The emergence of the COVID-19 pandemic provoked the imposition of strict border controls around the globe through 2020 and 2021. In Japan, this resulted in a sharp fall in visitor numbers, from 31.88 million in 2019 to 4.11 million in 2020 and just 240,000 in 2021. In designing post-COVID policies for inbound tourism, Japan should focus on higher added value for visitors.
Inbound Tourism Restarts
During the COVID-19 pandemic, the Japanese government introduced tough border controls to restrict the entry of non-Japanese, while requesting that Japanese people also limit their domestic travel and socializing. The policy on domestic travel was eased from spring 2022, and moves were made toward restarting full-scale tourism starting in October. Specifically, the government launched a campaign of cash incentives to boost domestic tourism, and inbound tourism was encouraged through the lifting of visa and COVID-19 test certificate requirements.
These moves are already reinvigorating both domestic and inbound travel. The latest data shows the total number of Japanese who took domestic overnight trips in September was 38.32 million, an increase of 71% from the same month in the previous year. Japanese domestic tourism consumption totaled ¥5.3 trillion for the July–September quarter, increasing 2.3 times over the same period in 2020, according to data from the Japan Tourism Agency. The number of international visitors to Japan increased 2.4-fold from the previous month in October, exceeding 490,000, as per numbers from the Japan National Tourism Organization. But compared with October 2019, the number of Japanese who took overnight trips was still down 5%, and domestic tourism consumption down by some 20%. Accommodation use by inbound travelers was a whopping 80% lower. Although tourism is recovering, the figures are still far below prepandemic levels.
The increased flow of people has sparked greater activity among businesses and consumers. The government’s travel subsidies proved very popular, and its initial budget was soon exhausted, coupled with complaints from consumers who did not qualify for a subsidy. Inbound tourist numbers, which fell by 90% during the pandemic, have now recovered to around 40% of their prepandemic levels, and large cruise ships are set to return to Japan in the near future. Retail businesses are enjoying brisk sales of luxury goods thanks to the yen’s depreciation. Department stores have increased duty-free and multilingual services and are also offering hotel delivery for purchases. Presently, there is no indication of when tourism will recommence between Japan and China, the origin of the highest proportion of tourists pre-COVID-19. But despite concerns about the eighth wave of the pandemic, the restart of tourism in Japan is beginning to take shape.
The Need to Add Value in Tourism
The Japanese government is currently revising its Tourism Nation Promotion Basic Plan for 2023 to 2025, and has stated that it intends to retain its prepandemic goals of attracting 60 million international tourists in 2030, with related consumption valued at ¥15 trillion. But the pandemic has led to changes in the tourism business and the needs of consumers. As Japan contemplates measures to revitalize its tourism industry, instead of simply aiming to return to the prepandemic status quo, it needs to examine and address the questions that have emerged since the pandemic. One critical issue is how to switch tracks from quantity to quality—that is, how to add value.
There are two major reasons to aim for higher added-value tourism.
Firstly, postpandemic tourism is characterized by the stronger demand of consumers for safety measures. In order to avoid crowding, tours and visits to tourist facilities must be in smaller group sizes, which will result in lower occupancy. We therefore need to break away from conventional mass tourism and increase the profit generated by each individual tourist in order to achieve the same income as before. Per-person prices will need to increase, and this should be met with a commensurate enhancement of service quality and overall value of each experience.
Learning the process of making shimenawa rope, used to mark consecrated spaces at shrines, at the Ōshimenawa Sōsakukan in Iinan, Shimane Prefecture. (Courtesy of the Shimane Prefectural Tourism Federation)
The second reason is the need to secure income for improving the operating environment, including revision of employment conditions and investment in facilities. In regard to employment, the extended restrictions on travel and mingling during the pandemic resulted in a large-scale departure of labor from the tourism industry. According to Ministry of Internal Affairs and Communications data, the accommodation sector employed 510,000 people in August 2022, down 20% from August 2019.
But Teikoku Databank noted that the accommodation and food and beverage sectors rank highest in terms of labor shortages, for both full-time and nonregular (part-time, dispatch, seasonal, and the like) workers, implying that efforts by these businesses to secure staff are not bearing fruit. This can be attributed to the low wages, lack of holidays, and time commitment required by these positions, pointing to the pressing need to reform work conditions. In regard to capital investment, the pandemic spurred digital transformation in the tourism industry, including the expansion of automated check-in machines, cashless payment systems, and AI-based chat systems for customer assistance. This technology meets the demand for contactless services and is effective as a means to tackle the worker shortfall, but its full-scale introduction involves a certain degree of investment.
Industries with the Highest Labor Shortages
|Food and beverage establishments
|Hotels and other accommodation
|Hotels and other accommodation
|Food and beverage establishments
|Recruitment agency staff
|Transportation and warehousing
Note: Data from Teikoku Databank for October 2022.
Defining Higher Added-Value Tourism
What, then, are higher added-value tourism products? Japan already has a reputation for good service, but of course, there is always room for improvement. More imperative is the need to bolster the range of tourism content—specifically in terms of short tours and activities. Post-COVID tourism is shifting from the conventional pattern of visiting famous sights and historic ruins to more relaxed, extended stays in one location. The draw card to attract tourists will be unique, region-specific content to occupy their stay.
Consider adventure tourism, which is currently being promoted by the Japan Tourism Agency. AT is tourism that incorporates a combination of the natural environment, activities, and cultural experiences. More than a simple pleasure trip, AT experiences are designed to deeply inspire tourists, to teach them, to prompt realizations among them, or to expand their horizons. In order to meet such expectations, AT needs to have unique and profound content. A further requirement is a guide who accompanies the travelers and is able to make adjustments according to their interests. The bar for product development is set high, but by adapting local scenery, history, customs, and traditional goods to create tourism resources, hopefully this field can contribute to regional economies.
At present, the JTA is providing support for AT trials across Japan. Hokkaidō has taken the lead in this area, and is providing guidance to other regions. In 2017, the Hokkaidō Bureau of Economy, Trade, and Industry spearheaded the establishment of an AT marketing strategy, and in 2019, it developed an experiential-style digital-art product combining Ainu culture with cutting-edge technology. In 2021, the Adventure Travel World Summit was held online, but it will be held on-site in Hokkaidō in 2023.
Examples of existing AT content include hiking in the forests around Lake Akan and across the lake itself in winter, a snowshoe ice-fishing trip including cooking and dining onsite, a forest and lake shore tour with an Ainu guide, and a performance of folklore and traditional music connected to the local region and its natural environment.
Until now, over 70% of tourists to Japan have come from Asia, so AT, with a high following among Westerners, offers the chance to diversify the mix of visitors, which has been a challenge in the past. Also, it provides communities with the opportunity to leverage their local appeal to gain fans and repeat visitors. Furthermore, it can help these communities to build pride and appreciation locally, and hopefully inspire more people to participate in regional development and tourism management.
AT-style activities help the development of tourism while also supporting preservation of the environment and community ways of life. Post-COVID tourism is seeing an obvious rise in interest in sustainable and responsible tourism globally. As Japan aims to increase its presence as a tourism destination, it is important to come to grips with these global trends as we strive to revitalize our tourism industry.