• JIJI, Bloomberg

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The number of Chinese visitors canceling trips to Japan is expected to reach 400,000 by the end of March due to the coronavirus outbreak, industry data has shown.

The forecast, provided Monday by the Japan Association of Travel Agents, was based on the number of “letters of guarantee,” which are needed to obtain tourist visas for Japan.

The actual number of cancellations is likely to rise even further as the estimate does not include business travelers.

When Chinese group tour participants visit Japan, Japanese travel agencies become their guarantors and create letters of guarantee.

Letters of guarantee were prepared for some 400,000 Chinese people planning to participate in tours to Japan between Jan. 27, when the Chinese government started banning overseas group tours, and the end of March.

If the ban continues until the end of next month, almost all of their travel reservations during the period will be canceled.

The number does not include business travelers or those who did not apply for letters of guarantee despite plans to visit Japan.

In February to March last year, 1.4 million Chinese nationals visited Japan. Given this, the estimated number of 400,000 may only be a fraction of the upcoming cancellations.

Meanwhile, Japanese department store operators saw duty free sales slump during the key Lunar New Year holiday, one of the first indications of how hard the nation’s retail sector will be hit by the coronavirus outbreak in China.

Takashimaya Co.’s duty free sales during the weeklong holiday plunged almost 15 percent compared with last year.

Isetan Mitsukoshi Holdings cited concerns over the virus as a reason its duty free sales slumped 10 percent during the period.

Sales at Sogo & Seibu Co., a division of Seven & I Holdings Co., dropped 15 percent, while J Front Retailing Co., which operates the flagship Ginza Six complex, saw revenue decline 5 percent.

Chinese visitors have become a key source of income for upmarket retailers in Japan as the nation’s tourism industry has flourished, helping to make up for a declining population.

The drop in tourists from China, who make up almost one-third of arrivals and more than that in spending, could hardly have come at a worse time. Retailers are already dealing with headwinds of a sales tax increase last year, as well as an unseasonably warm winter. Cosmetics maker Kose Corp. last week slashed its full-year profit outlook 19 percent due to a decline in tourists amid the outbreak.

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