Chinese Skiers Lift Japan as Tourism Defies Nuclear Disaster

Japan’s Hotels Rebound on Chinese Demand
Hoshino Resorts Inc.'s Altz Bandai ski resort in Fukushima, Japan. Source: Hoshino Resorts Inc. via Bloomberg

Eight months after being turned into refugee camps for earthquake victims escaping Japan’s worst nuclear accident, some ski resorts in Fukushima say bookings for the winter are back to about 70 percent of pre-quake levels.

While the earthquake, tsunami and reactor leak caused almost 230,000 people to flee the country, hotel chains across Japan are expanding and airlines are adding international flights, betting Chinese tourists will lead a recovery. Visitor arrivals, which slumped 63 percent in April from a year earlier, were down 15 percent in October, with the number of Chinese already back to year-earlier levels, government figures show.

Four Seasons Hotels Inc. and Japan Airlines Co. are among companies investing in Japan’s leisure potential even as a record-high yen and economic crisis make travel to the country less affordable for European and U.S. tourists. Japan earmarked stimulus last year for tourism and health industries to bolster its economy, which has grown an average 1 percent annually in two decades.

“The earthquake and tsunami will not slow us down,” said Dan Seymour, head of Japan operations for Singapore-based developer Pacific Star Group, which announced six days after the March 11 quake that it would open a Four Seasons-run property in the ancient capital of Kyoto by the end of 2013. “Chinese inbound demand is where the market is.”

The recovery is being led by Greater China. Tourists from Hong Kong rose 17 percent in October from a year earlier and 2.6 percent from Taiwan, according to Japan National Tourism Organization. Inbound visitors from China, which fell by 50 percent in April, were unchanged in October from the year before.

Asian Tourists

Asia accounts for about 70 percent of Japan’s foreign tourists, with 9.5 percent coming from the U.S. While the Japanese currency appreciated 7.9 percent against the greenback in the past year, touching a postwar record 75.35 yen per dollar on Oct. 31, it rose only 3.4 percent against the yuan.

“The yen is very strong right now, so it makes Tokyo more expensive in the short term,” said Christopher Hart, president of hotel operations for Asia-Pacific at Four Seasons. With Chinese demand, “everybody is expecting a significant increase in travel across the Asia region, including Japan.”

Even resorts close to the nuclear accident are seeing improvement. Hoshino Resort Co., which will post radiation levels along with snow readings on its website, expects occupancy in its two Fukushima resorts of around 60 to 80 percent of 2009-2010 levels. Aizukogen Resort said bookings at its three lodges are likely to be about 70 percent of last year’s.

Safe Cities

Inbound visitors may return to pre-quake levels by the end of the year and rise 16 percent to 10 million by 2015, said Yasushi Tanaka, a senior consultant at industry-funded Japan Tourism Marketing Co. Professor Fuyuhiko Usui at the Center for Advanced Tourism Studies at Hokkaido University said numbers may recover by March, led by regions less affected by the quake.

“People realize places like Tokyo, Kyoto, Hokkaido and Okinawa are safe,” said Usui.

About 65 million Chinese are expected to travel abroad this year, 15 percent more than in 2010, according to the Beijing-based China Tourism Academy.

Danny Hao, 33, a branding manager at a Shanghai-based film company, is planning a 10-day trip to Japan during the Chinese New Year in January, taking in Osaka, Kobe and Nara in the Kansai region, about 500 kilometers (300 miles) southwest of Fukushima.

‘Not a Concern’

He said he’s not concerned about radiation. “Kansai is away from the epicenter. My friends in Japan told me the situation there isn’t as bad as people imagine.”

Pacific Star plans to build as many as seven new hotels in Japan within five years, Seymour said. Ritz-Carlton Hotel Co. and Hoshino, which manages four properties in Japan owned by Goldman Sachs Group, are building new luxury properties in Kyoto, Okinawa and near Mt. Fuji, all to open by 2014.

Four Seasons and Ritz-Carlton also said they are interested in opening ski resorts in Niseko on Japan’s northern-most island, which has drawn Kuala Lumpur-based YTL Corp. and Horst Schulze, founder of U.S.-based Capella Hotels.

Japan Airlines and Sydney-based Qantas Airways Ltd. formed Jetstar Japan in August, while All Nippon Airways will start budget carrier AirAsia Japan with AirAsia Bhd next year.

“Chinese leisure travel to Japan has shown a steady increase since June,” said Beijing-based travel agent in a e-mail. “The popularity of Japan is still quite high.”

Growing Business

The company, majority owned by Baidu Inc., said growth in visitors to Japan rose 1.1 percent in October, year-on-year.

Not everyone expects a rapid recovery. At Hotel Gran Deco, a ski resort run by Tokyu Hotels less than 80 kilometers from the Fukushima plant, bookings are still about half of last year’s level, said spokesman Akihito Abe.

“I don’t see why people are so optimistic about inbound tourism,” said Michio Kitamura, a senior consultant at Nomura Research Institute. “With the uncertainty of the world economy at the moment, people are pessimistic for consumption.”

To help counter the headwinds, Japan cut visa restrictions for Chinese on Aug. 10 and doubled the maximum stay to 30 days. The tourism agency asked parliament to approve funds for 10,000 airfares to promote Japan in 2012, spokesman Zensuke Suzuki said.

“In the past there was an industry perception that inbound demand would grow without us doing anything,” said Hoshino President Yoshiharu Hoshino, who opened a Beijing sales office in 2010. “Now’s the time to bring out Japan’s attractiveness.”

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