Tourism in Osaka, often overshadowed by Tokyo, is catching up
11/03/2019 23:00
* Osaka is Japan's fastest-growing tourist destination
* Tourist spending surged, but is shifting to slower growth
* Retailers optimistic about Osaka casino and resort
* Tourism could become long-term economic plus for Osaka
By Stanley White
OSAKA/TOKYO, March 12 (Reuters) - Osaka, long Japan's
"second city," is winning the race against Tokyo to draw foreign
tourists, but after a boom, its retailers and property
developers are adapting to shifting tourism spending patterns.
Inbound tourism to Osaka surged five-fold between 2012 and
2017, faster than visits to Tokyo, as the city lured low-cost
carriers and promoted itself as a base to visit the 25 World
Heritage sites in nearby Kyoto and Nara.
Initially, developers and retailers scrambled to build new
hotels, expand floor space, and install cashless payment systems
like AliPay and WeChat to keep up with the sudden influx of
big-spending tourists, mostly from China.
But tourism is entering a new phase now, where instead of
loading up on luxury brands, visitors want to spend more on
services like makeup consulting, maternity goods, and other
cheaper items.
Businesses expect that to become the norm - and to provide a
permanent boost to the economy of the Kansai region around Osaka
as the city prepares to build a large casino resort.
"Osaka was running at full speed on tourism, but now we're
moving to a more sustainable pace of growth," said Takeshi
Yamaguchi, associate director of research at real estate
consulting firm CBRE in Osaka.
"Compared to Tokyo, Osaka is positioned for longer and more
sustainable growth in development and tourism because of things
like the integrated resort," Yamaguchi added.
TOURIST BOOM
The success of Osaka, long overshadowed by Tokyo and
dismissed as gritty and chaotic, has caught analysts by
surprise.
The city's compact layout and food culture have proven a hit
with Asian tourists, and that has created new opportunities for
start-ups, social media marketing consultants and foreign
property developers.
Osaka and its surrounding cities may become the most visible
example of how Prime Minister Shinzo Abe's economic policies
have changed Japan.
Since Abe took office in late 2012, the government has
relaxed visa requirements for China and other Southeast Asian
countries. Foreign visitors to Osaka hit 11.1 million in 2017, a
five-fold increase from 2012, making it Japan's fastest-growing
inbound tourist destination, government data show.
By contrast, visits to Tokyo roughly tripled in the same
period.
Foreign visitors to Osaka could reach 26 million per year by
2030, CBRE's Yamaguchi says.
"I've been to Osaka three times, and I like it better than
Tokyo," Zhang Xin Jie, 30, a software engineer from Shenzhen,
China, said at a shopping arcade in Osaka's bustling
Shinsaibashi district. "I like the vibe, the history, and the
shopping."
Tourism spending in the Kansai area, which includes Osaka,
Kyoto and Nara, more than tripled to 1.3 trillion yen ($11.64
billion) in fiscal year 2017 from fiscal 2013, adding an average
0.2 percentage point to the Kansai area's economy for the past
three fiscal years, according to a central bank report.
'SELLING EXPERIENCES'
The economic benefits are expected to continue, but Osaka's
retailers say tourism spending is slowing.
Average incomes of visitors are falling as more cheap
flights become available. China's government enacted a law in
January taxing Chinese sellers who buy Japanese goods in bulk
and resell them online.
Chinese tourists are growing more interested in beauty
treatments, maternity wear, baby bottles and other goods that
cost much less than luxury items, retailers say.
Duty-free sales at Takashimaya Co's 8233.T Osaka
department store rose 13 percent in 2018, much slower than a 71
percent increase in the previous year.
"The amount purchased per customer is falling, so we are
reaching a point where we need to think more about selling
experiences instead of selling only goods," said Tatsuya
Inagawa, deputy manager of public and investor relations at
Takashimaya's Osaka store.
More Chinese shoppers are asking sales assistants to show
them different makeup techniques, according to Inagawa, so
stores may offer tourists more beauty counselling.
Some start-ups are taking things a step further by marketing
Osaka to Chinese tourists as a destination for spa treatments
and medical tourism.
Property development, which was once red-hot in Osaka, is
also starting to slow.
New construction of hotels and restaurants surged six-fold
from 2012 to 2017 but slumped by 87 percent in 2018 compared
with the previous year, a sign of concerns that too much supply
came to market too quickly. Construction of wholesale and retail
space also fell 28 percent in 2018 from the previous year.
Some property analysts and retailers say the slowdown in
tourist spending and property development is just a temporary
dip.
Their rationale: Osaka plans to open a 1
million-square-metre casino and conference centre in fiscal 2024
on par with Singapore's casino on Sentosa Island. The Osaka
facility is expected to draw 2.2 million visitors by 2030 at an
estimated economic impact of 760 billion yen per year.
In addition, Osaka will host a Group of 20 heads of state
summit in June, Rugby World Cup matches in September and
October, and a World Expo in 2025, which should keep tourists
and their money flowing steadily into Osaka and the Kansai
region.
"Tourism in Osaka is growing faster than in Tokyo, so I am
certain that one day soon we will overtake Tokyo," Hirofumi
Yoshimura, mayor of Osaka city, told reporters in Tokyo.
"Osaka is close to a lot of attractions in Kyoto and Nara
that tourists want to see," Yoshimura added. "This is a catalyst
for tourism that Tokyo doesn't have."
($1 = 111.7200 yen)
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Overseas visitors to Osaka https://tmsnrt.rs/2NVO9Bz
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(Reporting by Stanley White; Editing by Gerry Doyle)
((stanley.white@thomsonreuters.com; +81 3 6441 1984
twitter.com/stanleywhite1; Reuters Messaging:
stanley.white.reuters.com@reuters.net))