Global travel and experiences remain robust in 2024, with Japan emerging as the top trending destination in Asia post-pandemic.

According to a report by Mastercard Economics Institute (MEI), part of the financial services firm Mastercard, visitor arrivals from mainland China, the largest source of tourists for Japan, are still below 70 pc of pre-pandemic levels and despite that Japan’s total visitor arrivals in the first half of 2024 have already exceeded 2019 figures over the same period.

The report says that this surge in tourism is fuelled by pent-up demand, a favourable exchange rate for the Japanese Yen (JPY) and more active airline routes. With the Japanese government aiming to double the annual number of foreign visitors to 60 million by 2030 compared to 2023 levels, the MEI anticipates further developments in the tourism sector to accommodate this increase in travellers in the coming years.

The United States, Canada, Australia and Singapore are the top growth drivers of inbound arrivals to Japan. Pre-pandemic, Northeast Asian source markets heavily dominated inbound arrivals at 70 pc of all visitors.

The report says that Chinese mainland was the top source market, accounting for 30 pc of Japan’s visitors, followed by South Korea at 18 pc, Taiwan at 15 pc and Hong Kong SAR at 7 pc.

While Northeast Asian source markets remain important in 2024, data for the first half of 2024 reveals greater traction in the growth of visitor arrivals from North America and elsewhere in the Asia-Pacific. This suggests airlines have been growing their flight corridors with comparatively smaller markets.

According to the Mastercard report, visitors from Western countries spend a greater share of wallet on accommodation while visitors from Asian countries prioritise retail therapy. It says that generally, travellers from Asia allocate a larger portion of their budget to retail and shopping compared to visitors from Western countries, who spend more on accommodation. It is because visitors from North America and Europe are often travelling to Japan for the first time and tend to stay longer, leading to higher expenditures on accommodation and dining, as noted in official Japanese government surveys.

On the other hand, the lower cost of airfare and shorter flight times from East Asia enable these travellers to make frequent short trips to Japan. This type of travel encourages spending on retail, resulting in a higher share of their budget going towards shopping, the report says.

Travellers from Asia spend more on shopping than other visitors (Photo: JNTO)

It adds that foreign exchange rates have influenced tourist spending priorities. The weak Japanese yen has boosted spending, particularly in retail. In 2024, compared to 2019, there has been a noticeable increase in the retail share of spending for many tourists.

This is most pronounced among tourists from Singapore, the US, Europe, and the UK, where the currencies have strengthened significantly against the yen, enhancing their purchasing power compared to pre-pandemic levels.

In terms of length of stay between Q3 2023 and Q2 2024, according to an official survey, visitors from South Korea were most likely to take very short trips, with 23 pc of them staying less than three days between Q3 2023 and Q2 2024. The report says that over half of the visitors from South Korea, Taiwan, and Vietnam stayed for 4 to 6 days. In contrast, visitors from Europe tended to stay much longer, with over 40 pc of them visiting for 14 to 20 days. Japan is facing an uneven distribution of tourists across the country.

The report shows that a large portion of foreign hotel visitors are concentrated in a few key areas, such as Kyoto, Tokyo, Osaka, and Okinawa, which are well-served by international flights. In April 2024, Kyoto had the highest proportion of foreign visitors, with 68 pc compared to Tokyo’s 36 pc. Outside these main cities, the foreign visitors ratio typically falls below 10 pc. This marks a significant increase from 2019, when Kyoto and Tokyo had average foreign visitors ratios of 38 pc and 17 pc, respectively.

The report adds that Japan has many other destinations that are increasingly attracting foreign visitors. Destinations like Ishikawa, Fukuoka, and Nagano are seeing growing interest.

Improving travel connectivity between international airports and these emerging destinations will be crucial for distributing tourists more evenly across the country. Enhancing tourism infrastructure in these areas will help Japan move towards its goal of welcoming 60 million international visitors annually by 2030, says MEI.