IVIS Country Analysis – Japan

JAPAN

3,169,682 Arrivals in the United States

Loss of 457,582 over 2002, -12.6%

32.2% of all Japanese Long-Haul Travel

-7.2% over 2002

SUMMARY

Total outbound travel from Japan declined eight percent in 2003 over 2002, but still generated 21.2 million Japanese arrivals to destinations worldwide. The outbreak of Severe Acute Respiratory Syndrome (SARS) in Asia all but halted short-haul, intraregional travel from Japan for more than a month in 2003. Japanese long-haul travel also declined, but at a slower rate, falling 5.9 percent over 2002. Arrivals to the United States from Japan declined 12.6 percent year-over-year. Both Japanese long-haul travel and Japanese arrivals to the U.S. in 2003 fell to their lowest levels in a decade. Because arrivals to the U.S. declined more steeply than long-haul travel, the U.S. market share (MSI) declined 7.2 percent in 2003 over 2002. Still the U.S. earned nearly one third of the Japanese long-haul market resulting in an MSI of 32.2 percent for 2003.

The Japanese economy has been slow for nearly a decade. In 2003, real GDP registered its first real gain in more than two years, expanding 2.2 percent over 2002. Real private consumption, which has been weak throughout the decade, experienced only 0.6 percent growth over 2002, but this can be attributed to deflation. The consumer price index in Japan declined 0.2 percent in 2003. Unemployment remained nearly flat at 5.3 percent, still very high for this economy. Persistent deflation causes consumers to delay purchasing, which is exacerbated by their fear of unemployment. Despite the sluggish economic performance in 2003, Prime Minister Junichiro Koizumi's economic program to curb government spending, decrease regulations and increase incentives for private investment has begun to revive the economy. Yet, slow growth is inevitable in the short-term.

After two consecutive years of decline, the Japanese yen appreciated against the U.S. dollar in 2003 by 7.9 percent, and against other world currencies by 4.9 percent. Typically, a strong currency boosts outbound travel and travel to the U.S. Japan was an exception to this rule in 2003 due to the outbreak of SARS in Asia.

The United States was the number one country destination for long-haul travel from Japan, receiving nearly one-third (32.2%) of this market in 2002. Second in popularity was Italy (17.5%), followed by Germany (7.6%), France (6.1%), Canada (3.6), the UK (3.2%) and Spain (2.6%). Among these countries, only Italy and Germany gained share of the Japanese long-haul travel market in 2003.

Source: Global Insight

Europe remained the number one regional destination for Japanese long-haul travel, with well over half (60.8%) of the market in 2003. Throughout the 1990s, the United States (32.2%) and Europe together have consistently captured around 90 percent of all Japanese long-haul travel, and did so again in 2003. Other regions include Africa (1.9%) and the Middle East (0.7%). Among these regional destinations, only the U.S. lost market share of Japanese long-haul travel in 2003.

Source: Global Insight