Three years on, Japan is still recovering from the widespread infrastructure damage caused by the March 2011 earthquake, tsunami and nuclear crisis. It is expected to take at least another two years for rebuilding to be completed, with approximately 270,000 people still displaced and many tourist destinations such as the waterfront park in Rikuzentakata destroyed. The government is investigating significant levels of funding to aid the recovery process, and the infrastructure investment that will take place in the run-up to the 2020 Olympic Games will further these efforts.
While inbound arrivals to Japan decreased substantially in 2011, the year the earthquake struck, arrivals have subsequently recovered thanks to the country's wide range of attractions and well-established tourism base. Arrivals reached 9.5mn in 2013 and are expect to increase by 7.6% in 2014 to reach 10.2mn. Average annual growth of around 6% means that by the end of the forecast period to 2018 we expect to see annual arrivals reach an impressive 13.2mn.
Countries from within the Asia Pacific region will continue to dominate Japan's inbound tourism market, with China and South Korea remaining key source markets. Careful management of the current diplomatic tensions between these countries is therefore necessary in order to prevent any decline in international relations that could impact reciprocal tourism. Arrivals from Europe and North America will increase throughout our forecast period but will remain far behind those of Japan's Asia Pacific neighbours.
Although outbound travel has seen little growth in recent years on the back of Japan's struggling domestic economy, the number of outbound travellers from the country is already well established, and reaching 24.4mn in 2013 far outstrips the number of inbound arrivals. As the economy improves, we expect to see small but steady growth in the number of outbound travellers to reach 26.1mn in 2018, or around 0.21 departures per 1,000 of the population.
2013 saw very positive growth in Japan's construction industry, with the sector reporting its highest monthly growth rates in a decade. The economic stimulus package approved by the Liberal Democratic Party in early 2013 is yielding results, and we expect to see more extensive infrastructure investment, including in the transport and travel sectors, over the next few years. This will enable Japan to keep up with the expected increases in both inbound and outbound travel.
Key forecasts and developments include:
- The hotel market in Japan remains competitive, with several new hotels including a Ritz-Carlton in Kyoto, which opened in February 2014, and Mariott's Miyako Hotel, which opened in Osaka in March 2014. New developments under way include a Four Seasons in Kyoto, which is expected to open in 2015.
- Investment in air travel continues, with expansions planned at Narita and Haneda airports, which will aid the development of the long distance travel market. The country's already extensive rail network continues to receive substantial investment, with several major modernisation and expansions projects under way.
- Arrivals are expected to reach 13.2mn in 2018 following average annual growth of around 6%, based primarily on the strength of Asia Pacific regional markets.
- This quarter BMI has maintained Japan's overall Tourism Industry Risk/Reward rating of 54.35, placing the country ahead of the Philippines and Laos but behind Sri Lanka, 13th in the Asia Pacific market.
- Key events in 2014 include the Sapporo Snow Festival, the Cherry Blossoms festival, the Tokyo Sumo Tournament, and a range of other cultural and historical celebrations.
BMI's tourism report for Japan examines a broad range of industry trends, including the prospects for growth in the country's inbound and outbound tourism markets. Although poor domestic economic conditions have limited investment in recent years, it was announced in late 2013 that Tokyo would host the 2020 Summer Olympics, and this will provide a substantial boost to tourism infrastructure and market penetration over both the short and longer term.