Tourism Attractive Markets

One of the objectives of tourists visiting Japan is shopping. Very often, cashless payments are the norm in their home countries. Hence, the introduction of cashless payment systems is essential to increase the tourists’ satisfaction and convenience. In particular, South Korea and China, which accounted for nearly half of all tourists visiting Japan in 2019, are pioneers of cashless, making it imperative to improve consumer convenience (See Figure 6). Furthermore, there has been an increase in online payments with the coronavirus pandemic. Even brick-and-mortar stores are emphasizing cashless and contactless payments to reduce chances of contact between employees and customers in the case of handing over cash.

Against this background, Alipay by Alibaba (a Chinese multinational technology giant) and WeChat Pay by Tencent (another Chinese company) have entered the Japanese cashless payment market. Several other foreign companies are expected to join the Japanese market to meet inbound demand.

It is worth noting that Japan's cashless payment ratio has been rising with the government's initiative of consumption tax reward point program for cashless payments from October 2019 to the end of June 2020. The number is expected to rise further amid the pandemic, where "contactless" is encouraged. The government’s target cashless payment ratio has been set to 40% by 2025, and is aiming to have the highest ratio in the world (80%) in the future.

Although the short-term outlook for the hotel industry, which has been hit hard by the spread of the novel coronavirus, is desolate, it is a promising market in the medium- to long-term. Of the total 543.24 million overnight stays in 2019, Japanese people accounted for 441.8 million, or 81% of the total (See Figure 8). It goes on to show that while the rapid growth of inbound demand has received attention, Japanese tourists remain the mainstay of the Japanese hotel market. Therefore, it is necessary to encourage domestic travel demand to establish a foothold and prepare to restore the inbound demand after the pandemic.

The type of hotel that attracts particular attention is a resort (full-service hotel). Resorts account for less than 10% of the total number of rooms in Japan. Considering the scale of domestic travel and the potential increase in inbound demand for post-corona travel, the number of resort hotels in Japan is noticeably small, and there is plenty of room for entry by foreign companies (See Figure 9). Moreover, as this aligns with the Japanese government's plans (announced at the end of 2019) to build 50 world-class luxury hotels across Japan, the resort market is expected to grow.

Global hotel giants such as Marriott, Hilton, IHG (InterContinental Hotels Group), and Hyatt have already opened luxury hotels. A prestigious Hawaiian resort, Halekulani Hotel, also opened in Okinawa in 2019, while another well-known Hawaiian hotel, The Kahala Hotel & Resort, opened in Yokohama in 2020. Additionally, Thailand-based Dusit Thani Hotels and Resorts plans to open in Kyoto in 2023, and many foreign hotels and resorts are all set to enter the Japanese market.