The Japanese authorities made a final decision on Saturday not to allow foreign fans to enter the country during the Olympic Games because of the Covid-19 epidemic. The exclusion of spectators from abroad means that organisers will lose out on the proceeds of the Olympic and Paralympic Games from the price of some 630,000 tickets purchased. Although this is a significant blow to tourism, particularly the hotel and catering sector, the impact on the economy does not appear to be as strong as might have been imagined. According to AFP, the economic contribution of the event was overestimated before the pandemic, when the Japanese government set a target of 40 million international tourist arrivals a year by 2020. Naive hopes for the Games were dashed when the Olympics were postponed last year, as Japan has since then almost continuously banned foreign visitors. Even if the 600,000 international fans were allowed to enter the country, their estimated spending would be no more than 95 billion yen, or just 0.02% of GDP, according to Capital Economics calculations at the end of last year. In total, the Games organisers expect a loss of revenue of around 200 billion yen (€1.5 billion) due to the Games being held without an overseas audience and limited capacity for local spectators. Although this is not a large enough sum to shake the Japanese economy, it is a serious shortfall. But the news has come as a cold shower to Japanese tourism professionals, some of whom have invested heavily in preparing for the event. For some, their livelihoods are currently dependent on government subsidies and the current outlook is that a tourism boom is a long way off. During the recession in the second half of last year, the Japanese government focused on promoting domestic travel, which has been strongly criticised by policymakers for exacerbating the local health crisis in 2021. The worsening disease situation prompted the government to reintroduce a state of emergency in large parts of Japan in early January. This measure has now been lifted, with effect from mid-March in and around Tokyo, but caution is still required. The staging of the Olympics promises to be much more than just a hypothetical doping effect on Japanese morale and spending, it is likely that with the expected increase in the number of vaccinations in the second half of 2021, spending on preparations for the Games should also increase consumption by Japanese households.
Source: Lechotouristique.com