The 2025 edition of the ‘Tourism White Paper’ released by the Japan Tourism Agency is not just an accumulation of data. A closer look reveals a clear depiction of the future of the tourism industry.
The figures tell the story that the tourism of the past is “not returning” and the industry has not yet prepared for a new era of tourism. Let’s extract characteristic items from the released data and make some “future predictions.”
Future Prediction for the Travel Industry ①—The End of a Business Model Reliant on Seniors
Quoted from “Tourism Situation FY2024 and Tourism Policy FY2025” (Tourism White Paper).
The “domestic overnight travel experience rate,” meaning the proportion of people who traveled domestically in 2024, shows a slight increase among those in their 20s and below compared to 2019, but a slight decrease for those in their 30s to 60s, and a decrease from 38.6% to 30.7% for those 70 and above, a drop of 20%. This is due to changes in population structure, with the average age within the 70s increasing, resulting in a higher proportion of individuals in their 80s and 90s who find it physically difficult to travel. As they will increasingly have to give up traveling with age, the travel experience rate for those 70 and above will likely continue to decline.
Quoted from “Tourism Situation FY2024 and Tourism Policy FY2025” (Tourism White Paper).
Of course, new people entering their 70s isn’t a problem in itself, but this generation does not favor group tours and has various other interests besides travel. When it comes to “attitudes toward travel,” 32.9% of those in their 70s consider travel their most important hobby, compared to only 24.1% in their 60s. The era of affluent seniors being the main target of the travel industry is approaching its end.
In the future, seniors entering the travel industry will transition from the baby boomer generation to Generation X, and finally to the employment ice age generation. Currently around the age of 50, they did not experience the benefits of the bubble economy and tend to prefer economical, short, and close-to-home travel styles. Those in their 50s who consider travel their most important hobby amount to only 16.1%, even lower than those in their 60s. How the nation’s high-value-added strategies align with their needs will be crucial, as mishandling this may make domestic tourist spots even more distant from Japanese nationals.
Future Prediction for the Travel Industry ②—Travel Demand Will Decline If We Don’t Make the Current Young People Love Traveling
Quoted from “Tourism Situation FY2024 and Tourism Policy FY2025” (Tourism White Paper).
According to the “domestic overnight travel experience rate” mentioned above, the travel experience rate for young people aged 20 and below increased slightly from 62.8% in 2019 to 64.0% in 2024. However, in terms of “attitudes toward travel,” 33.6% of those in their teens, 35.3% in their 20s, and 36.8% in their 30s said they would “not voluntarily travel” or “have no interest in traveling” (compared to 23.1% in their 60s and 22.4% in their 70s). If we do not transform young people under 30 into “travel enthusiasts,” there is a risk that travel demand may decline over time.
The decline in overseas travel also reflects this trend away from travel. Many factors, such as the lingering effects of COVID-19, a weak yen, international circumstances, and rising prices, are causing overseas travel to be avoided. The number of Japanese who traveled abroad has decreased by more than 30%, from 20.08 million in 2019 to 13.01 million. In 2024, only 17% of Japanese hold a passport, a 15% decrease compared to 2019, indicating a waning interest in overseas travel. While attention is focused on inbound numbers, this decrease is often overlooked, but if interest in overseas travel continues to decline, it could accelerate an overall departure from travel, posing a threat to the domestic travel market.
If young people from the employment ice age onwards stop willingly traveling domestically, and if Japan becomes a country where overseas travel is never considered an option, let alone a point of interest, discussing the future of tourism will be futile. Faced with such a regressive movement relative to globalization, how should the tourism industry respond? Can it be sustainable by relying solely on inbound tourism? The White Paper poses such questions.
Future Prediction for the Travel Industry ③—Ryokans Are Being Left Behind
Quoted from “Tourism Situation FY2024 and Tourism Policy FY2025” (Tourism White Paper).
According to “room occupancy rate trends by type of accommodation,” the overall average occupancy rate has continued to recover from 57% in 2023 to 60.5%. While city hotels, business hotels, and casual lodgings are on a recovery trend by 3 to 5 points, ryokans remain stagnant, almost flat compared to the previous year. With urban recovery being led by inbound tourism, this comparison may disadvantage ryokans often found in rural areas, but fundamentally, it is the slow transformation of the ryokan business that’s a major factor.
Quoted from “Tourism Situation FY2024 and Tourism Policy FY2025” (Tourism White Paper).
For instance, according to the “trend of traveler companions in domestic total travelers,” the proportion of solo travelers increased from 6.7% in 2014 to 10.3% in 2024, or 1.5 times, yet ryokans have not been able to accommodate this demand. The traditional package of one-night stays with two meals doesn’t align with inbound travelers seeking popular Japanese street food like ramen and yakitori rather than high-formal kaiseki cuisine. The delay in digital transformation also hinders resolving labor shortages, and many establishments find themselves unable to sell rooms even if they are willing. Without being able to transform flexibly to accommodate solo travelers, workationers, short-term and medium-term stays while retaining the entertaining aspects of a ryokan stay, the business is likely to face increasingly severe challenges.
Future Prediction for the Travel Industry ④—Inbound Tourism Will Not Easily Continue to Grow
Quoted from “Tourism Situation FY2024 and Tourism Policy FY2025” (Tourism White Paper).
Without even looking at the “trend of traveler companions in domestic total travelers”, many might feel reassured seeing that inbound tourism has reached 36.87 million, surpassing pre-COVID-19 levels and continuing to break records. However, as mentioned earlier, the number of Japanese traveling abroad has dramatically reduced. Meanwhile, international flight routes operating to Japan have returned their passenger seating to pre-pandemic levels (according to Travel Journal).
The reason for the surge in inbound tourism is due to similar seat capacity pre-COVID-19, but with fewer Japanese using international flights, airlines had more seats to sell to inbound tourists. This means it’s not just that “more foreigners are coming” but rather “fewer Japanese are traveling, leaving seats available.” This does not guarantee sustainable growth in inbound tourism.
First, the expansion of Narita Airport, which has recently commenced construction, should spearhead efforts to increase international routes and seat availability in hub airports and regional airports. It is also critical to prioritize securing employment in rural regions with accelerating population decline and urgently prepare content capable of accommodating inbound tourism. If these strategies do not mesh well, achieving the annual inbound target of 60 million will not be easily attainable.
Future Prediction for the Travel Industry ⑤—Adapting to the Irreversibility of Business Trips
Quoted from “Tourism Situation FY2024 and Tourism Policy FY2025” (Tourism White Paper).
Business demand, that is the need for travel due to business trips, has not yet returned.
According to “trends in the number of domestic travelers by purpose of travel,” while overnight leisure travel has increased to 109.6% compared to 2014, day trips for business are at 52.9%, and overnight business trips are at 86%, showing a significant decrease. Post-pandemic, the business world has largely shifted to an online basis, and the proportion of travel demand attributed to business trips is expected to further contract.
Air routes connecting local regions and hotels in regional cities have emphasized business demand over the more sporadic nature of leisure demand, and even now are struggling to boost occupancy rates as desired. Previously, loyalty programs like mileage and points treated business customers as heavy users to retain them, but in the future, those benefits will likely need to be reduced. Instead, greater effort will be required to normalize tourist traffic, which tends to fluctuate with weekdays and seasons.
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By simply interpreting the Tourism White Paper, at least this much future can be predicted.
Beyond just focusing on inbound tourism, unless we present new values toward journeying to Japan’s youth, Japanese tourism may merely rely on inbound tourism to fill gaps while continuing a cycle of reduced production. Moreover, that value must be something that inspires optimism for future employment among local residents and those employed in the tourism industry.
Only regions, facilities, and businesses that have begun adopting flexible responses now will survive the next decade. The white paper is filled with clues for such endeavors. For those involved in tourism, it’s recommended to give it a read.
Notice
This article was generated using automatic translation by GPT-4 API. The translation may not be accurate.
