Japan’s tourism sector has logged record growth in part due to Chinese tourists, but things are changing. — Reuters
Japan could lose out on as much as US$1.2bil (RM4.97bil) in visitor spending between now and the end of the year as would-be travellers from China cancel their trips due to a worsening diplomatic spat.
Around 30% of the 1.44 million trips to Japan from China planned through the end of December have been cancelled since Beijing advised citizens to avoid travelling to their Asian neighbour, according to figures from China Trading Desk.
Roughly 70% of the drop comes from near-term departures being cancelled or delayed, while new bookings haven’t materialised, according to the market researcher that specialises in travel data.
That’s set to remove at least US$500mil (RM2.073bil) in spending from Japan, though the figure could rise to US$1.2bil, said Subramania Bhatt, chief executive officer of China Trading Desk. His calculations are based on estimates that Chinese tourists spend over US$900mil (RM3.731bil) a month as well as data on Chinese overseas spending from UnionPay and other financial service companies.
Japan has been left facing a major hit at a delicate time for its economy after remarks by Prime Minister Sanae Takaichi that linked the use of military force in any Taiwan conflict with the potential deployment of Japanese troops. The retaliation from Beijing, which has also suspended seafood imports from its neighbour, now threatens to ripple through its economically significant tourism sector, which counts China as its biggest source of visitors.
“We’re seeing a very sharp shock to Japan demand out of China,” Bhatt said, noting that the fallout of the current spat may differ from previous times of diplomatic strain.
“The current notice explicitly discouraging trips to Japan is a noticeably stronger stance than we have seen in recent years.”
While there’s been a raft of cancellations, some travellers are choosing to re-route their holiday plans. Singapore and South Korea have seen new bookings increase as much as 15% over the last few days, while Thailand, Malaysia and Vietnam are heading for growth of as much as 11% week-on-week, according to Bhatt.
Tour operators are already acting on the advice to stay away. China Trading Desk estimates group and package tours account for up to half of the lost travel volume, with individual leisure trips making up as much as 22%. Most Chinese airlines, as well as Cathay Pacific Airways, are waiving cancellation fees on tickets to Japan, accelerating cancellations.
At least two state-owned Chinese travel agencies have scrapped group bookings that were made months in advance, in a move that was aimed at protecting them against potential losses amid policy uncertainty and shifting sentiment, Bloomberg News has reported, citing people familiar with the matter.
Chinese airlines have also started to cancel flights to Japan, data provided by flight scheduling data service AeroRoutes showed. Juneyao Air is reducing 24% of its 114 flights a week to Japan, while China Eastern Airlines Corp. has temporarily scrubbed six of 14 flights a week between Beijing and Osaka.
Japanese media have reported several instances of hotels already feeling the impact. The Gamagori Hotel in Aichi prefecture, where up to 60% of guests book through Chinese travel agents, has seen a surge in cancellations for November and December, FNN News Network reported Thursday. The hotel said 28 tour groups, totalling about 1,000 people, have cancelled for November alone.
Sapporo Stream Hotel, which hosts about 3,000 Chinese guests each month, has seen about 40 room reservations cancelled, resulting in losses of roughly ¥800,000 (RM21,162), Hokkaido Broadcasting reported recently.
Before the travel warning, China-Japan bookings through the end of the year were up as much as 25% from the same period last year, he said. With the cancellations, it’s now running behind last year’s pace. Some of Japan’s most popular tourist destinations are bearing the brunt, with routes from Shanghai, Beijing and Guangzhou into Tokyo and Osaka accounting for the majority of cancelled travel plans, Bhatt said.
Record numbers
Japan’s tourism sector has logged record growth in part due to Chinese travellers flocking to the country. They account for about one in four visitors annually and were responsible for around 27% of total inbound consumption from July to September, spending about ¥240,000 (RM6,350) on average during their stays, according to government tourism data.
The weak yen has given a particular boost to high-end shopping demand. Chinese luxury spending abroad was about 120% of the pre-pandemic levels last year in the Asia-Pacific, especially in Japan, according to consultancy firm Bain & Co. The current bout of trip cancellations may see luxury purchases drop as much as US$600mil (RM2.48bil) this year, according to China Trading Desk.
With no sign of tensions easing, the risk of the diplomatic spat extending into the new year would deal a particularly heavy blow.
If mainland Chinese visitors continue to stay away through 2026, the cumulative hit could reach as much as US$9bil (37.32bil), said Bhatt,
Still, so far trip cancellations are largely contained to the final weeks of this year and January bookings are stable.
“That suggests many travelers still hope the situation will ease by then,” said Bhatt. – Bloomberg
