The Japanese government will reportedly resume its Go To Travel domestic travel campaign to try to help a tourism industry struggling in the wake of the COVID-19 pandemic.
While there is enthusiasm over that prospect, and projections are positive, considerable uncertainty hangs over the program. The government should proceed only if it has the protocols to ensure that a new Go To campaign can be done safely.
Japan has had high hopes for its tourism industry. The sector was expected to provide a substantial boost to national wealth and income, an ambition that had been achieved. The number of foreign visitors to Japan climbed from 4.7 million in 2001 to nearly 32 million by 2019. Those visitors spent ¥4.5 trillion in 2018. The domestic travel market was also expanding, generating ¥20 trillion to ¥22 trillion in 2019.
The bottom fell out when COVID-19 hit. Total tourist spending plunged 61% to ¥11 trillion in 2020. Foreign tourists vanished, returning to the level of 2011, the year of the Great East Japan Earthquake, undoing a decade of gains. In 2020, the number of Japanese domestic tourists fell 50% from the previous year and travel consumption dropped 54.5%.
Alarmed, the Japanese government launched the Go To Travel campaign in July 2020, with a ¥1.35 trillion budget to stimulate demand for tourism. It covered up to 50% of an individual’s travel expenses, including transportation, food and lodging, through a combination of discounts and coupons, up to a maximum of ¥20,000 per stay. Some 90 million people took advantage of the campaign, but it was suspended in December after a surge in COVID-19 cases.
The program was widely viewed as a success. One analysis reckons it boosted consumption by ¥1.46 trillion, but some economists were skeptical. They countered that most people who made use of the campaign would have traveled anyway and those who feared the coronavirus would stay home regardless of the incentive. One comparison of spending on tourism showed that there was little difference from other consumption items that were not subsidized.
The prospect of a recovery from COVID-19 and a vaccine and pills that can protect against future infection has prompted the government of Fumio Kishida to restart the program. There are plans to launch a revised Go To Travel campaign in the first months of 2022, assuming that there is no sixth wave surge of the virus.
Initial drafts indicate that the program will be scaled back to 30% of total costs, with the maximum discount dropping to ¥10,000 from ¥14,000. For a day trip, the discount will be up to ¥3,000. Preliminary estimates of the new program indicate that it will generate ¥3.7 trillion and demand for 210 million guest nights, although much depends on the size and scale of the subsidy.
A Go To Travel campaign makes sense, if properly managed. For a start, measures must be in place to ensure that travelers have proof of vaccination or submit a negative COVID-19 test. This must be scrupulously applied. There is evidence that the Go To Travel campaign contributed to the introduction of COVID-19 variants across the country and drove the third wave of infection in Hokkaido. The government has noted the need to create a safe and secure system, with Prime Minister Kishida himself acknowledging this priority.
The government is reportedly going to structure payments to discourage congestion while traveling, with preference given to weekday trips. Not only will that reduce crowds, but it will encourage people to use official vacation days, a long-sought national ambition; the average number of paid days off taken in Japan is lower than in many countries.
The program should also try to encourage travel to less-frequented areas and regions. That could be facilitated by incentives to stay at small- and medium-size hotels and inns rather than the bigger chains.
A third requirement is ensuring that the program is run properly. There have been reports that some travel companies inflated reports for reimbursement, and those accounts were not caught by Go To Travel program managers. A board of audit found the mistakes. In fact, management of the program was outsourced to a “tourism industry joint recommendation body,” which had little incentive to punish offenders. That cannot be replicated in the next iteration.
In addition to trial runs for the new program that concluded last month, several prefectural governments and municipalities have introduced their own discount programs. They offer subsidies or reduced prices for stays at designated hotels in their jurisdictions. This has an appeal, but there cannot be a competition among prefectures or localities that costs more revenue than it generates. That is why a central government program is so important.
Government balances cannot be ignored, however. Attention must be paid to overall spending, but a pandemic is (hopefully) a once in a lifetime event for which governments should be prepared to intervene. Moreover, last year considerable sums in the budget went unspent; reportedly, about one-half of the original Go To Travel budget, about ¥1.3 trillion, remains.
The national daily infection rate remains low, but the emergence of the omicron variant could change that, especially as the country prepares for the year-end and New Year holidays; Japan Railway has already reported an 81% increase over last year in reservations on bullet and express trains.
If Japan can get through the new year without another surge in cases, the country may well be ready for the resumption of the Go To Travel campaign. Safety and security must remain foremost among government considerations.
The Japan Times Editorial Board