Royston Carr Asset Management - Japan may not reach spending target for foreign tourists as rate of growth declines.
Online PR News – 25-January-2019 – Although the number of visitors to Japan and the amount they spent reached an all-time high last year, analysts at Royston Carr Asset Management say the slowing rate of growth of inbound tourists and their spending could suggest that the profitability of the tourism industry could be starting to diminish.
Spending by inbound tourists in 2018 reached $41.3 billion but only grew 8.7%, significantly less than the 17.8% the year before. Chinese tourists are traditionally the biggest spenders when visiting Japan but, in 2018 Chinese visitors reined in their spending, possibly due to growing economic uncertainty in China. Although Chinese spending still remains the highest worldwide, Australian tourists in Japan beat Chinese tourists to the top of the list of biggest spenders in 2018.
The number of foreigners visiting Japan has been steadily increasing since 2011 but after a devastating earthquake hit Osaka half way through 2018, the pace of growth declined and only picked up again in October.
Analysts say the biggest cause for concern for the Japanese government is the change in spending habits of foreign tourists. The amount spent on shopping declined by 4.5% last year with tourists choosing to scale back on department store spending in particular.
Japan's government has introduced several measures to boost foreign tourism and spending and has set a target of 8 trillion yen by next year. If the downward trend continues, analysts at Royston Carr Asset Management say the target will be unreachable and at best Japan could hope to see 7 trillion yen spent by tourists in 2020.
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