Osaka’s vibrant tourism industry, a cornerstone of the Kansai region’s economy, is navigating a period of significant transformation. A slower-than-expected recovery in the number of Chinese tourists, once the largest demographic of international visitors, is compelling the city to rethink its strategy and diversify its target markets for a more resilient and sustainable future.
The Background: A Heavy Reliance on the Chinese Market
Before the global pandemic, Osaka’s retail and hospitality sectors thrived on the influx of Chinese visitors. Shopping districts like Shinsaibashi-suji and Dotonbori were bustling with tour groups, and “bakugai,” or explosive shopping sprees, became a symbol of their immense spending power. In 2019, visitors from mainland China accounted for the largest portion of international tourists to Japan, and their expenditure, particularly in cosmetics, electronics, and luxury goods, was a critical revenue stream for local businesses.
However, the landscape has changed dramatically. Several factors are contributing to the sluggish return of Chinese tourists. Strained political relations, partly due to the release of treated water from the Fukushima Daiichi nuclear power plant, have led to some reluctance and cancellations of group tours. Furthermore, a slowing Chinese economy and a weaker yuan against other currencies have tempered outbound travel enthusiasm.
The Current Impact in Numbers
Recent data from the Japan National Tourism Organization (JNTO) clearly illustrates this trend. While overall inbound tourism to Japan has surpassed pre-pandemic levels, the recovery from the Chinese market is lagging significantly.
For instance, in April 2024, Japan welcomed over 3 million international visitors, a record high. Visitors from South Korea, Taiwan, and the United States have exceeded their 2019 numbers. In contrast, the number of visitors from China, while substantial at over 530,000, remained approximately 27% below the figures for the same month in 2019. This gap has created a noticeable void in department stores, drugstores, and hotels that had previously tailored their services heavily towards Chinese customers.
Osaka’s New Strategy: A Shift Towards Diversification and High-Value Tourism
In response to this new reality, Osaka’s tourism industry and local government are pivoting. The strategy is twofold: diversifying the visitor base and shifting focus from volume to value.
Broadening the Market
There is a concerted effort to attract more tourists from Southeast Asia (such as Thailand, Singapore, and Vietnam), the Middle East, and Western countries, including the United States, Europe, and Australia. These markets are appealing not only for their growing interest in Japanese culture but also for their different travel patterns. Visitors from these regions often stay longer and spend more on experiences, such as fine dining, cultural activities, and exploring beyond the main tourist hubs, rather than focusing primarily on shopping.
Targeting the Luxury Traveler
Osaka is also positioning itself as a destination for high-net-worth individuals. The city is witnessing a boom in the construction of luxury hotels, with international brands opening new properties in anticipation of a growing demand for premium travel experiences. This shift involves developing and promoting bespoke tours, exclusive cultural workshops, and world-class culinary journeys that cater to travelers seeking unique and high-quality experiences. This approach aims to increase per-capita spending, ensuring economic benefits even with a different visitor demographic.
Looking Ahead: The Future of Osaka’s Tourism and the 2025 Expo
This strategic shift is not merely a short-term reaction but a long-term vision for a more robust tourism economy. By reducing its dependence on a single market, Osaka aims to build a more resilient industry capable of withstanding geopolitical and economic fluctuations.
The upcoming Osaka-Kansai Expo 2025 serves as a powerful catalyst for this transformation. The global event is expected to attract millions of visitors from a wide array of countries, providing a perfect stage for Osaka to showcase its new, diversified identity. It will accelerate the development of infrastructure and high-value tourism offerings, cementing the city’s reputation as a multifaceted global destination.
While the transition presents challenges for businesses accustomed to the previous model, this pivot towards diversification and value-added tourism is a crucial step. It promises to shape a more sustainable and dynamic future for Osaka, ensuring its appeal to a broader global audience for years to come.
