Coronavirus crisis threatens to silence Japan's tourist boom
06/03/2020 02:32
* China banned group tours after coronavirus outbreak
* Chinese tourists, a pillar of Abenomics for Japan economy
* Japan economy already weakened
* Hotels, travel agents squeezed
By Daniel Leussink and Makiko Yamazaki
TOKYO, March 6 (Reuters) - The restaurants at the Exitmelsa
shopping centre in Tokyo's upscale Ginza district are usually
packed with Chinese tourists. But on a recent weekday, many
lunchtime tables were empty, a sign of the toll that the
coronavirus is taking on tourism.
For Japanese who have grown dependent on Chinese tourists
for business, like waiter Kiyotake Watanabe, it marks a
disconcerting trend.
"People on group tours would gather together at noon, and 10
or 20 of them would come in all at once," Watanabe, who works at
a Chinese restaurant in the shopping centre, told Reuters. Those
customers evaporated after China in January banned overseas
group tours.
Just months ahead of the 2020 Olympics, the jolt to tourism
may presage a broader economic impact from the coronavirus for
both Japan and the global economy. Japan could be at particular
risk because of its increased reliance on Chinese tourism under
Prime Minister Shinzo Abe's "Abenomics" policies.
Nomura Securities had forecast a 240 billion yen ($2.3
billion) bump from event-related tourism in 2020, which it said
would evaporate if the Olympics were cancelled, although
organisers have said delaying or moving the games is not an
option. Last year, Japan hosted 31.9 million foreign visitors,
who spent 4.81 trillion yen.
The flu-like virus SARS-CoV-2 has spread to about 80
countries after emerging in central China late last year and has
hurt global tourism, air travel and events. About 98,000 people
have been infected and 3,300 killed worldwide.
Although most cases are in China, more new infections are
appearing outside that country.
There are no official tourism figures from February yet, but
some analysts - and anecdotal evidence from people in the
tourism industry - suggest that arrivals from Asia alone are
likely to be down by at least half.
"You've got that negativity that is going to percolate
through the system," said Jesper Koll, a senior adviser at
WisdomTree Investments.
The hit to economic growth from slowing inbound tourism
could be a quarter of a percentage point or more, he said.
'EXPLOSIVE SHOPPING'
For Japan, which has seen more than 1,000 confirmed
infections, 2020 was supposed to be a record year for foreign
arrivals and a boon for an economy already on the brink of
recession. urn:newsml:reuters.com:*:nL4N2AE05X
About 9.5 million of Japan's foreign visitors last year were
Chinese, a number that has risen more than six-fold over the
past seven years.
And Chinese visitors spend more than others, accounting for
30% of tourists but 37% of tourist spending last year, according
to Japan Tourism Agency data.
At a shop near Watanabe's restaurant, the shelves were lined
with rice cookers, sake cups and beauty products such as
lipstick usually popular with Chinese tourists, who are known
for their "bakugai" or "explosive shopping" sprees.
But there were few customers. Shop workers chatted with each
other in the nearly empty store.
On Wednesday, Bank of Japan Governor Haruhiko Kuroda said
the outbreak has hurt consumption through a decline in Chinese
tourists. urn:newsml:reuters.com:*:nL4N2AX256
The pain could worsen after Abe on Thursday said the
government would suspend existing visas for visitors from China
and South Korea and quarantine them for two weeks. urn:newsml:reuters.com:*:nL4N2AY2LT
HOTELS SQUEEZED
In the central prefecture of Shizuoka, home to Mt Fuji,
Chinese account for as much as 70% of foreign tourists. Some
90,000 people, mostly Chinese, have cancelled hotel and ryokan
inn bookings for the first three months of this year, according
to the local tourism association.
That represents about a third of the total bookings by
Chinese tourists during the period.
In response, the prefecture has made it easier for
tourism-dependent businesses to get loans, said Mitsuhiro
Sasamatsu of the local government's tourism policy division.
But some hotels that are dependent on Chinese tourists are
temporarily shutting down. "For them, it is better cost-wise to
shut down completely than to have the business open for few
guests," Sasamatsu said.
About 80,000 new rooms are expected to open in nine major
cities between 2019 and 2021, according to a June report from
CBRE, a property research firm.
Even before the coronavirus, the supply of rooms in all nine
was forecast to outstrip demand, according to CBRE.
This week, H.I.S. Co 9603.T , Japan's largest listed travel
agent by revenue, said it expected a full-year loss, rather than
a profit, citing the coronavirus impact. urn:newsml:reuters.com:*:nFWN2AT0CM
Yoshio Adachi, who guides tourists around Yokohama's bay
area in a custom tuk tuk imported from Thailand, reckons the
number of Chinese tourists has fallen by as much 60% since the
outbreak.
He is hoping that a bid to host a casino resort in the city,
Japan's second largest, will pan out and lead to more tourists.
"The Olympics will be a one off, so the economy will need to
come back after that," he said.
($1 = 105.9000 yen)
(Reporting by Daniel Leussink and Makiko Yamazaki; Additional
reporting by Kaori Kaneko and Junko Fujita; editing by David
Dolan and Gerry Doyle)
((daniel.leussink@thomsonreuters.com; Twitter: @danielleussink;
+81-3-4563-2747;))