More than 14.6 million international tourists visited Japan between January and May, according to the Japan National Tourism Organization. Nearly 3.1 million people traveled to the country in March alone, the highest monthly total on record since 1964.
If this trend continues, Japan will surpass the record of 31.9 million tourists in 2019 (before the COVID-19 pandemic).
Total inbound tourism expenditure increased to 1.75 trillion yen (US$10.8 billion) in the first quarter of this year. According to reports, this makes the tourism industry Japan’s second largest “export”, second only to automobiles and ahead of semiconductors and other products. of wealth Calculations and data from Oxford Economics.
Norihiro Yamaguchi, senior Japan economist at Oxford Economics, noted that this is the first time since the last quarter of 2019 that tourism spending has ranked second. Inbound travel all but disappeared during the pandemic but quickly recovered after Japan began easing coronavirus controls in September 2022.
With the yen hitting a record low against the dollar, Japanese tourists now have significant spending power. This makes hotels, sightseeing and family meals more affordable for foreign tourists than before the pandemic.
But Jeremy Bek, global head of Japanese travel platform Rakuten Travel, believes the surge in travel to Japan is not just due to a weak currency.
Visitors now want unique social media experiences, not just food and shopping. “This is Instagram culture, right?” Baker said. “It’s not about what you eat or what you do. What matters is what people see you eating and doing. And Japan is beautiful. There’s a lot of beautiful things on Instagram.
How does a weak yen help tourism?
The yen, long a safe haven for investors during crisis times, has fallen against the dollar. A year ago, one U.S. dollar was worth 140 yen; now the price is about 161 yen.
The Fed’s “longer-term higher” interest rate stance makes the dollar more attractive to investors and puts pressure on many Asian currencies.
Japan has refused to raise interest rates in its decades-long battle against deflation. The Bank of Japan has kept its key interest rate in negative territory even as other central banks try to follow the U.S. central bank’s lead in a rate hike cycle from 2022 to mid-2023.
In March, the Bank of Japan raised interest rates above zero for the first time in 17 years. The rate hike comes after Japanese companies agreed to massive wage hikes, raising hope that Japanese consumers can start spending more and boost the economy.
Japanese businesses generally view a weak yen as a good thing because it reduces the cost of exports and increases the value of profits repatriated overseas. But the yen may now be too weak for Japanese companies’ liking as expensive imports eat into profits and dampen consumer spending.
Even Japan Airlines, a company that relies on travel for revenue, is growing wary of a weak yen as overseas travel becomes prohibitively expensive for many Japanese.
Why does Japan complain about overtourism?
Rakuten Travel is benefiting from Japan’s tourism boom. Bek said bookings for the first quarter of 2024 surged 75% compared to the same quarter in 2019 before the pandemic. Total transaction volume also increased by 200% during the same period.
Japanese government data shows that most tourists come from South Korea, China, Taiwan and Hong Kong.
Baker said tourists are looking for a more authentic, comprehensive experience rather than the main attractions in Tokyo and Osaka. Citing data from Rakuten Travel, Bek said non-metro bookings are growing faster than metro bookings as travelers seek experiences such as kaiseki dinners, hot springs and nature experiences in second- and third-tier cities.
Some Japanese residents have expressed dissatisfaction with the surge in tourism, complaining of overcrowding and rude behavior from tourists. (Several other tourist destinations, including Spain and Greece, are also experiencing an “overtourism” backlash.)
In Kyoto, a major tourist destination, a mayoral candidate was even elected based on complaints from tourists. Koji Matsui launched a campaign against overtourism, citing dissatisfaction with tourists dragging suitcases on crowded public transport.
In another example, the Japanese town of Fujikawaguchiko erected a barrier blocking Mr. Fuji’s famous photo spot. Locals are annoyed by the increasing number of tourists littering, trespassing and breaking traffic rules in search of social media-worthy photos.
Still, tourists haven’t given up on the pursuit of the perfect shot. Baker said people were poking holes in the fence to take photos.
The influx of tourists has prompted some attractions and businesses to consider dual pricing, offering regular prices to Japanese residents and higher prices to tourists.
The city of Himeji is considering asking foreigners to pay more to visit the 400-year-old Himeji Castle, a UNESCO World Heritage Site, ostensibly to fund needed maintenance.
Kyoto Mayor Matsui is pushing to increase tourist fares to ease pressure on public transportation; the city has also launched express sightseeing buses that stop only at major tourist attractions.
However, Baker believes that concerns about overtourism are mainly limited to large cities such as Tokyo, Kyoto and Osaka. Lesser-known cities are not yet “overpopulated,” he said.
Fortunately for tourists, Baker said the hotels he works with are not considering making foreigners pay more. Baker noted that restaurants still have enough inventory to meet demand from inbound and domestic visitors. Even as tourism booms, Japan’s restaurants remain cautious about capacity, he believes.
“They don’t want to repeat the mistakes of COVID-19,” he said. “If they rely too much on international tourists and then everything shuts down, they won’t have any customers.”
