Data and analytics company GlobalData has identified disastrous business impact on various tourism-related industries in Japan should a complete ban on attendance be passed for the upcoming Tokyo 2020 Olympic Games.
Although a decision has yet to be made about the acceptance of domestic spectators, GlobalData said the prospect of a complete ban cannot be dismissed.
A complete spectator ban will crush Japan’s lodging, airlines and retail businesses, warns GobalData
Ralph Hollister, travel and tourism analyst at GlobalData, commented: “The prospect of no attendance would take things from bad to worse for Japanese businesses involved in the tourism sector. The wait for the announcement on spectatorship with be agonising for all businesses involved, as domestic attendance would at least allow for the recouping of some losses.”
Hollister said a a no-crowd attendance would hurt Japan’s lodging, airline, and retail industries.
He expects further bankruptcies in the lodging sector to surface in the event of a complete spectator ban, following on from 2020’s 57.3 per cent increase in hotel bankruptcies from the previous year, according to Tokyo Shoko Research.
“Many Japanese hotels were built and refurbished in time for Tokyo 2020. According to GlobalData, the number of hotels that opened in Japan between 2013 (the year that it was announced that Japan would host the Olympics) and 2019 increased by 9.1 per cent, showcasing the investment that has occurred,” said Hollister.
He added: “If the Games are played behind closed doors in 2021, hotel bankruptcies could well exceed 2020 levels, as many smaller businesses will not be able to deal with a second summer of rock-bottom occupancy rates. Additionally, the large hotels built to directly cater for the Olympics will remain empty, leaving stakeholders in the lurch with little return on investment.”
Airlines would also have to brace for deep impact, warned Hollister
“The one-year delay has added to the woes of major airlines operating in Japan, which originally anticipated fleets at full capacity over the summer of 2020,” he commented.
On May 7 this year, Japan Airlines posted an annual net loss of US$2.6 billion, and All Nippon Airways reported its worst ever annual loss of US$3.7 billion for 2020. With overseas spectators having already been barred from the event in 2021, the airlines’ most valuable customers are out of the equation.
Hollister said: “If domestic visitation is also banned, meaningful recovery will look like even less likely. Japan Airlines and All Nippon Airways dominate both domestic and international routes. According to GlobalData, these two industry heavyweights controlled 48.7 per cent of the Japanese airline market in 2019, which also means that they will have taken the most impact from the pandemic on top of the potential impact of no visitation for the Olympics.”
Japan’s retail sector would see reduced return on investment made in anticipation of the Games.
“Many retailers in Tokyo would have been expecting a significant boost to revenues due to visitation created by the Olympics. Alike other industries involved in tourism, the retail sector has invested heavily in the build up to the Olympics. Many new concepts have been trialled to improve retail and touristic experiences for the Games, including mixed-use spaces that offer retail, food stands, coffee shops, art, cultural events and product launches.
“If no visitation is allowed, minimal returns will be seen on this kind of expenditure for the event, further forcing Japanese businesses into the red,” he warned.
Data and analytics company GlobalData has identified disastrous business impact on various tourism-related industries in Japan should a complete ban on attendance be passed for the upcoming Tokyo 2020 Olympic Games.
Although a decision has yet to be made about the acceptance of domestic spectators, GlobalData said the prospect of a complete ban cannot be dismissed.
Ralph Hollister, travel and tourism analyst at GlobalData, commented: “The prospect of no attendance would take things from bad to worse for Japanese businesses involved in the tourism sector. The wait for the announcement on spectatorship with be agonising for all businesses involved, as domestic attendance would at least allow for the recouping of some losses.”
Hollister said a a no-crowd attendance would hurt Japan’s lodging, airline, and retail industries.
He expects further bankruptcies in the lodging sector to surface in the event of a complete spectator ban, following on from 2020’s 57.3 per cent increase in hotel bankruptcies from the previous year, according to Tokyo Shoko Research.
“Many Japanese hotels were built and refurbished in time for Tokyo 2020. According to GlobalData, the number of hotels that opened in Japan between 2013 (the year that it was announced that Japan would host the Olympics) and 2019 increased by 9.1 per cent, showcasing the investment that has occurred,” said Hollister.
He added: “If the Games are played behind closed doors in 2021, hotel bankruptcies could well exceed 2020 levels, as many smaller businesses will not be able to deal with a second summer of rock-bottom occupancy rates. Additionally, the large hotels built to directly cater for the Olympics will remain empty, leaving stakeholders in the lurch with little return on investment.”
Airlines would also have to brace for deep impact, warned Hollister
“The one-year delay has added to the woes of major airlines operating in Japan, which originally anticipated fleets at full capacity over the summer of 2020,” he commented.
On May 7 this year, Japan Airlines posted an annual net loss of US$2.6 billion, and All Nippon Airways reported its worst ever annual loss of US$3.7 billion for 2020. With overseas spectators having already been barred from the event in 2021, the airlines’ most valuable customers are out of the equation.
Hollister said: “If domestic visitation is also banned, meaningful recovery will look like even less likely. Japan Airlines and All Nippon Airways dominate both domestic and international routes. According to GlobalData, these two industry heavyweights controlled 48.7 per cent of the Japanese airline market in 2019, which also means that they will have taken the most impact from the pandemic on top of the potential impact of no visitation for the Olympics.”
Japan’s retail sector would see reduced return on investment made in anticipation of the Games.
“Many retailers in Tokyo would have been expecting a significant boost to revenues due to visitation created by the Olympics. Alike other industries involved in tourism, the retail sector has invested heavily in the build up to the Olympics. Many new concepts have been trialled to improve retail and touristic experiences for the Games, including mixed-use spaces that offer retail, food stands, coffee shops, art, cultural events and product launches.
“If no visitation is allowed, minimal returns will be seen on this kind of expenditure for the event, further forcing Japanese businesses into the red,” he warned.