Slow gradual rebound expected for Japanese visitors

Hawaii arrivals from Japan, once forecast to make a quicker rebound from the COVID-19 pandemic, now are not expected to return to pre-pandemic 2019 levels until the end of next year.

Eric Takahata, managing director of Hawaii Tourism Japan, told the Honolulu Star-Advertiser that during the first and second quarter of this year, Japanese arrivals are projected to return to about 30% of pre-pandemic numbers, and it’s expected to take until the third or fourth quarter of this year to get back to 40% or 50% of the 2019 visitor counts.

“It’s going to be a slow gradual build; it won’t be rapid, ” Takahata said. “To get back to 2019’s 1.4 million to 1.5 million (arrivals), I think it will take the whole of (2024) as well.”

Japan travel sellers and marketers told the Star-Advertiser this week that the Japan visitor market has lagged returning to Hawaii for a variety of reasons, including fuel surcharges and an unfavorable exchange rate. That’s been exacerbated by U.S. inflation and robust domestic demand for Hawaii, which has limited visitor industry inventory and driven up airline and hotel prices. The Japanese government’s decision to offer incentives to stimulate domestic travel, as well as its late start to lifting COVID-19 restrictions, didn’t help, either.

Most travel sellers and marketers specializing in the Japan visitor market to Hawaii are far less optimistic now than they were in the spring of 2022, when a delegation from the Japan Association of Travel Agents visited Hawaii and predicted an accelerated recovery.

JATA Chairperson Hiroyuki Takahashi said that he expected Japanese visitors would return to Hawaii in 2022 at 40% of the numbers seen in 2019 before the pandemic, which was more than 1.54 million visitors. Takahashi had expected that by this year, arrivals would have returned to the 2019 level or even beat it. But his projection, as well as forecasts from economists and other travel watchers, proved far too optimistic.

Takahata said during previous travel disruptions, such as 9/11, the SARS outbreak of 2002-03, the 2008 Lehman Brothers financial crisis, and even the 2011 Tohoku earthquake and tsunami in Japan, visitor arrivals from Japan had rebounded rather quickly.

“The following quarters, it had popped back to about 90%. But we had never had a two-year gap with the world stopping in their life. I think there was a lot of underestimating, ” he said.

Certainly coming out of COVID-19 has been a lengthy process for Japan, a country known for caution.

Dave Erdman, PacRim Marketing president and CEO, Hawaii and Tokyo, said, the “Japanese are still seeing COVID cases in the news, and are perhaps still concerned overall with foreign travel, and have delayed bookings to understand the current situation. That is also perhaps why we still see so many people continuing to wear masks, not just out of obligation, not because of spring hay fever, but more out of concern of getting COVID still.”

It was only in March that Japan’s government dropped its mandatory mask requirement.

Japan lifted its coronavirus border controls, including a requirement that entrants show proof of three vaccinations or a pre-departure negative test, on April 29, the start of the popular Golden Week travel period.

It wasn’t until May 8 that the Japanese government lowered its COVID-19 threat from a Level 2 to a Level 5, putting coronavirus on par with the flu.

Jean Dickinson, PacRim Marketing chief integrated marketing officer, said, “Please keep in mind that the beginning of the year is a peak time for booking travel. Because of that, many Japanese travelers made other plans for 2023, as they did not believe international travel would be practical.”

Sayuri Kimura, PacRim Marketing executive vice president, said preliminary figures from the Immigration Bureau show the number of Japanese overseas travelers in March 2023 was 694,293, up 982.33% compared with March 2022 and down 64% compared with 2019.

“Looking at the number of departures by country and their growth rates in the research data, areas that are less affected by exchange rates or are less expensive compared to the U.S. dollar are showing remarkable growth,” Kimura said. “So areas where it is possible to reduce the number of days of stay and areas that are relatively close are currently popular, as fuel surcharges due to high oil prices are also a major factor.”

Tetsuya “Ted” Kubo, JTB Hawaii president and CEO, said Hawaii continues to be the most popular destination for Japanese travelers. However, Kubo said, “Short-haul destinations, like Korea and Taiwan, which are more affordable, have experienced a faster rebound.”

“The tour prices have gone up by 50% or more compared to pre-pandemic,” he said. “This has been a big factor in the recovery pace when it comes to attracting repeat travelers to Hawaii.”

Takahata said Europe is outpacing Hawaii’s booking pace, mostly because Hawaii costs more.

“A five-night trip to Italy is cheaper than a four-night trip to Hawaii,” he said, adding that other destinations such as Australia, Southeast Asia and Guam also are aggressively marketing to Japanese travelers.

Still, Kubo said the total passenger count from Japan to Hawaii has been increasing since Japan’s government eliminated the COVID-related border restrictions May 8.

“The average daily passenger count on flights arriving from Japan in the first 15 days of June was about 2,300 passengers, compared to 1,600 passengers in the first half of May,” Kubo said.

He added, “JTB’s bookings are picking up this summer with last-minute bookings, as well as for the fall travel season, but exactly when the pace will escalate the way everyone expects is still unknown.”

Takahata said airlift between Japan and Hawaii, which is currently 48% below 2019, is expected to grow for July, August and September — Japan’s traditional summer travel period. Obon, the popular mid-August Buddhist tradition where people honor the spirits of their ancestors, also is expected to add volume to the peak summer months.

“We have intelligence that all carriers are looking to add back supply over the summer months,” he said. “They aren’t flying with strong load factors (occupancy), which are about 55%, but for July, August and September, the load factors are at 80%.”

Takahata said starting in mid-July, Japan Airlines will offer a seasonal flight between Narita, Japan, and Kona three times a week.

Takahata said another positive sign is that the Honolulu Marathon already has 5,000 runners from Japan registered to participate in December. Takahata said he’s hoping that the number will at least double by year’s end. That would bring the count closer to the 16,000 runners who came from Japan in 2019.

He said there also are signs that the meetings, incentives, conferences and exhibitions business is returning to Hawaii, with two large groups in the thousands planned for fall.

Kubo said the timing of the market’s full recovery may depend on its affordability.

“It will be challenging to increase the number of Japan visitors back to pre-pandemic levels while the cost of travel to Hawaii remains high,” he said. “As (a recent Department of Business, Economic Development and Tourism) survey showed, Hawaii may be losing appeal for repeat visitors from the U.S. mainland and Canada markets, which recovered sooner than other source markets. We would not want to see this to become the case with the recovery of the Japan market.”

Kimura said it’s difficult to predict when the Japan market will recover, although there may be signs of market recovery as the yen improves and fuel surcharges subside, easing the sense of “overvaluation.”

She said, “According to the Tokyo Metropolitan Government, the number of passport applications had been declining in Tokyo, but preliminary figures for April show that the number of applications was about 55,000, recovering to near pre-corona disaster levels. This may be a good trend that is gradually increasing awareness of overseas travel.”

Erdman said he has been encouraged to see tour operators, along with airlines, aggressively promoting and selling Hawaii packages.

Kimura said as of April 1, the Japan Association of Travel Agents began a “JATA Overseas Travel Promotion Project,” a one-year promotion aimed at stimulating demand for overseas travel.