Japan seeks local tourism restructuring as demand exposes staff shortages

Japan’s regional tourism industry must transform to make it a more profitable industry, a government report said on Tuesday, as a post-pandemic surge in demand highlighted staff shortages and low productivity.

The government’s call in its annual tourism white paper comes as companies reduced workforces amid movement restrictions triggered by the coronavirus pandemic but are now seeing a return in tourist numbers. Tourism is a major driver of local economic activity and employment.

A file photo taken in May 2023 shows a business district near the site of the former Tsukiji fish market in Tokyo packed with tourists. (Kyodo)

Since October, the government has lifted a ban on unscheduled overseas travel by individuals due to the outbreak and launched a national travel discount program for residents.

In a sign of recovery in the lodging sector, hotel occupancy by foreigners topped 10 million nights in April for the first time since January 2020, equivalent to about 92% of the April 2019 total, the Japan Tourism Agency said.

Despite the rebound in tourism, labor shortages and increased workloads are cited as issues that need to be addressed.

The Bank of Japan’s March Tankan report on a key index gauging major business sentiment found that the hotel and food services sector was three times more concerned about staffing than manufacturers.

The white paper also raises the issue of compensation.

The 2022 government wage survey showed the average wage in the hospitality industry at 3.46 million yen ($24,800), well below the 4.97 million yen average for all industries.

While average wages across all industries have risen for two years in a row, wages in the hospitality industry have declined.

To raise wages, the government proposes ways to increase average spending per customer. The government-backed value-add scheme, which funds works such as refurbishing rooms, is seen as a way to boost sales.

The agency said that after interviewing 89 tourist facilities, they charged an average of 54.2% more for refurbished rooms.

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