Tourism Drop in Japan Leaves Asian Hotels Counting on Chinese for Business

Asia’s holiday resorts may see fewer Japanese tourists as the tsunami and nuclear scare keeps some of the region’s wealthiest travelers at home, leaving countries more reliant on Chinese travelers to fill the gap.

Government officials and lawmakers in Thailand, Taiwan, Vietnam, Malaysia and South Korea have predicted drops in tourist revenue in the past week. Japanese nationals spent $25 billion on travel in 2009, compared with $44 billion in expenditures from China, according to the latest available data from the United Nations World Tourism Organization.

“The Japanese outbound market has been in decline the past few years,” said Kris Lim, a director at the Pacific Asia Travel Association, an industry group. “For the next few months, the drop will be much more severe.”

Canceled travel plans after the world’s fourth-strongest earthquake since 1900 and resulting tsunami hit Japan a week ago crimped travel-related stocks around the region. The disaster will accelerate a trend that has seen countries in the region court more visitors from China, which may have eclipsed Japan as Asia’s biggest economy last year, Lim said.

Japanese tourists to the Asia-Pacific region declined for three straight years before rising to 17.5 million last year, still below 2006 levels, PATA data shows. By comparison, Chinese tourists surged to 48 million last year, five times more than a decade ago, with most heading to Hong Kong or Macau.

“The volume of Chinese visitors actually makes up a lot for some of those countries that have Japan as the number one source market,” Lim said by phone. “Most destinations in the region may not be experiencing a very huge decline.”

Hawaii Decline

The U.S. state of Hawaii, where Japanese visitors accounted for 17 percent of 7.1 million tourists last year, may see fewer arrivals, Sandra Carvao, a spokeswoman for the UNWTO, said in an e-mail today. The agency has maintained its forecast of global tourism growth at 5 percent after the Japan earthquake and uprisings in the Middle East and North Africa, she wrote.

“We expect that the proven dynamism and resilience of the tourism sector, particularly in Asia, will contribute to limit the medium- and long-term impact,” Carvao said.

Taiwan, where Japanese tourists comprised 19 percent of arrivals last year, may see its travel industry hurt due to the crisis, central bank Governor Perng Fai-nan said at a session of parliament in Taipei yesterday. China overtook Japan as Taiwan’s largest source of tourist arrivals in 2010 with 1.64 million visitors, a 68 percent rise from a year earlier.

Tourism Stocks Fall

Formosa International Hotels Corp. (2707), Taiwan’s largest listed hotel chain, has dropped 12 percent as of 9 a.m. local time today since the March 11 earthquake that killed 5,692 people. EVA Airways Corp. (2618), the island’s second-biggest airline, has fallen 10 percent in that time, fifth-most among the 31-member Bloomberg World Airlines Index, which declined 5.8 percent.

South Korea’s tourism industry may be hurt because of a possible drop in the number of Japanese visitors after the quake, the Finance Ministry said March 12. In January alone, 1.9 million Japanese visited South Korea, comprising 33 percent of all arrivals, according to the Korea Tourism Organization.

“Even though there is no assessment yet on how much the number of Japan tourists coming to Thailand will fall, we believe Japan will focus on rebuilding their country more than traveling outside for a while,” Thai Finance Minister Korn Chatikavanij said March 14.

Little Japanese Growth

Minor International Pcl (MINT), Thailand’s biggest operator of hotel resorts and fast-food restaurants, hasn’t seen a “material cancelation” of Japanese tour groups so far, Ririnda Tangtatswas, senior investor relations manager, said in an e- mail. Japanese tourists, who accounted for 6.2 percent of the Thailand’s 15.8 million arrivals last year, are responsible for about 5 percent of the company’s hotel revenue, she said.

“Japanese volume has been flat in 2010 compared to 2009, so it’s not one of our growth markets,” Ririnda said, adding that visitors from China increased 20 percent last year.

Malaysian travel-related companies may suffer with the rest of the region, Lee Heng Guie, chief economist at CIMB Investment Bank in Kuala Lumpur, said in a March 15 report. Japanese tourists accounted for 1.7 percent of visitors to Malaysia last year, it said.

“We expect a more visible impact on the services and tourism sectors as the Japanese may avoid travelling abroad given dampened consumer sentiment,” the report said. “Likewise, Malaysians will refrain from travelling to Japan for fear of radiation leaks.”

Vietnam’s benchmark VN Index has fallen in four straight trading sessions since the earthquake on concerns Japanese visitors would decline and investors would leave the country.

“The earthquake will definitely affect the number of tourists,” Nguyen Manh Cuong, deputy head of Vietnam National Administration of Tourism, said by phone March 15. “They will have to prioritize spending to rebuild their lives.”

To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg in Hong Kong at phirschberg@bloomberg.net

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