China tour ban deals blow to Japan’s goal of 40mn visitors

Bloomberg

Japan’s goal of attracting 40 million visitors this year may already be in danger, following China’s decision to ban tour groups going overseas to help contain the impact of the rapidly spreading novel coronavirus.
Chinese tourists made up almost a third of all arrivals to Japan in 2019, in a year that saw visitor growth impacted by a diplomatic spat with South Korea and a series of extreme weather events.
Once considered a tourism backwater with a reputation for expensive prices and a lack of foreign language skills, Japan’s inbound boom has been one of the few unambiguous economic success stories under Prime Minister Shinzo Abe. Aided by government steps to relax visa approvals, visitors to Japan have surged almost four-fold to 31.9 million since 2012, buoying sectors from cosmetics to consumer goods and hospitality.
The government’s original goal of attracting 20 million visitors this year, when it will host the Olympic games, was met with five years to spare and swiftly doubled. That goal could now be in doubt, with the tour restriction the latest brake on growth.
The pneumonia-like illness has led China to take unprecedented moves to lock down travel as the number of infections in the country surged to almost 2,000. Chinese President Xi Jinping has ordered a faster response to the virus, with the ban on all outgoing overseas group tours to take effect Monday. Domestic group tours were suspended on January 24.
The restrictions come in the middle of Lunar New Year, a peak time for travel by Chinese to Japan. Almost a third of visitors from China came as part of tour groups in 2018, the most recent year for which information was available from Japan National Tourism Organisation.

Escalating Feud
Chinese spending has been a highlight for Japan’s tourism industry in the last year. Visitors from China are the largest from any country, and their spending rose 15% to 1.77 trillion yen ($16.2 billion), making up almost 37% of the total.
That helped alleviate a plunge in arrivals from South Korea, which fell by more than 60% in December from the year earlier amid an escalating feud that’s spread from historical grievances to trade, investment and military ties.
A series of typhoons making landfall in metropolitan areas in 2018 and 2019 also hurt tourism and dented the country’s reputation for smooth public transport.

Thailand’s economy hit by China’s ban on tours
Bloomberg

Thailand’s economy faces fresh turbulence after China banned outbound group tours to try and limit
the spread of the novel coronavirus that’s sickened thousands.
Chinese holidaymakers — many on group tours — spent almost $18 billion in Thailand last year, more than a quarter of all foreign tourism receipts, government data show. The industry as a whole contributes 21% to gross domestic product, according to the World Travel & Tourism Council.
Both tourism and exports were already under pressure from a surge in the Thai currency. Disarray over the annual budget is another obstacle for growth.
The government has rolled out more than $10 billion of stimulus steps in the past few months to cushion the economy, which the Bank of Thailand estimates expanded at the weakest pace in five years in 2019.
“The outbreak of coronavirus is a risk,” Tim Leelahaphan, a Standard Chartered Bank economist in Bangkok, wrote in a note. “The strong Thai baht may also affect tourism growth. That is unlikely to help an already-slowing economy.”
The new coronavirus originated in China, where dozens have died from the illness. A number of nations have diagnosed the infection in travelers from China. Cases in Thailand are rising but remain in the single digits.
China’s prohibition on outbound group tours takes effect Monday and may spell more pain for Thailand’s Tourism & Leisure equity index. The gauge slumped more than 6% last week, making it the third-worst performing industry group on the stock exchange.