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A hotel worker wearing a protective face mask and goggles is seen through a plastic partition at the reception desk of Mitsui Garden Hotel Nihonbashi Premier in Tokyo on June 26.   © Reuters
Asia Insight

Japan's Go To Travel plan spurs fears of 'man-made' COVID disaster

As Thailand and Taiwan seek to boost tourism, Tokyo residents barred from scheme

ERI SUGIURA, Nikkei staff writer | Japan

NIKKO, Japan -- Masaki Hirano, a hotelier in Japan's historic city of Nikko, is facing a wave of cancellations from guests in Tokyo.

Due to begin on Wednesday, a government plan offering 1.3 trillion yen ($12.6 billion) of travel subsidies aimed at helping coronavirus-battered local economies was scaled down last week. A surge of infections in Tokyo -- cases hit a daily high of nearly 300 on Friday -- prompted the government to exclude residents of the capital and those traveling there from using the initiative.

The move is hurting Hirano's Nikko Kanaya Hotel, a famous luxury inn in scenic Tochigi Prefecture north of Tokyo, which gets nearly 40% of its guests from Tokyo. Since the "Go To Travel" campaign was announced on July 10, the inn had seen a tick up in weekend bookings for the summer.

"I wonder if the government really needs to go through with this campaign at this point," Hirano told the Nikkei Asian Review.

"While we were starting to see some positive signs, I now fear how these cancellations will impact us," Hirano said. "There must be some sense of unfairness among travelers, as Tokyo residents also pay tax. The timing and the operation could have been revised."

Under the initiative, the government will cover half of applicants' domestic travel spending up to a maximum 20,000 yen per person per night, or 10,000 yen for single-day trips. The Ministry of Land, Infrastructure, Transport and Tourism even brought it forward from its scheduled start in August to begin this week so people could use the discounts for a four-day holiday from Thursday.

Nikko Kanaya Hotel hotelier Masaki Hirano shows a renovated room that allows guests to enjoy meals in a private space and avoid contact with others.  (Photo by Ken Kobayashi)

But the plan came under scrutiny as cases rose, and there was also public criticism that funds could have been better allocated to medical institutions amid the pandemic fight.

"It would be a man-made disaster created by the government if the infection keeps spreading because of the campaign," Soichiro Miyashita, mayor of the city of Mutsu in far northern Aomori prefecture, said on July 13.

However, many people are not convinced by the decision to go ahead with the Go To Travel campaign while Tokyo is excluded. A Nikkei poll published Monday showed that 80% of respondents in the country believe it is "too early" to launch the campaign. Only 15% said it was "appropriate."

While the capital may be included in the campaign after the current spike in cases subsidies, some people are furious.

"Residents in Tokyo are also taxpayers. If the Go To Travel shuts out Tokyo, the campaign should be run with tax revenue from the other 46 prefectures," a 47-year-old female resident of the capital's Setagaya Ward told Nikkei.

The woman, who asked not to be named, is a wedding hairdresser, and said that she made no money from April to June because all ceremonies had been cancelled. "People are struggling to pay their rent," she said, stressing that travel is not an option for many.

Chief Cabinet Secretary Yoshihide Suga defended the revised initiative at a regular news conference on Friday.

"While infected cases in Tokyo stand out, experts say there is no problem for the areas other than Tokyo to implement the Go To Travel campaign," he said. "It is just before the launch but the ministry will thoroughly explain the campaign to the tourism industry."

Japan's tourism minister said Tuesday that the government will cover cancellation fees for people who called off trips following the sudden change in the plan.

Nikko Kanaya Hotel, founded in 1873 as Japan emerged from centuries of feudalism to embrace the modern world, had taken steps to contain the spread of the virus since resuming operations at the end of May following a nearly three-week closure.

The inn has been limiting the number of guests to two-thirds of its capacity of 71 rooms, and reducing tables in the restaurant to limit crowds, enclosed spaces and close contact between staff and guests. It takes the temperatures of guests at the entrance and regularly sanitizes handrails and door knobs.

Elsewhere in Asia, authorities have moved to underwrite domestic travel expenses to boost their battered tourism sectors ahead of the summer season given the prospect of foreign tourists returning in previous numbers anytime soon appears remote.

The Thai government issued a special tourism package subsidy worth 22.4 billion baht ($720.3 million) to encourage Thais to travel, together with issuing a four-day special public holiday earlier this month. Taiwan's "Travel at Ease" subsidy scheme launched on July 1, meanwhile, will inject over $130 million to the sector.

Such policies have been generally welcomed by most industry players and tourists in the two economies, which have been among the most successful in containing the virus. Hotels, nearby restaurants and souvenir shops are seeking to earn money and make up for losses.

People walk in Bangkok: The Thai government has issued a special tourism package subsidy to encourage Thais to travel domestically. (Photo by Akira Kodaka)

But in Japan, the Go To Travel plan has been greeted with disappointment by industry players and analysts alike.

"The situation became so severe that the tourism industry needs to brace for the worst scenario -- that the massive injection of money may not convince people to travel, and the economy continues to go backward," said Yuichi Yamada, chief researcher at the Japan Travel Bureau Foundation, a think tank. "Discounting and couponing at last may not be enough to push travel demand."

Yamada estimates that nearly 25% of travel demand will be lost because of the decision to exclude travelers to and from Tokyo, hitting nearby regions as well as popular destinations like Okinawa or Hokkaido.

"The slowdown is expected to be greater than the government imagines," he said.

The World Tourism Organization in May released multiple scenarios for this year, saying international tourist arrivals may drop 58%-78% by year-end, depending on when governments reopen borders. Such figures translate into a loss of 850 million to 1.1 billion international tourists globally, putting 100 to 120 million travel and tourism jobs at risk.

Hotel data provider STR, meanwhile, said the occupancy rate in the Asia-Pacific region in May was down 47.3% from the same month a year earlier. Revenue per available room stood at $20.04, down 68.5%.

Tokyo's Haneda International Airport is nearly empty on July 14. (Photo by Ken Kobayashi)

The Thai tourism industry, after experiencing a full lockdown, is eager to capitalize on the measures. Indeed, during special holidays from July 4 through July 7, the country saw roads to beaches, mountains and other tourist attractions crowded with buses and cars.

"As we are competing in a price-war, we need to offer discounts in order to gain more clients, and that prevented us from getting full profits. However, we need to do it anyway in order to keep business running," said a senior official at the Thai Hotels Association, who asked not to be named.

Kasikorn Research Center forecast that the government tourism incentive is expected to spur Thais to travel around 91 million times this year, generating approximately 41 billion baht from domestic tourism. But this is still well below the 171.4 million domestic trips in 2019.

"The government's incentive at a time that Thais cannot travel abroad because of the COVID pandemic could help encourage Thais to travel domestically," a Kasikorn analyst said.

"But, it is unlikely to help reduce reliance on foreign tourists," the analyst said. In 2019, nearly two-thirds of the industry's 3.06 trillion baht of tourism revenue came from foreign tourists.

In Taiwan, the government is backing tourism not only through consumer vouchers but also with hotel salary subsidies.

Achim v. Hake, general manager of The Sherwood Taipei, a five-star hotel in the capital, said the three-month subsidy for staff salaries launched in April was "very important" to enable hotels to break even and stay open. Hotels on the island are now hoping for reduced property taxes and subsidies for energy and water usage.

The travel subsidies anchored the governments' eagerness to support tourism. But now, while industry players follow suitable guidelines to welcome guests under the "new normal," some point out the need for travelers to adhere to different kinds of rules for tourism to recover.

Eihito Fukuda, general manager of the Nikko City Tourism Association, said he understood the government's last-minute decision to exclude residents in Tokyo from the program, despite more than 70% of visitors coming from the capital and surrounding areas.

"Safety should be the biggest priority and we keep asking all visitors to follow our standards," he said. The association put a notice on its website this month not only outlining infection prevention measures of hotels and facilities in the city, but also urging guests to wear face masks, maintain social distance and refrain from talking in loud voices.

Yamada from the Japan Travel Bureau Foundation says there should be a framework such as city ordinances or expansion of cancellation insurance to allow hotels to select guests and reject them if they don't follow rules.

"People keep arguing travel is dangerous, and this means infection prevention measures implemented in tourism service are yet to gain the trust of communities," Yamada said.

Women walk down the stairs of Nikko Toshogu Shrine in Japan's Tochigi Prefecture. In a Nikkei poll, 80% of respondents said it was "too early" to launch the Go To Travel campaign on Wednesday without arrivals and departures to and from Tokyo. (Photo by Ken Kobayashi)

One idea is the notion of 'micro-tourism' which is gaining a growing presence in Japan.

Venture Republic, a Tokyo-based operator of travel metasearch sites in Japan and outside, gave out coupons for hotels located in central Japan's Gifu Prefecture to residents through the popular Line chat app in June. "Coupons were handed out in just minutes," CEO Kei Shibata said, saying the idea of traveling in local areas reassured people they could avoid crowds and mitigate infection risks.

Ultimately, it is likely to take time for consumers to travel with confidence.

"I chose to travel to Nikko now [before the Go To Travel campaign] because I am scared to move cities when everyone else is also traveling," said a 29-year-old woman who visited there in early July with her husband from nearby Saitama Prefecture. "What if I become a spreader?"

Fukuda, from Nikko's tourism association, said the economic importance of visitors can't be overstated.

"We have been a tourist spot since the Meiji era, at the end of the 19th century," he said. "Everyone in the city is aware that we can't survive unless tourists come visit us."

Additional reporting by Nikkei staff writer Apornrath Phoonphongphiphat in Bangkok and contributing writer Chris Horton in Taipei.

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