward: Uncertainty and Hope
Looking ahead, the future of Japan’s tourism industry depends on several key developments. The industry is anxiously awaiting the full reopening of borders, including the resumption of individual, non-guided travel and the reinstatement of visa-waiver programs for many countries. This move is seen as essential to attract the high-spending, independent travelers from Western nations who could help fill the void left by Chinese tour groups.
While the weak yen presents a powerful incentive, the recovery will likely be gradual and uneven. The short-term forecast suggests that Japan will have to rely more on travelers from Europe, North America, and Southeast Asia. A full-scale recovery hinges on the stabilization of the global economy and, most critically, the reopening of China’s borders. Until then, Japan’s tourism industry must navigate this period of profound uncertainty, adapting its strategies to a dramatically changed global travel landscape.
