Although the economy remains weak and the prices of oil and other commodities continue to rise, many Japanese consumers throw caution to the wind come holiday season.
With little time to travel far, many stressed-out people opt to splurge during the winter holiday season on stays at luxury hotels in Tokyo and Osaka.
Meanwhile, those looking abroad can expect to spend more than last year on air travel thanks to higher fuel surcharges.
The yearend holiday season is a special time for Japanese, said Shinichi Tsuaki, a public relations officer at major travel agency JTB Corp.
“Those who travel at this time of the year don’t care much about high costs,” he said, noting the flights are more expensive than in other seasons.
Fuel surcharges, which airlines update every three months, have been trending upward due to recent rises in oil prices. For example, the surcharge for a Japan Airlines flight out of Narita to Hawaii costs ¥5,000 to ¥6,000 more than a year ago.
Betraying the economic uncertainty, the government Wednesday cut Japan’s growth forecast for the year to March to 1.3 percent from 2.1 percent.
Despite all the negative factors, however, the yearend holiday season is the time for travel and staying in luxury hotels.
The Mandarin Oriental Tokyo, opened two years ago with Hong Kong capital, saw its Christmas special packages mostly booked on the Dec. 22-23 weekend.
Couples packages range from ¥89,000 to ¥290,000 per night, depending on the type of room. A suite of 90 to 100 sq. meters includes a bottle of vintage champagne with a personalized message for a partner printed on the label. The bathtub will be filled with 50 roses, and breakfast the next day will include caviar and truffles.
Most of the Mandarin’s 179 rooms are booked on Dec. 31 and Jan. 1, said Chie Hayakawa, a director of communications at the hotel.
“People in Tokyo are enthusiastic consumers, and we are trying to provide high-quality time that is different from their ordinary daily lives,” she said.
The Mandarin went a step further and created a special package from Dec. 21 to Christmas for one couple at a cost of ¥14 million.
It features a 250-sq.-meter suite with a Christmas tree decorated with ¥11.5 million worth of jewelry, including diamond watches and bracelets, that the customers can keep. There were inquiries from five people, but no actual reservation was made, Hayakawa said.
She said the hotel’s earnings outlook for 2008 is brighter than this year, adding that they see better outlooks in the near future mainly because their major customers — wealthy people — will spend at the same level, even if the economy slows down.
Although many luxury hotels have opened in Tokyo in recent years, there is no glut: Demand remains strong.
This year, the Peninsula opened in Tokyo with Hong Kong capital and Ritz-Carlton launched its second hotel in Japan with U.S. capital in the Tokyo Midtown shopping complex.
Osaka’s Ritz-Carlton has found guests for most of its 292 rooms on Dec. 22 and 23, as well as Dec. 31 and Jan. 1.
“The pace of reservations is faster than usual this year,” said Mutsuko Akesaka, a public relations director at Ritz-Carlton.
Meanwhile, more people are planning to fly away this holiday than last despite the costlier flights.
Those who booked packages for domestic or foreign travel between Dec. 23 and Jan. 3 will spend 1.9 percent more than a year ago, amounting to ¥1.15 trillion, according to an annual survey by JTB. Around 30.09 million people plan to travel in Japan or abroad during the period, which is 0.2 percent more than last year, according to the survey.
According to JTB, popular destinations are Europe for Christmas, Hawaii for New Year’s Eve, and East Asia for the New Year holidays. As for domestic trips, Hokkaido and Okinawa are popular destinations, the survey found.
Another factor spurring travel this season is the dates of the national holidays, JTB’s Tsuaki said.
Many Japanese companies close from Dec. 29 until Jan. 3. Since Jan. 5 and 6 fall on a weekend, people will be able to take a nine-day holiday if they take Jan. 4 off, Tsuaki said.
Timing aside, is personal consumption really picking up?
Some economists think so, depending on the generation involved.
“The demand for leisure services, especially overseas trips, is led by retiring baby boomers,” said Naoko Ogata, senior economist at Japan Research Institute Ltd.
Baby boomers, who number more than other generations, also have more personal assets thanks to their good fortune of having worked most of their careers during Japan’s flush times.
“After 30 years of hard work (without long vacations), they don’t care much any more about recent rises in prices,” she said.
Ogata also pointed out people’s consumption patterns are changing.
Despite the overall shrinking of workers’ bonuses, many people tend to splurge on something they really want and then tighten their purse strings when it comes to everything else.
For example, some young people scrimp by eating cheap fast-food dinners every day to afford expensive brand-name furniture, she said.
“In that way, they balance their spending,” Ogata said.