Japan’s Tourism Industry Booms as Record Numbers of Big-Spending Tourists Arrive
Japan Welcomes Record-Breaking Tourists, With Numbers Expected to Increase This Year
Japan welcomed almost 37 million inbound visitors in 2024, a significant increase from previous years. This number is expected to rise to 40.2 million this year, driven by the weak yen and the World Expo 2025 in Osaka, according to JTB, a travel agency.
Tourism-Related Stocks on the Rise
As the number of tourists increases, tourism-related stocks are poised to benefit. Hotel operators such as Kyoritsu Maintenance, owner of the budget Dormy Inn chain, Fujita Kanko, and TKP may see significant gains, especially if they hike prices to capitalize on higher demand. This is according to Hiroyuki Terada, senior analyst at Pelham Smithers Associates.
Sellers of Vintage Goods and Budget Hotels Set for Gains
Sellers of vintage goods, such as Kotobuki Spirits, are also set to benefit from the increased footfall at airport gift shops, driving earnings growth. Budget hotel chains like Dormy Inn are also expected to see increased demand, with the company planning to open new hotels.
Government Efforts to Ease Entry Restrictions
The Japanese government is planning to ease entry restrictions for visitors from China, which is expected to lead to an increase in spendthrift Chinese tourists. This will benefit vintage sellers like Treasure Factory, which gets 10% of its sales revenue from inbound tourists.
Currency Risks
While the Japanese yen may strengthen if the Bank of Japan raises rates further, this is unlikely to pose a significant threat to inbound-related stocks, according to Hui Shi Yeo, assistant manager of research and portfolio management at iFast. A gradual strengthening of the yen is expected, which will have a minimal impact on tourism-related stocks.
World Expo 2025
The World Expo in Osaka, scheduled for April to October, is expected to draw around 3.5 million overseas visitors, generating almost 200 billion yen in foreign tourist spending, according to the Asia-Pacific Institute of Research.
Conclusion
Japan’s tourism industry is expected to continue growing, driven by the weak yen and the World Expo 2025. Tourism-related stocks, such as hotel operators and sellers of vintage goods, are poised to benefit from the increased demand. While currency risks are a consideration, the industry is likely to remain strong, driven by the growing number of tourists visiting Japan.
FAQs
Q: How many tourists visited Japan in 2024?
A: Almost 37 million inbound visitors in 2024.
Q: What is expected to drive the increase in tourism this year?
A: The weak yen and the World Expo 2025 in Osaka, according to JTB.
Q: Which hotel operators are set to benefit from the increased demand?
A: Hotel operators such as Kyoritsu Maintenance, Fujita Kanko, and TKP.
Q: How much did tourists spend in Japan last year?
A: Tourists spent 8.1 trillion yen (S70.5 billion) in Japan last year, the most on record.
Q: What is the expected impact of a strengthening Japanese yen on tourism-related stocks?
A: A gradual strengthening of the yen is expected, which will have a minimal impact on tourism-related stocks.
