Tourism and Hospitality
Overview

The number of foreign visitors to Japan has increased sharply since the COVID-19 pandemic subsided, boosting inbound tourism. Due to an increase in the number of flights between Japan and other countries, the cumulative number between January and April 2024 has reached 10 million people. By country/region of residence, the numbers are above the 2023 level across all countries and regions, and except for China, Thailand, Russia, and the Nordic countries, the levels have also exceeded those of 2019, before the COVID-19 pandemic.¹ Additionally, inbound consumption in 2023 has exceeded the government's target, amounting to 35.05 billion USD * (5.3 trillion JPY)², rapidly expanding Japan's tourism industry.

The tourism industry encompasses various related industries, including transportation, accommodation, tourist facilities, restaurants, events, and travel agencies, and with inbound tourism demand rapidly expanding across the entire industry, there is significant potential for business entry. Inbound consumption can be broken down into the number of foreign visitors and their per capita travel spending. The cumulative number of visitors between January and April 2024 exceeded 10 million (72.1% more than the same period last year and 5.7% more than the same period of 2019), indicating a rapid increase and surpassing the pre-COVID-19 level (Figure 1)

Additionally, per capita travel spending by visitors has also increased. It is estimated to be 1,407.1 USD * (2.13 million JPY) in 2023 (34.2% more than in 2019). In particular, the spending on accommodation and meals has increased across various expense categories.⁴

The travel spending by visitors reached 35.05 billion USD * (5.3 trillion JPY) in 2023, a record high of 10% more than the pre-COVID-19 level in 2019 (Figure 2).

Furthermore, this inbound consumption is as large as the export value of some of Japan's major export industries. Compared to the export value in 2022, it is the third largest after Automobiles at 85.88 billion USD * (13 trillion JPY) and Electronic components such as semiconductors, etc. at 37.65 billion USD * (5.7 trillion JPY), surpassing Iron and Steel at 31.05 billion USD* (4.7 trillion JPY), Equipment to manufacture semiconductors, etc. at 27.08 billion USD * (4.1 trillion JPY), and others (Figure 3). Therefore, Japan's tourism industry, generating a large amount of inbound consumption, can be regarded as one of the important industries driving the Japanese economy.

In the fourth Tourism Nation Promotion Basic Plan approved by the Cabinet in 2023, the goals were to increase per capita spending of foreign visitors to 1,321.2 USD* (0.2 million JPY) by 2025 and consumption to 33.03 billion USD * (5.0 trillion JPY) at the earliest⁷, but these goals were achieved ahead of schedule as of the end of Mar.2023. While tourism demand is recovering faster than the government's expectations, labor shortages are still evident. In addition to social issues such as the aging population and the declining population, labor shortages are still an issue because workers who left their jobs due to the COVID-19 pandemic have not returned to the accommodation industry and other relevant industries⁸. As the government works to support the digital transformation of lodging operators to address the labor shortage⁹, the entry of foreign companies is also anticipated.

The increase in Japan's inbound tourism demand can be attributed to its abundant tourism resources and well-developed environment, which are attracting global attention. In the 2023 Readers' Choice Awards by the major U.S. travel magazine Condé Nast Traveler, Japan was ranked first as the World's Most Attractive Country while Tokyo was ranked second in the major city category¹⁰(Figure 4). Additionally, in the 2024 Travel and Tourism Competitiveness Report by the World Economic Forum, Japan was ranked third in the world and first in the Asia-Pacific region for its well-developed infrastructure, including enhanced public transportation; health and hygiene conditions, including accessibility to healthcare; and rich cultural resources such as intangible cultural heritage.¹¹

As the attractiveness of tourism resources continues to be highlighted in the global rankings as mentioned above, interest from around the world is increasing, and with the tourism industry rapidly developing beyond expectations and emerging as one of Japan's key industries, numerous business opportunities are anticipated in this industry.