Foreign visitors to Japan, their spending, hit record high in 2024
Commentary:
Japan needs tourists to spend as much as they can as domestic spending in Japan is never good enough to really help the economy grow.
The challenge is Japanese consumers just aren't the big spenders like western consumers are, as they are more savers than spenders.
Foreign tourists, for the most part is taxed like all transaction in Japan, except for those who take advantage of the 10 percent tax break, but the red-tape related to getting that 10 percent break on can be cumbersome at times.
The weak Japanese yen is a boom for foreign tourists as their purchasing power increases as the yen gets weaker.
The Bank of Japan notices that the weak yen is both a positive and negative for the Japanese economy, but as 34 million foreign tourists took advantage of the weak yen, it highly unlikely that the BOJ is going to do anything significant to make the yen stronger.
The negative part of the weak yen is it increases the price of imports to Japan as Japan is a relatively resource poor country and has to import much of what it needs, which means as the yen gets weaker import prices get higher.
I lived in South Korea for many years and before the pandemic getting relatively low price tickets was very easy, but since the pandemic ticket prices to Japan has doubled and almost tripled with all flight being full.
South Korean for a long time had some issues with Japan as their is some not so good history between the two countries, which for a long time limited the number of South Koreans going to Japan.
But as ticket prices, globally, have gone up significantly, the flight from Seoul South Korea to Tokyo Japan is only about 2 hours which makes for a short trip to take and even weekend trips are very common.
Chinese tourists used to be the largest foreign tour group to Japan, but flight between the two countries have not gone back to normal yet, as flight are still somewhat limited due to the pandemic hangover.
Hotel prices in Japan has increased significantly as I used to a twin for less than $100 dollars a night but those days are long gone in Japan as even singles are becoming very expensive or not cheap anymore.
Of course as with anything related to supply and demand as demand increases prices will naturally increase and with 34 million foreign tourists entering Japan, Japanese hotels are taking advantage of the situation and increasing hotel prices and at the same time maybe making up for all of the loses the endured during the pandemic.
Hotel accommodations are always going to be one of the largest expenses in Japan as you can limit other costs such as shopping and food.
Yes, foreign tourism in Japan has become an economic driver much like Japanese car exports which significantly helps economic growth in Japan.
The Bank of Japan is not going to do anything that might dampen the enthusiasm of foreign tourists going to Japan as the BOJ now understands that foreign tourists are a strong economic driver for the Japanese economy.
However, mostly in Kyoto, a very popular tourist destination in Japan, there is concern for over-tourism as there is now talk of taxing tourists to reduce the congestion and trash in the Kyoto area.
If the tourism tax becomes too much for tourists they might react negatively to the tax and not go to certain tourist areas so cities in Japan need to be very careful and try to find the right balance between protecting the community and taxing foreign tourists.
At the same time foreign tourists need to respect the the laws including Japanese society/culture and not do things that might cause Japanese people and society to get upset with foreign tourists who don't have any respect for Japanese culture or society.
It seems Japan is now trying to compete with Spain and France as the most popular tourist destination globally.
But Japan has Osaka and Tokyo might not be able to accommodate 60 million tourists and yes, Japan need to get foreign visitors to travel to other areas in Japan beside the two main metro areas.
Japan is in the middle of a significant labor shortage at this time and finding enough workers for hotels, restaurants, along major tourist areas is going to be challenging not to mention getting enough workers for small regional airports in Japan.
High-end travelers are always a goal of any country, but not all travelers are high-end as most are just normal people with normal incomes globally.
Hotels, restaurants, and other service sector and hospitality companies will need to significantly increase the wages they pay in Japan to attract the workers they need as Japanese workers now have a choice of many jobs,due to a labor shortage, and they are not going to take a minimal wage job that sometimes comes with hospitality work or service sector work.
Have a nice day!
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