Japan Earthquake: The Impact on the Tourism Economy
by Gary Bowerman
Could it get any worse for Japan? A magnitude 9 earthquake offshore on March 11 was followed by a devastating tsunami that savaged swathes of the northwest coast. Then came frequent and powerful after-shocks, snow and ice, and then a fight to prevent nuclear meltdown at Fukushima.
Images of the humanitarian crisis are unremittingly distressing, and now governments around the world have issued travel warnings and advised foreign nationals to leave Japan. Ten days after the quake, some airlines were rerouting Tokyo flights to Osaka and Nagoya further south, while special evacuation charters were scrambled. Long lines of both Japanese and foreign nationals seeking official exit visas were broadcast worldwide.
In the immediate aftermath of the disaster, most Japanese airports and hotels used by foreign travelers remained open, but infrastructure – including railways and highways – was badly damaged on routes to/from the northeast. Rectifying this will form a central part of a sustained government investment program. Japan, after all, prides itself on having one of the world’s most integrated and efficient travel and logistics networks.
Three overlapping logistical issues emerged for corporate travel managers in the aftermath of the quake: the repatriation of Japan-based foreign workers, the rerouting or canceling of upcoming travel itineraries that included Japan, and the short-term relocation of Japan-based staff to cities in the south of the country.
While Japan clearly remains open for business – the Bank of Japan initially pumped around USD440 billion into the money markets, and efforts are ongoing to stabilize the Yen, which hit a record value against the US dollar on 17 March due to speculation about insurers cashing in overseas assets to settle the cost of earthquake claims – airlines are anticipating reduced near-term demand for travel. This likelihood was confirmed by, among others, Delta, United and Singapore Airlines, which postponed its planned A380 Singapore-Tokyo-Los Angeles service.
Airline service adjustments will not just affect inbound travel to Japan – a projected shortfall of outbound Japanese corporate and leisure travel in the near term would affect tourism markets across Asia Pacific – there were 17 million Japanese arrivals across Asian Pacific in 2010 – and worldwide. Japan was the fourth ranked inbound tourism market to the US in 2010, with total arrivals up 16% on 2009.
As with most large-scale disasters, the fluidity of events following the Japanese earthquake again proved the difficulty of making travel decisions based on accurate information. The Japanese government – as most governments would do faced with a crisis of this magnitude – was forced to balance disseminating details about the nuclear radiation threat while simultaneously preventing mass panic. One unfortunate result, however, was distrust and uncertainty – a situation that seems likely to prevail for some time. Stock markets, in particular, are extremely sensitive to such atmospheres of national crisis.
For agents and travel managers watching events unfold from afar, the inevitable reaction is safety first. Travel to Japan is off-limits for many companies for the immediate future. Predicting beyond that timeframe is almost impossible. But the scale of the disaster, and uncertainty about the stability of the nuclear power plant at Fukushima, mean Japan’s travel economy – at least in the short term – could be another casualty of this horrifying natural tragedy.
About Gary Bowerman:
Oxford-born Gary Bowerman has travelled the world in search of a good story. After cutting his teeth in legal and tax publishing in London, Gary moved on to edit international business and travel titles before relocating to China in 2004. Resident in Shanghai, he has recently been a contributor to CNN Traveller, Business Traveler,CNBC Europe Business, New York Times, Travel & Leisure and South China Morning Post. Editor of the Singapore Highlights and Beijing Highlights guides, Gary is also one of the founders of Hong Kong and Shanghai-based media and marketing communications agency Scribes of the Orient.
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