News Japan inbounds: more tourists spend less

According to the Japan Tourism Agency, international visitors to Japan are spending more overall, with expenditures reaching approximately 1.75 trillion yen in the first quarter, a significant increase from previous years. However, the average spending per traveller is on a downward trend, indicating a shift towards more budget-conscious behaviour. Despite the weakening yen, this pattern suggests that businesses may face challenges in achieving sustainable profits, reminiscent of the pre-pandemic situation where high business volumes did not necessarily translate into substantial earnings.

Yet data on spending per traveler shows a decline even as the yen has been weakening. Foreign visitors spent 234,524 yen on average in 2022, 212,764 yen in 2023, and 208,760 yen last quarter. Before the pandemic, spending per visitor peaked at 176,167 yen in 2015, during the "explosive buying" boom among Chinese tourists. The January-March 2024 figure is only about 20% higher than that, despite the significant depreciation in the yen since then. From the 2015 peak to 2019, just before the coronavirus outbreak, spending per visitor was flat or declining, owing to a combination of factors including less interest in buying goods, lower satisfaction due to overtourism, and a shortage of options in such areas as entertainment and nature-based tourism.

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Comparing the January-March quarter of 2023 with the same period in 2019, spending on lodging grew in absolute terms and as a percentage of the overall total. Spending on dining rose in amount but accounted for about the same share of the total. Shopping has gone down in percentage terms. Spending on entertainment and services, a weakness of Japanese tourism compared with Europe and the U.S., is increasing in scale but still accounts for less than 10% of the total. In other words, travellers spend a significant portion of their budgets on accommodations but not much on shopping, entertainment and leisure activities.

This past January, Prime Minister Fumio Kishida reiterated goals first declared in 2016, when the "explosive buying" trend had reached a fever pitch. "In order to support the growth of our local regions, we aim to have 60 million foreign tourists visit Japan and 15 trillion yen in tourism consumption in 2030," he said in a policy speech.

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I hope this will never happen.

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