Domestic tourism in Japan is a multi-trillion Japanese yen market and constitutes the main pillar of the travel and tourism industry in the country. Tourism forms an important part of the Japanese economy, as it generates considerable revenues, and provides a substantial number of jobs, while also contributing to the revitalization of rural areas. Domestic tourism data is commonly differentiated by the purpose of trips, dividing it into three segments. These include travel for home-coming or visiting friends, travel for leisure and recreation, and business trips. Travel for leisure and recreation is the most common type of trip and generates the most revenue in the industry.
The COVID-19 pandemic has negatively impacted domestic travel (and has had a catastrophic impact on inbound and outbound travel), resulting in record-low industry revenues between 2020 and 2022. The void of travelers caused by the advent of the pandemic led to sluggish performances during that period in related industry segments, such as the hospitality industry, gastronomy, and transportation industry, among others. In 2023, domestic tourism almost fully recovered, while inbound and outbound tourism were on a recovery track.
Transport and accommodation during domestic travel
Japan has a well-developed network of accommodations indicated by the impressive number of lodging facilities prepared to accommodate travelers for leisure and business purposes alike. Even though trips for leisure and recreation were the most common among domestic trips, business hotels were the lodging facilities with the highest occupancy rates among all types of accommodations. This indicates that business hotels are also used for leisure sojourns. There was a significant drop in the occupancy rate of accommodations caused by the COVID-19 pandemic, which was a good indicator of the extent to which the COVID-19 pandemic harmed the travel and tourism industry in Japan. This was also observable in the choice of transportation method of tourists. The utilization of public railways to get to touristic destinations declined, while the use of private cars for touristic leisure trips increased, as travelers tried to minimize the risk of infection by reducing unnecessary contact with others. This led to the private car further bolstering its position as the leading mode of transport used for leisure travel. Expenses for transportation, together with expenses for lodging, constituted the largest two segments of domestic overnight tourism expenditure.
Travel agencies in Japan have a sizable market scope, with the transaction value of domestic tourism surpassing the two trillion Japanese yen mark in 2022. Package tours and travel in groups were (and still are) common in Japan, and even the prolonged existence of the pandemic and the incompatibility of group travel with infection guidelines did not affect the ratio of travel agency utilization to private trips for domestic travel considerably. While only a fraction of tourists on domestic travels enlisted the services of travel agencies, the share of travelers who used travel agencies on outbound trips was comparatively high, with more than half of the trips making use of travel agencies. Since the advent of the COVID-19 pandemic crippled outbound tourism and substantially slowed down domestic tourism, travel agencies have had a hard time making ends meet, with the income of large industry players plunging dramatically.
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