TravelMole Guest Comment: How the Japan disaster will hit tourism

Over the last week, Japan has suffered its fair share of natural disasters from a colossal 9.0 magnitude earthquake which hit north eastern Japan, a tsunami and the subsequent threat of nuclear meltdown. Nadejda Popova, Travel and Tourism Industry Analyst at Euromonitor International, reviews the impact of the disaster on tourism.

“Even before the natural disaster, the global economic recession of 2008/2009 hit the Japanese economy hard, with the country registering a public debt to GDP ratio of 200% in 2010, making it one of the most indebted economies in the world.

Although Japan – a seismically active country – is considered to be one of the most prepared to react to crisis, the country is on its knees due to the magnitude of the devastation. Fears are further compounded by the threat of the Shinmoedake volcano in Southern Japan which may erupt.

Earthquake causes nuclear crisis
The earthquake struck Japan on 11 March 2011, triggering 10 meter high tsunami waves, engulfing towns and villages in the north east, bringing the death toll to more than 10,000 in the Miyagi prefecture alone.

Following the impact of the earthquake, several nuclear power plants were severely damaged, leading to electricity blackouts. The Fukushima nuclear power plant suffered explosions causing radiation leakage. The authorities continue to battle to avert nuclear meltdown.

People living within a 13-mile exclusion zone were required to leave immediately and residents within 19 miles to stay indoors, causing panic as there is a severe shortage of food, fuel, water and medicine.

Far-reaching implications on the economy and tourism
The earthquake led to a slump in global stock markets following growing fears that the ongoing events in Japan will slow the global economy, with the country being a huge manufacturer of goods such as electronics and automobiles.

Tourism flows are most likely to decline as international tourists cancel travel plans to Japan. Environmental disaster, threat of other earthquake tremors and crippled infrastructure will be factors affecting consumer and business confidence. A huge number of people will be displaced. Many Japanese citizens are relocating to the western city of Osaka.

Several airlines have already cancelled flights to Tokyo, for example, Air China and Lufthansa, while services out of Japan are sold out as people flee the country. Already many governments, including France and Germany are advising citizens to avoid non-essential travel to Japan. The UK is advising only against non-essential travel to Tokyo and the northeast of Japan but not elsewhere in the country.

Physical damage and destruction caused by the tsunami is expected to have a negative impact on travel and tourism sales as most tourism facilities and infrastructure are closed, bringing hotel occupancy rates down in the short- to medium-term.

Prices for holidays to Japan are expected to decline sharply with a number of tour operators cutting their prices by 50% in an effort to stimulate demand.

Massive reconstruction in the country will take priority over travel plans. This will also dent outbound tourism flows in the country and equally the performance of those markets where Japan is a major source market such as China, South Korea, the US and Taiwan."

Source: Euromonitor International