WTTC Reports Japan’s Tourism Recovery Exceeding Expectations

WTTC Reports Japan’s Tourism Recovery Exceeding Expectations
By James Ruggia

Just nine months after the three-pronged assault by tsunami, earthquake and subsequent nuclear calamity, Japan’s travel and tourism numbers are recovering more swiftly than even the most optimistic projections, according to the World Travel & Tourism Council (WTTC). The WTTC launched the third of four quarterly reports about Japan’s travel and tourism recovery following the Tohoku Tsunami in Japan this year.

According to the report, “The Tohoku Pacific Earthquake and Tsunami: Impact on Travel & Tourism -- Update December 2011,” Japan’s tourism industry has rebounded strongly in the second half of 2011 and more rapidly than previously expected.

The first report, launched at WTTC’s Global Summit in Las Vegas in May, set three recovery scenarios and suggested that the overall impact of the earthquake and tsunami could range from a reduction of ¥0.9 trillion (low-impact scenario) to ¥1.9 trillion (high-impact scenario) in travel and tourism’s contribution to Japan’s GDP in 2011.

In WTTC’s second Japan update report in September 2011, analysis of tourism data showed that the recovery was in line with the low-impact scenario, and more recent analysis shows that domestic and outbound tourism is now back to the pre-March 2011 baseline, with inbound well on the way to recovery.

Updated scenarios, based on this most recent data, suggest that the total negative impact of the earthquake and tsunami to Japan’s GDP will be roughly ¥0.7 trillion and confined largely to 2011 (less than even the most optimistic low-impact scenario prediction immediately after the disaster).

Data from the Japan National Tourism Organization and STR Global also suggest that Japanese domestic and outbound tourism has recovered “losses” to levels consistent with or better than forecasts made prior to the earthquake.

Due to the dominance of domestic tourism relative to inbound tourism, this implies that total Japanese demand and GDP will have recovered by the end of 2011. For the year as a whole, there is a noticeable negative effect, but this should not have any lingering impact in 2012.

This recovery can be attributed to the speed of the restoration of basic infrastructure immediately after the earthquake, and has been supported by the ongoing appreciation of the yen.

Furthermore, airline data from Japan Airlines and All Nippon Airways suggest a quicker recovery in demand for long-haul destinations than for travel to other Asian destinations. This is in contrast to the inbound trends and may be due to a fundamental change in the pattern of demand.

Inbound travel has yet to fully recover and for 2011 as a whole, foreign visitor arrivals are expected to be around 25 percent lower than in 2010. Arrivals continue to be in line with WTTC’s previous low-impact scenario, which states that international tourist arrivals will recover in numbers by early 2012.

This is partly the result of growth in short-haul arrivals -- by October, arrivals from Hong Kong, China and Taiwan were back to, or above, October 2010 levels -- and backed by strong performance in the Indian and Thai markets, although the latter has dropped off due to the severe flooding in Thailand.

For long-haul markets, and especially European sources, the trend over recent months also appears to have been upwards, but improvement has been slower partly due to the eurozone debt crisis as well as some residual nervousness regarding nuclear safety. The WTTC’s 12th Global Summit will be held in Sendai and Tokyo, April 16 to 19, 2012. The final Japan update report will be a “one year after” review launched in March 2012.