TOKYO: Spending by foreign and domestic travellers in Japan is increasing as the central government relaxes Covid-related restrictions.
The number of inbound travellers, especially wealthier visitors, is increasing due to the easing of border controls. Duty-free sales to date in December have exceeded pre-pandemic results for the same period at some department stores. And as domestic travel picks up, many hotels are reporting an average daily rate (ADR) topping pre-pandemic levels for December.
On Oct 11, Japan lifted the ban on individual travel for inbound visitors and began to allow visa-free entry from certain countries. The number of inbound visitors in October increased 2.4 times from the previous month to 490,000, according to the Japan National Tourism Organization (JNTO).
Although the number in October was only about 20% that of October 2019, tourists from South Korea firmed back to around 60%. Visitors from Southeast Asia, the US and Europe are also increasing.
High-priced purchases by foreign tourists are increasing thanks to a weaker yen. According to the Japan Department Stores Association, duty-free sales in November at Takashimaya and four other high-end department stores rebounded to between 50% and 90% of sales in November 2019.
Isetan Mitsukoshi Holdings logged a 4% increase in duty-free sales at stores in the Tokyo metropolitan area in the first 2 weeks of December compared with the same period in 2019.
Duty-free sales are picking up on strong demand for high-priced goods such as luxury-brand watches. Foreign visitors spent on average ¥192,000 (US$1,411) per person on shopping in October – nearly three times more than the ¥65,000 for the same month in 2019, according to the association.
At the Matsuya Ginza department store in Tokyo, luxury-brand goods priced at around ¥500,000 have seen brisk sales since the start of November, a sales manager said. Duty-free sales during the first 15 days of December topped those for the same period in 2019 by 5.7% due to an increase in visitors from mainland China, Hong Kong, Macao and Taiwan. “For all of December, sales are likely to exceed pre-Covid levels,” the manager said.
But spending from inbound travellers differs between sectors. The rebound has yet to hit drug stores and other mid-level businesses because travellers from mainland China – who accounted for 30% of foreign tourists before ¥ and were big buyers of cosmetics and daily items – have yet to return.
A major drug store said duty-free sales in November were roughly a quarter of that for the same month in 2019. Recovery is also slow at electronics retailers, which were popular destinations for Chinese tourists before the pandemic.
Hotels and inns are benefiting from both the increase in inbound visitors as well as a government travel subsidy programme. A total of 44.22 million people stayed at hotels and inns across Japan in October – up 38% from a year earlier, according to a JNTO survey. The number of Japanese guests exceeded the October 2019 level.
ADR at hotels and inns is also rising on increased tourist demand. At Palace Hotel Tokyo, ADR has been higher since November than for the same period in 2019. With foreign visitors accounting for more than 60% of guests, the hotel has forecast an all-time monthly high in revenue for December.
Since September, ADR at Dormy Inn, operated by Kyoritsu Maintenance, has remained higher than for the same period in 2019, while hotel occupancy rate has roughly returned to pre-Covid levels. The occupancy rate will top that if inbound tourism continues to increase, an official said.
The number of foreign visitors is expected to continue increasing in 2023 after the government further eases border restrictions. Nomura Research Institute has forecast the number to reach 13.84 million in 2023 – less than the 31.88 million in 2019 but much more than the 1.52 million for the first 10 months of 2022.
Demand for year-end and New Year travel among Japanese will also increase now that ¥ curbs have been mostly lifted. From Dec 23 till Jan 3, about 22.15 million Japanese are expected to travel in Japan or abroad – up 17% from the same period in 2021, according to travel agency JTB.
The domestic travel subsidy programme will restart on Jan 10. “Reservations for personal trips in 2023, including those during the Golden Week holiday season in May, are considerably increasing,” said Eijiro Yamakita, president and CEO of JTB.
“Travel has been the least active consumption sector during the Covid crisis,” said Yoshiki Shinke, senior executive economist at Dai-ichi Life Insurance Research Institute. “Travel will likely ease the impact of price rises and underpin consumption as a whole in light of its large potential demand.”