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In contrast to the strong recovery of domestic tourism, the Japanese yen's record low against the US dollar for several consecutive months has forced Japanese people to consider cutting back on overseas travel this summer.
The yen continued to depreciate, falling to 161.96 yen per US dollar for the first time since December 1986. The yen's value against the euro also hit a historic low, at 174.48 yen per euro.
For a country as heavily reliant on trade as Japan, a depreciating currency can bring many benefits to trade and tourism. However, due to its lack of self-sufficiency in resources, Japan could still suffer significant losses from such exchange rate fluctuations.
The depreciation of the yen is affecting many sectors in Japan.
Statistics from travel agency JTB show that the number of overseas tours during the 2024 summer holiday is expected to increase by 1% compared to last year, reaching 1.75 million visitors, but this is only equivalent to 60% of the pre-COVID-19 pandemic level.
Due to the depreciation of the Yen, the cost of items such as airfare, hotels, and food when traveling abroad has become more expensive than before. This has made many Japanese people hesitant and reconsider traveling overseas. Instead of traveling abroad, many Japanese people are choosing to travel domestically because it is cheaper and more convenient.
According to JTB, the average cost of an overseas trip for Japanese people in 2024 increased by 3% compared to last year, reaching 239,000 yen per person (approximately $1,500). The main reasons for this increase include the weakening yen, which has led to inflation in many countries, causing prices of travel services such as airfare, hotels, and food to rise.
Because of this influence, Japanese people choose to travel domestically and to neighboring countries during the peak summer season.
These factors have led to a decline in demand for overseas travel among Japanese people. According to HIS forecasts, the number of Japanese tourists traveling abroad this summer may only reach 60% of pre-pandemic levels, much lower than the initial forecast of 80%.
In particular, due to the sharp increase in tour prices (1.5 times higher than four years ago), the number of Japanese tourists visiting popular destinations such as Hawaii and Guam has plummeted, reaching only 50% of the 2019 figures.
The decline in demand for overseas travel is negatively impacting Japan's tourism industry, particularly travel agencies and airlines. Tourism contributes significantly to Japan's GDP, so a drop in tourism could negatively affect the country's economy.
For Japanese people, the depreciation of the yen can affect family finances. But for foreigners, this is a great opportunity to travel to Japan because travel costs, when converted to their own currency, have decreased significantly.
According to the Japan Times, the total number of international visitors to Japan in March exceeded 3 million for the first time in history, an increase of 11.6% compared to the same period in 2019, before the COVID-19 pandemic. Per capita spending in the first three months of the year also increased by 52% compared to the same period in 2019.
However, tour prices cannot decrease yet because some services such as airfare, fuel, and operating costs have increased, causing the higher prices of these services to offset the increases in other services. At this time, converting to Japanese yen for shopping would be advantageous because goods in Japan are cheaper, and even high-priced services in Japan are now more affordable.
