Foreign Tourists and Productivity of the Accommodation Industry

Services have distinct characteristics of simultaneous production and consumption. As a result, capacity utilization is an important index in considering the productivity of the service industries. This paper analyzes quantitatively the effect of foreign tourists on the occupancy rate of the accommodation industry. The major findings of the analysis are as follows. 1) Recent depreciation of the yen has contributed greatly to the increase in the number of visitors from overseas. 2) Increase in the visitors from foreign countries has a positive impact on the occupancy rate of accommodation facilities through temporal smoothing of demand. 3) Solely from this demand smoothing effect, the total factor productivity (TFP) of the accommodation industry has improved by around one percentage point. These results suggest that policies to increase the number of visitors from foreign countries are effective for improving service sector productivity, as well as boosting external demand.

The English version of this paper is 16-E-064.