A hotel in Japan which is popular amongst Chinese tourists has been forced to file for bankruptcy following a sharp fall in demand. The outbreak of the novel coronavirus has led to a huge decrease in customers from China. In a normal year, Japan would usually expect to welcome over 8 million tourists from the Chinese mainland, accounting for over a quarter of all visitors from overseas!
The Fujimiso hotel had unfortunately been very much focused on attracting Chinese customers as business boomed in the last few years. The sudden fallout from the coronavirus has led to thousands of cancelations, resulting in the hotel unable to cover their costs.
With catering for Chinese tourism such a big industry in Japan, it is expected that this will not be the only business that finds themselves in dire financial trouble. Hotels are likely to be hit the hardest, but the impact will be felt throughout the Japanese economy, from restaurants to theme parks to boutique shops, with Chinese tourists spending billions of dollars in Japan each year.
There will certainly be a lesson for Japan to learn after a sense of normality is restored. The country has become overdependent on Chinese tourists, with some smaller industries relying on them entirely. Tourism in Japan will need to look beyond China, and think about diversifying their sources of tourists in order to mitigate any future risk.
THINK LIKE AN ECONOMIST!
Q1. What is meant by the term ‘overdependent’?
Q2. Explain why the business in the article failed.
Q3. Analyse the reasons for why the Japanese tourism sector should diversify their sources of tourists.
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