Regional economies have been dealt a blow from plummeting numbers of foreign visitors, largely affected by a ban on group overseas travel by China to curb the spread of COVID-19, the pneumonia-causing coronavirus.
While the government has extended financial support to smaller businesses in the tourism industry, the global crisis could spell disaster for local economies if prolonged.
“We’ve received cancellations not only from visitors from China, but also from Southeast Asia. With the trend of people avoiding crowds (due to fears of catching the virus), the effects will likely drag on,” said a representative of the Hokkaido Bus Association.
In a survey of its chartered-bus operator members, the association found that around 1,700 buses have been canceled for trips between January and March, equivalent to a loss of ¥110 million.
Meanwhile, the annual snow festival in Sapporo, popular among Chinese travelers, saw visitor numbers plunge by about 710,000 through Feb. 11 to 2.02 million compared with last year.
According to the Hokkaido Prefectural Government, at least around 147,000 guests have canceled accommodation bookings in Sapporo and other cities in the district for stays up until March.
The prefecture estimates a loss of over ¥20 billion in tourism revenue if there are no Chinese tour groups until next month.
The city of Osaka has also taken a big hit.
The open-air observatory in the city’s Umeda Sky Building attracts around 1.2 million visitors per year, mainly from abroad. It has recorded a decline in numbers since late January, with recent figures down more than 30 percent from a year earlier.
Due to cancellations, Royal Hotel Ltd., the Osaka-based operator of the Rihga Royal hotels chain, last week downgraded its earnings estimate for the business year through next month. It now expects group operating profit to fall 70 percent from the previous year.
Kyushu is facing similar struggles.
Overseas visitors to an active volcano on the island of Sakurajima in Kagoshima Prefecture have fallen by around half due to the sharp drop in Chinese travelers, according to the operator of a rest stop there.
“Tourism is Sakurajima’s lifeline. I hope (the virus) is stamped out as soon as possible,” said assistant manager Miyuki Ueyama.
An official from Miyazaki Prefecture’s tourism promotion division also expressed concern about the ripple effect of the virus, saying there have been cancellations among domestic travelers as well.
Tsutomu Yuguchi, a research director at the Hamagin Research Institute in Yokohama, said regional economies were already suffering from weaker demand following last October’s consumption tax rise and damage caused by last year’s typhoons.
“If it takes six months or a year to contain the virus, tourism-related businesses face the very real threat of chain-reaction bankruptcy,” he said. “The most worrying thing is if an increasing number of Japanese refrain from going out or traveling due to fear of infection. In such a case, the damage will be even bigger.”