Japan’s tourism poised for U-shaped rebound

Nakamise Shopping street at Sensoji Temple with some people with masks during the outbreak of the coronavirus (COVID-19).

Hospitality experts have expressed confidence that Japan’s tourism industry will enjoy a U-shaped recovery from the devastating impact of the pandemic, thanks to its strong domestic market.

In a RICS-hosted webinar, representatives of JLL and global property agent Savills said local travel would lead recovery, evidenced by the rebound in hotel occupancy in areas within driving distance of major cities.

Experts forecast a swifter recovery for Japan’s tourism sector on the back of a strong domestic segment; locals strolling through Nakamise Shopping Street at Sensoji Temple amid the pandemic pictured

“Japan’s domestic tourism has historically been strong and stable, accounting for 83 per cent of the country’s total tourism spend in 2019,” said Raymond Clement, managing director for hotels in Asia Pacific at Savills.

Takahiro Tsujikawa, head of JLL’s Japan hotels and hospitality group, agreed, adding that “about 80 per cent of lodging demand in Japan is domestic, so we should be able to see a swifter recovery compared to other Asian cities where lodging demand is highly dependent on inbound guests.”

Majority of Japan’s accommodation demand comes from locals: Tsujikawa

In a survey related to Japan’s travel subsidy campaign, 71 per cent of respondents said their number of anticipated trips from July to December 2020 would be the same or higher than before the pandemic.

Japan also has the potential to relocate the spending of outbound travellers who are currently unable to go abroad, which amounted to 3.7 trillion yen (US$34.6 billion) in 2019.

Clement predicts that people will likely restart travelling by visiting nearby destinations that don’t require transport by airplane or train. Tsujikawa agreed, noting that “green shoots” in hotel occupancy can already be seen at locations within a couple of hours’ drive of major cities, including Karuizawa and Hakone near Tokyo, and Itami near Osaka.

Within the hotel sector, Tsujikawa said limited service hotels are “starting to see some recovery in performance” in regional cities, largely driven by business use.

Four- and five-star hotels that targeted primarily the wealthy inbound market can expect a slower recovery. Many are appealing to the high-end domestic market with staycations.

Okinawa, in particular, is tipped to be sold as the destination of choice for those who once chose resort destinations like Hawaii.

Destinations with fewer cases of Covid-19 are likely to experience a swifter recovery, meaning Tokyo is likely to be the slowest to rebound, Tsujikawa said.

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