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A hotel in Aichi Prefecture will file for bankruptcy due to a steep fall in customers amid the coronavirus outbreak, Tokyo Shoko Research Ltd. said Tuesday.

It marks the first business failure in Japan linked to the COVID-19 outbreak, officials at the credit agency said.

The Fujimiso hotel in the city of Gamagori will file for bankruptcy with the Nagoya District Court’s branch in Toyohashi, Aichi Prefecture, they said.

Fujimiso, which has been focusing on attracting tourists from China in recent years, started to see cancellations from Chinese tour groups last month, the officials said. Established in February 1956, Fujimiso has ¥96 million in capital. The amount of its liabilities is now being investigated, the officials said.

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, the Japan Association of Travel Agents announced earlier in February.

The association came up with the forecast 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.

The fallout from COVID-19 is likely to hit more domestic firms.

According to an online survey of 12,348 firms conducted between Feb. 7 and Feb. 16 by Tokyo Shoko Research, 66 percent said they are already seeing or will be seeing impacts from the outbreak, such as cancellations of business trips, supply chain disruptions and declining sales.

Asked how they are dealing with the situation, 974 firms said they are working to expand their supply chains beyond China while 200 said they are reconsidering or freezing plans to enter the Chinese market.

More than 5,800 companies also expressed concern that the virus will weaken consumption in China, indicating the extent that ups and downs in the Chinese economy can directly affect Japanese firms.

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