The depreciation of the Japanese yen has led to a 67.4% increase in overseas travel package fees and a surge in overseas spending by Japanese travelers. Despite May being the peak tourist season in Japan, the number of Japanese traveling abroad remains one-third lower than pre-pandemic levels.
TOKYO, JAPAN (Business Northeast) – Japan’s exchange rate has hit a 34-year low, fueling a domestic tourism boom while causing local prices to rise and significantly increasing the cost of overseas travel. Consequently, the number of Japanese traveling abroad continues to decline. According to the latest consumer price index released by the Ministry of Internal Affairs and Communications in May, “overseas tour package fees” saw a 67.4% increase, marking the most significant rise among all items. Although May is typically a peak tourist season in Japan, only about 940,000 people traveled abroad, a 34.5% decrease compared to 2019. This represents a one-third drop in the number of overseas travelers compared to pre-pandemic levels.
According to data from the Ministry of Internal Affairs and Communications, the consumer price index in May was 108.1 (based on the 2020 average of 100), an increase of 2.8% from last year. Among them, “overseas travel package fees” was the item with the most significant growth, compared with the same month the previous year, up 67.4%. Overseas tour package fees include transportation fees, meals, accommodation fees, tour fees for tourist attractions, airport service taxes, and other costs, all of which have increased in price due to the depreciation of the exchange rate. Therefore, people who used to travel abroad during the Golden Week switched to traveling within Japan to reduce the burden of travel expenses.
In addition to rising tour package fees, the bottoming out of the exchange rate has significantly reduced Japanese people’s spending power and willingness to shop abroad. In May, the Japanese yen exchange rate to the New Taiwan dollar was about 0.21. Compared with before the epidemic (the exchange rate of Japanese yen to the New Taiwan dollar was about 0.28 in May 2019), the exchange rate fell by about 2.50%. Take traveling to Taiwan as an example. If you exchange 100,000 Japanese yen for New Taiwan dollars, you will lose about NT$7,000, which is equivalent to the loss of 28 cage of steamed dumplings in Din Tai Fung or 120 cups of bubble milk tea.
High overseas tour package fees and consumption have significantly reduced Japanese people’s willingness to travel abroad. According to data from the Japan Immigration and Residence Service, the number of Japanese people going abroad in May 2024 was 941,710. Although it increased by 39.3% compared with the same month last year, compared with 1,438,010 people going abroad in May 2019, it decreased by 34.5%. The number of people traveling abroad is about 1/3 of what it was before the epidemic.
Although the end of April to early May is the Golden Week holiday in Japan, which is the most popular tourist season in Japan, due to the depreciation of the yen and other factors, tourist destinations mostly choose countries and regions closer to Japan, such as Asia, or switch to domestic travel. Although the decline of the Japanese yen has led to a boom in tourism and overseas investment, it has also affected the Japanese people’s economic conditions and spending power. How to strike a balance between the double-edged sword of exchange rate appreciation and depreciation is the test the Japanese government faces.
