Japan’s Golden Week amidst the rapid depreciation of exchange rates: Overseas tourists dare to spend, Japanese people need to “save”

More than 60% of Japanese respondents believe that the impact of rising prices and the depreciation of the yen will reduce budgets and travel expenses.

The “May Day” Golden Week is a “people follow the crowd” model both domestically and internationally. In Japan, May 3rd to 6th is the traditional Golden Week, with three consecutive days off starting from April 27th. If annual leave or compensatory leave is used from April 30th to May 2nd, Japanese people can gather a full 10 days of short and long leave this year.

“Ginza Avenue has temporarily become a pedestrian street, and all vehicles must take a detour before 5 pm.” On the first day of Japan’s Golden Week holiday, a Chinese resident in Japan told First Financial.

Over the past weekend, many parts of Japan have experienced peak travel times. Among them, Narita International Airport predicts that during the approximately 10 day “Golden Week” holiday, the airport will receive over 800000 trips, about 77% of the same period in 2019 and 1.3 times more than the same period last year. In terms of railways, data earlier this month showed that from April 26th to May 6th, six Japanese railway operators reserved a total of 2.96 million seats, an increase of 16% compared to the same period last year. The number of reserved seats this year has increased by 7% compared to 2018 before the pandemic. Several Japanese railway companies have stated that the traffic situation is expected to reach its peak on May 3rd and 6th.

((“The impact of the Japanese yen exchange rate on this year’s Golden Week in Japan is significant (source: official website of the Japan Tourism Administration)”,)

As the Japanese people celebrate the holiday, officials from the Bank of Japan dare not slack off at all. Since the beginning of this year, the Japanese yen has been continuously falling in the foreign exchange market. On the 29th, the exchange rate of the Japanese yen against the US dollar briefly fell below 160, reaching a new low of about 34 years since May 1990.

Chen Yan, the director of the Japanese Enterprise (China) Research Institute, is not surprised by this. He told First Financial that the current decline in the Japanese yen is not only a national policy of Japan for over a decade, but also in line with the interests of large enterprises. Therefore, in the long run, the yen exchange rate will still remain low, and there is not much room for a correction.

The impact of the fluctuation of the Japanese yen exchange rate on the Golden Week arrangement has been reflected in previous polls. According to a survey on Golden Week released by Japanese research firm INTAG on the 23rd, over 60% of respondents believe that high prices and the depreciation of the yen will have an impact on holiday arrangements, such as reducing budgets and travel. Regarding the arrangement of Golden Week, domestic tourism accounts for 15.6% and outbound tourism accounts for 1.0%, with only an increase of 1.2 and 0.2 percentage points respectively compared to last year; The proportion of “homestays” who don’t go anywhere is the highest, reaching 34%.

Chinese tourists rank first

Since entering 2024, benefiting from the depreciation of the Japanese yen, international tourists have flocked in. As the US dollar has surged against the Japanese yen from 146 to around 158 in the past month, the Chinese yuan has also risen from around 20.5 to a high of 21.8 against the Japanese yen. In the eyes of international tourists, under the same budget, there are obviously more attractions to visit and things to buy than before.

Taking Kyoto, a popular tourist destination in Japan, as an example, “Since the beginning of this year, foreign tourists have been continuously coming to Kyoto,” a Chinese friend told First Financial. He even kindly reminded that it is best to choose Japan’s niche tourist destinations during the May Day Golden Week, as “Kyoto is already too crowded.”.

The depreciation of the Japanese yen has long been a hot topic in promoting tourism. According to the latest data released by the Japan National Tourism Administration (JNTO), the number of foreign tourists visiting Japan in March 2024 was about 3.08 million, surpassing 3 million for the first time in a single month, an increase of 69.5% compared to the same period last year and 11.6% compared to the same period in 2019, setting a new historical record (the actual number of tourists in 2019 was 2.7614 million).

In terms of countries and regions, South Korea, Taiwan, China, Mainland China, the United States and Hong Kong ranked among the top five tourists.

In March 2024, according to the latest data from the Japan Tourism Agency, the tourism consumption of foreign tourists in Japan reached 1.75 trillion yen from January to March 2024, an increase of 73.3% compared to the same period last year, which is the highest quarterly data to date. Among them, per capita tourism expenditure increased by 41.6% compared to the same period in 2019, reaching 208700 yen.

The Japanese tourism industry welcomes the influx of international tourists, from duty-free shops to hotels, catering, transportation, and other related industries, which have already made a lot of money. According to data from the Japan Department Store Association, the total sales of department stores nationwide in Japan reached 510.9 billion yen in March this year, marking the 25th consecutive month of growth. The duty-free sales of tourists visiting Japan increased by 2.5 times, reaching 49.5 billion yen, the highest value since the start of the survey in October 2014, and breaking records for three consecutive months. The sales revenue of tax-free goods in 2023 was 348.4 billion yen, about three times that of the previous year, setting a new high since 2015 with full year data. Among them, luxury goods such as LV have become the sought after items for international tourists.

A survey conducted by Japanese media targeting 100 hotels in Sapporo, Tokyo, Kyoto, Osaka, and Fukuoka (with over 100 rooms) showed that during the Golden Week of 2024, prices of almost all hotels in Japan increased year-on-year. 1/4 of hotels have seen an increase of over 30%; 3/4 of the hotels saw an increase of over 10%. The room prices on the first day of the Golden Week are 20% higher than those in 2019 before the pandemic.

Japanese tourists’ wallets shrink

Compared to overseas tourists who spend less money on tourism in Japan, domestic Japanese tourists are much more cautious about their plans for the Golden Week. For them, the depreciation of the yen has pushed up the cost of outbound travel, so they must be meticulous in their calculations. For example, some tourists expressed in interviews that they would consider ordering takeout instead of stopping at restaurants when traveling overseas, while others simply gave up their overseas travel and chose to stay in Japan. According to a survey by JTB Travel Agency in Japan, 70% of respondents stated that they would not choose “overnight travel” during this year’s “May Day” golden week; In terms of specific arrangements, 50% of the respondents said they would go back to their hometown to meet friends and relatives, 30% chose to travel for vacation, and 20% chose to stay at home for rest. Compared to last year, economic factors are the main factors that respondents are most concerned about and affect travel arrangements.

According to data from the Japanese government, the interest of the Japanese people in domestic destinations has been transformed into domestic spending, which has returned to pre 2019 levels. The recovery of Japan’s outbound tourism market will not occur until next year at the earliest.

“I may need some more time to travel abroad again, and now prices, including food, are too high,” said Tomoyo Shimoya, 39. Earlier this month, she chose to celebrate her birthday at an old-fashioned hotel a few hours drive from Tokyo. The bill she listed shows that the average cost per person, including breakfast and dinner, is about 15000 yen (approximately 700 yuan). “By comparison, hotel rooms in Hawaii average $375 per night (approximately 2720 RMB),” she said.

The decline of the Japanese yen is also “devouring” the increase in wages, causing the real income of the working class to decline instead of increase. The latest data released by the Japanese Ministry of Health, Labour and Welfare shows that as of February this year, Japan’s real wage income has decreased year-on-year for 23 consecutive months.

Mitsuko Tottori, CEO of Japan Airlines, is concerned about the trend of “domestic travel” being favored over overseas travel due to a shrinking wallet. Last week, she stated that due to the weakening of the yen, young people will reduce their travel to places outside of Japan for sightseeing and sightseeing. Koji Shibata, CEO of All Nippon Airways, also expressed similar concerns.

Bloomberg industry analyst Eric Zhu said that although All Nippon Airways and Japan Airlines recorded solid performance in the third quarter of last year, they are at risk of losing international market share. He said that the sluggish outbound tourism may limit the profit potential of All Nippon Airways and JAL this year, as these two companies need to engage in a tough battle with foreign airlines in terms of inbound tourists.

When will the Japanese yen exchange rate rebound

Regarding the current decline of the Japanese yen, Chen Yan believes that one of the arrows in the “Abenomics” implemented by then Prime Minister Shinzo Abe after he took office in 2012 was the depreciation policy of the yen. “This policy has continued to this day, even though the Bank of Japan has entered the era of agriculture.”

Bank of Japan Governor Kazuo Ueda stated on the 26th that the current trend of yen depreciation has not had a significant impact on the fundamental inflation rate, and stated that the current “loose financial environment will continue.”. Japanese Finance Minister Toshiichi Suzuki also stated on the 26th that he will continue to “closely monitor the dynamics of the foreign exchange market and take comprehensive measures to respond.”.

At the same time, Chen Yan said, “In the past, the interest and dividends obtained by Japanese companies in foreign investment were to be returned to Japan. However, today there is no new investment demand in Japan’s domestic market, or the demand for the Japanese yen is very small. Therefore, funds invested overseas have not chosen to return to the Japanese market, which leads to relatively limited space for the appreciation of the Japanese yen.”

In addition, Chen Yan also told First Financial that for Japanese large enterprises that pursue internationalization strategies, the exchange rate used for overseas investment may have been 110 yen per US dollar, but after many years it has increased to 156 yen, resulting in an additional nearly 50 yen. “For large enterprises, the depreciation of the yen is beneficial for revenue, equivalent to ‘lying down and making money’.”

Chen Yan believes that the above three points indicate that the Japanese yen will definitely remain in a lower range in the future. As for the issue of government intervention, Chen Yan believes that even if there is intervention, the effect will be temporary. After all, the scale of the yen that the government can provide is limited, and it will eventually be diluted in the huge foreign exchange market. Therefore, it is impossible to maintain the long-term upward trend of the yen through intervention.

“We often discuss that maintaining the Japanese yen at a level of 130 to 1 US dollar would be a good thing,” said Tottori, but as the yen continues to hit a 34 year low, she believes this is a big issue.