Business / Economy

After troubled start, Go To Travel campaign still likely to achieve some aims

by Kazuaki Nagata

staff writer

Go To Travel, the troubled government-backed travel discount program that kicked off Wednesday, has prompted both hope and concern.

Battered by the coronavirus crisis, the domestic tourism industry sees a glimmer of hope in the campaign and its gargantuan ¥1.35 trillion budget.

But amid heightened concern over a recent spike in new infections in some prefectures — especially Tokyo — many members of the public believe now is not the time to enjoy trips, and question how effective the campaign will be.

Due to the growing flak and the exclusion of travel to and from Tokyo, it may take some time for the campaign to swing into full gear. Nonetheless, experts have said that considering its enormous budget, it is expected to boost travel demand and help the devastated tourism industry, unless the COVID-19 outbreak spirals truly out of control.

That said, there are doubts that the benefits will be evenly distributed, because of the temporary exclusion of the capital and the likelihood that few travelers will choose to visit lesser-known destinations.

The Go To Travel campaign will cover half of travel expenses — up to ¥20,000 per stay or ¥10,000 for a day trip — if people purchase trip plans through designated travel agencies or make reservations at designated hotels.

Initially it will provide a 35 percent discount on total expenses, and from September special coupons providing discounts at designated shops during the travel period will be issued to compensate for the remaining 15 percent.

Yutaro Suzuki, economist at the Daiwa Institute of Research, said that in years past similar travel initiatives designed for particular regions with much smaller budgets have successfully helped local tourism.

“In comparison to the past travel subsidy programs, the amount of the budget is huge, so I think we can expect to see positive effects,” Suzuki said.

In July 2016, the government launched a travel campaign for some prefectures in Kyushu after powerful quakes hit Kumamoto Prefecture and devastated the area. It offered up to ¥35,000 subsidies for travelers.

The government also sponsored another campaign for Hokkaido between October 2018 to March 2019, after the island faced a strong earthquake in September 2018.

A sign at a travel agency in Nagoya promotes the government's Go To Travel campaign, which kicked off Wednesday. | Kyodo
A sign at a travel agency in Nagoya promotes the government’s Go To Travel campaign, which kicked off Wednesday. | Kyodo

Looking at the number of guests at accommodation facilities, the data shows that both Kumamoto and Hokkaido saw increases during the discounted periods and then remained at around the same level even after the campaigns ended.

This time, the size of the budget is considerably larger than those for Kumamoto and Hokkaido, which were funded with ¥18 billion and ¥8.3 billion, respectively.

Given that the amount of domestic travel spending in 2019 was ¥21.9 trillion, the Go To Travel budget itself is equivalent to about 6 percent of annual consumption.

Since the campaign covers half of travel expenses, it will theoretically boost domestic travel spending at least by ¥2.7 trillion if the budget is fully used up, Suzuki said.

But one major issue is the exclusion of travel to and from Tokyo. Because of the growing number of daily new infections in the capital, the government announced that Tokyoites would be barred from the campaign for the time being as would those who planned to travel to Tokyo. In the past couple of weeks, Tokyo has regularly seen more than 200 new cases of infection each day.

Because of that recent spike and Tokyo being off the list, “the campaign will probably start off moderately at a moderate pace,” said Suzuki, adding that the situation was a huge blow to hotels and other tourism-related businesses in Tokyo.

For travel destinations in other prefectures, this is likely to be a negative factor, too, since Tokyoites have the highest average income. It is uncertain when Tokyo will be included in the campaign, but as long as the ¥1.35 trillion budget is fully spent — even without the capital — it will help rev up the overall tourism industry, Suzuki said.

“Tokyo is the largest tourism market, so the exclusion would impact on consumption (the campaign would otherwise spur),” said Akiko Kosaka, senior researcher at the Japan Research Institute. “But it’s quite certain that the Go To Travel program will still create more travel demand and stimulate consumption compared with the past few months, in which the industry was hitting rock bottom.”

While the program will be significant help for the struggling industry, it was regrettable that the Go To Travel program has had to kick off amid heavy criticism and concerns, she said.

“After all, traveling is a nonessential activity, so people’s mood is important. If it had started out more smoothly, ripple effects might have been bigger” in the early stage of the campaign, she said.

Seeing those problems, including the abrupt removal of Tokyo and flip-flops on compensation for the resulting cancellations of travel plans, it seems that the government did not design the program carefully, which has in a way discouraged people from participating, Kosaka said.

Souvenir shops are seen open near Kiyomizu Temple in the city of Kyoto last week, but few visitors are present. | Kyodo
Souvenir shops are seen open near Kiyomizu Temple in the city of Kyoto last week, but few visitors are present. | Kyodo

The government had said it would not reimburse fees to travelers or related costs for business operators due to cancellations caused by the last-minute exclusion of Tokyo, but has since reversed its decision.

Suzuki of Daiwa Institute noted another possible criticism, saying that some regions with weaker tourist attractions may not receive significant benefit from the Go To Travel campaign.

“The Hokkaido travel program (launched in 2018) covered the whole Hokkaido area, but there was disparity in demand within the prefecture,” said Suzuki, adding that travelers had concentrated in the southern and central regions where famous destinations, such as Hakodate and Sapporo, are located.

“It is possible that (the Go To Travel program) will create disparity in demand at the national level,” Suzuki said.

It is true that the Go To Travel campaign has stirred controversy and that other issues may emerge in the coming months. But it will still be a potential silver lining for the devastated tourism industry.

“Expectations toward the Go To Travel program are high among accommodation operators,” said Hideyuki Sato, executive director of Japan Ryokan and Hotel Association.

Many ryokan-style inns closed in April and May due to the state of emergency imposed over spread of the virus. Even though the government gave a greenlight for cross-prefectural travel on June 19, travel demand remains stagnant, Sato said.

According to credit research agency Teikoku Data Bank Ltd., 46 hotels and ryokan-style inns have gone bankrupt due to the coronavirus as of Tuesday.

Thanks to bank loans, many operators have found ways to keep their business afloat, but “if this situation continues … bankruptcy cases will reach outrageous numbers,” Sato said.

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