Major Tourism Slump Worldwide, post-Japanese Disaster

It should come as no surprise that, in the wake of Japan's earthquake and tsunami, travel to Japan has come to a halt.

The Hong Kong Travel Industry Council has announced that all tours from Hong Kong to Japan are canceled until mid-April. Meanwhile, the National Tourism Administration in Mainland China has warned against tourism. Tour agencies in South Korea have also reported that many vacation packages are being canceled.

The impact on the Japanese economy is bound to be staggering. For 2011, most analysts had predicted that travel and tourism would make up 7 percent of Japan's GDP, or around $409.4 billion. That was before the nuke crisis.

The fallout on tourism is being felt way beyond Japanese borders, too.

• Last year, Japanese tourists spent about $13 billion last year in the U.S., or about $4,000 per visitor. A lot of that money was spent in Hawaii, which is now being hard hit by events of the past two weeks. How hard? Consider this: Arrivals to the Aloha state have dropped as much as 19 percent.
• California is also feeling the travel business pain, with Japanese tourists contributing about $502 million in revenue in 2009.
• Another tourism industry hit by the Japanese crisis and their own natural disaster is New Zealand. Japan is the country's fifth-biggest market for tourists, attracting about 88,600 visitors and spending $320 million annually.
• The Japanese spend big in New Zealand, averaging $3,901 per person for a nine-day holiday. According to New Zealand's General Travel Group, 100 percent of Japanese bookings have been canceled through the end of April.
• Meanwhile, Australia tourism is seeing an equally bleak market, predicting that 100,000 fewer Japanese will visit this year. Japan is Australia's fourth-largest market for tourism.

But it will come back, slowly but surely, because Japanese industry desperately needs to ramp up the supply chain. And even more important, businesses in Japan are trying to figure out a way to make up for the dropoff in foreign exchange caused by the lack of tourists.

A check of major chain hotels throughout the country, with the exception of the northeast region of Japan, reveals all hotels are open and operating, and have very low occupancies. Most airlines are operating into both Narita and Haneda airports in Tokyo.

One by one, travel providers are beginning to discount. A quick search shows that in mid-April (which, incidentally, is peak cherry-blossom season in Japan), flights from Los Angeles and New York to Tokyo costs less than $1,000 round trip. Business-class seats are still pricing high, around $4,000 to $5,000. So this is actually a great time to employ an age-old trick: buy a coach ticket and use miles to upgrade.

In situations like this, the traditional response has been for the tourism industry to discount. But in this case, discounting may not be enough. The travel industry will need to offer value-added deals and experience to entice travelers.

What would make you consider taking a business trip to Japan now?

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