RIETI Report July 2016

Inbound Tourism Boom and Beyond: Travelers exploring everyday life in Japan

Japan registered a travel surplus of about 1.1 trillion yen in 2015, marking the first black ink in 53 years. The number of inbound tourists increased by 47.1% to 19.7 million in 2015, outnumbering outbound tourists for the first time in 45 years, and foreign tourists spent a record 3.4 trillion yen, up roughly 70% from 2014. In the July issue of the RIETI Report, we present the column "Inbound Tourism Boom and Beyond: Travelers exploring everyday life in Japan" by Senior Fellow Yoko Konishi, where she explains Japan's booming tourist industry in recent years.

Konishi first explains the background of the efforts made by the Japanese government to boost tourism, starting with the Visit Japan campaign in 2013 as well as other tourism-friendly measures introduced in recent years. She then describes the heavy dependence of inbound tourism on Asian economies, most notably that 83% of all tourists are from East Asia, Southeast Asia, and India combined. As such tourists are now expressing more interest in experiencing daily life in Japan apart from group tours, multilingual signs and warnings on matters that could negatively impact foreign tourists' experience is necessary, as well as technology that can help them in their travels. Finally, Konishi discusses the significant ripple effects of inbound tourism that could occur on a wide range of industries in Japan, including transportation, accommodation, and hospitality, and that the government and businesses must continue to act proactively to make the tourism sector resilient against uncontrollable external fluctuations. If Japan can successfully turn the inbound tourism boom into a spring board for expanding much-needed domestic demand, acquiring excellent talents, and promoting the growth of new industries, a different scenario for the future of Japan would begin to emerge on the horizon.

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Inbound Tourism Boom and Beyond: Travelers exploring everyday life in Japan

KONISHI YokoSenior Fellow, RIETI

First travel surplus in 53 years

Japan registered a travel surplus of about 1.1 trillion yen in 2015, marking the first black ink in 53 years. The balance of payments in tourism refers to the difference between the amount of expenditures by inbound tourists in a country (receipts) and that of its own residents on travel abroad (payments), excluding travel expenses. The fact that Japan logged a travel surplus suggests its growing competitiveness as an exporter of tourism. According to the Japan National Tourism Organization (JNTO), the number of inbound tourists increased by 47.1% to 19.7 million in 2015, outnumbering outbound tourists for the first time in 45 years. Meanwhile, the Japan Tourism Agency (JTA)'s survey found that foreign tourists spent a record 3.4 trillion yen on shopping, accommodation, meals, and so forth, up roughly 70% from 2014.

What explains Japan's booming tourist industry in recent years? The Japanese government launched its Visit Japan Campaign in 2003, which has led to a steady increase in the number of foreign visitors. But to explain the rapid increase in inbound tourists in recent years, we need to focus on developments since 2013, namely, changes in the overall economy and initiatives undertaken by the government and the private sector. A sudden depreciation of the yen in 2013 boosted expectations for a rise in the number of inbound tourists. This coincided with the government's move to relax visa rules for visitors from Southeast Asian countries and China. Other measures designed to improve the tourism infrastructure include allocating greater portions of airport capacity to international flights, increasing domestic flight routes served by low-cost carriers, and simplifying the passport inspection process for those travelling on cruise ships, which are increasingly visiting Japanese ports. Furthermore, against the backdrop of remarkable economic development, more households in Southeast Asia and China are advancing into the middle and affluent classes, and their rising income translates into greater tourism demand. In response, the Japanese government in 2014 expanded the scope of duty-free items to all general goods including consumables, prompting a rapid increase in the number of duty-free shops not only in the Tokyo metropolitan area but also in other regions across the country. These steps have improved convenience for travelers and helped them save time and money.

To read the full text
http://www.rieti.go.jp/en/columns/a01_0450.html

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