Coronavirus pandemic lays waste to Japan's tourism industry

Government-imposed travel restrictions. The postponement of the Tokyo Olympics and Paralympics. The coronavirus pandemic is dealing a crushing blow to the Japanese tourism industry and some operators are struggling to stay afloat.

2020 boom

Tourism has always been a crucial industry for the Japanese economy. Last year, 32 million foreign visitors traveled to Japan, spending roughly 45 billion dollars. These numbers were expected to grow across the board this year, fueled by an influx of tourists for the Tokyo Games. Hotels hired extra staff and invested in new properties.

But as the coronavirus has spread around the world, people have become unable, or unwilling, to travel. Japan recorded a 60 percent drop in foreign visitors in February, and an even bigger decline is expected for March.

The Bank of Japan's latest Tankan survey shows that sentiment in the hotels and restaurants sector plunged from plus 11 to minus 59 during the end of February, early March period. A negative figure indicates that more companies are feeling pessimistic about the economy than optimistic. The 70-point drop was the biggest decline ever marked in the sector.

Tankan Survey

Empty guest logs

Tokyo's Asakusa district depends heavily on tourism. But right now, many shops and restaurants are closed. The area is a veritable ghost town.

The Kaminarimon Ryokan is one of the many businesses that have been finding things tough. Last year, in anticipation of a flood of Olympic tourists, the hotel took out a loan for a renovation. It transformed itself from a business hotel into a Japanese-style ryokan.

Japanese-style room
A traditional Japanese-style room at the Kaminarimon Ryokan.

But now, most of its rooms are empty. A raft of cancellations meant that March reservations were just 15 percent of what the hotel had expected. And there have already been more than 80 cancellations for April and beyond. To cope, CEO Tobe Yoshiko has had to make some tough decisions in terms of hotel workers. The staff has temporarily been stripped to just one third of its regular size and payroll has been slashed by 80 percent.

Tobe Yoshiko
Tobe Yoshiko, Kaminarimon Ryokan CEO

"It's tough to stay in business right now," Tobe says. "We may need to apply for a government subsidy or loan. But we're already in debt for the renovation, so we don't want to borrow any more, if possible."

With the Olympics scheduled to still take place next year, Japan needs to retain the accommodation capacity offered by hotels like the Kaminarimon Ryokan. It remains to be seen whether the government's soon-to-be released emergency stimulus measures will be sufficient to protect the tourism industry.

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