Hoshino Resorts has begun its activities aimed at the post-COVID-19 era. These include activities in preparation for the recovery of inbound tourism. I'd like to talk about why inbound tourism is important to Japan. In the first half, I'll discuss its economic aspects, but in the latter half I'll talk about the social mission of the tourism industry and how it relates to international tourism, and I'll look at key aspects of tourism that are drawing attention in the growing world of ESG investment.

The economic value of inbound tourism

Japan's tourism industry is a large one, accounting for 28 trillion yen in spending. It is our country's fifth largest industry. Inbound tourism still accounts for only roughly 17% of that, and the Japanese market -- the other 83% -- has supported the industry through the COVID-19 pandemic. However, in the post-COVID-19 era, attention is expected to turn to the growth of inbound tourism. There are several reasons for this.
　First, it is a growth market. The world's middle-class population is growing, especially in developing countries. This implies the further growth of the international tourism market. Until COVID-19, Japan's inbound tourism market had been growing steadily for 15 years. While this growth was partly due to the Japanese tourism industry being stronger than that of some other countries, an even greater reason is that the number of international tourists has been growing worldwide. Global competition in the international tourism market is about to heat up, and Japan needs to transform itself so that it doesn't miss the opportunities presented by this growth market.
　The second reason for the focus on inbound tourism is its importance to Japan. Japan's population peaked in 2008. By 2030, it is predicted to fall to 119.12 million, shrinking by over 600,000 people each year. A decrease of one person means a reduction in annual spending of 1.27 million yen, but this can be countered by increasing the number of inbound tourists by eight people. Of course, this alone is not enough to solve all of the problems created by Japan's population shrinkage, but increasing inbound tourism is expected to be one important countermeasure.
　The inbound tourism industry is one in which visitors from overseas purchase Japanese services, so it's categorized as an export industry. In 2019, the inbound tourism market was a 4.8 trillion yen market, already the third largest of Japan's export industries. In the past, local economies struggled after manufacturing plants were shifted overseas, but famous tourism destinations don't move to foreign countries simply because labor is cheaper, so tourism is expected to serve as an economic platform with long-term stability.

The issues facing the tourism industry

The industry faces numerous issues. First, it is a low productivity industry. Even if a market is large, if it generates little revenue and value, it will not produce sufficient economic benefits. The tremendous differences in tourism volume between on- and off-seasons, caused by the concentration of major domestic demand on specific days, is one reason for the low revenue structure of the tourism industry. Because of this, over 70% of the industry's employees are irregular employees, personnel retention rates are low, and there is insufficient investment power. A solution that I've long advocated is performing leveling and increasing productivity while the industry still enjoys healthy domestic demand. This would promote investment in people and facilities and prepare the industry to compete in the global travel market. Specifically, I've recommended that individual regions target different portions of extended holiday periods. Leading tourism nations such as France have already systematized this approach.
　Hoshino Resorts has been taking on these challenges on its own. By introducing a complete multitasking system in our hot spring ryokans, we have increased labor productivity and succeeded in hiring almost all of our necessary personnel as regular employees. Improving earning rates has made it possible to make workplace environment improvements and to invest in equipment, and we are increasing the number of facilities that can meet the needs of the modern travel market.
　The second issue facing the Japanese tourism industry is inbound tourism inequality. As I mentioned earlier, one of Japan's goals has been to turn the tourism industry into a new industrial foundation for the economies of provincial regions, whose populations are shrinking. To achieve this, the industry has taken an active approach towards inbound tourism. However, the current reality is that over 80% of inbound tourism is concentrated in 10 prefectures, such as Tokyo, Kyoto, Osaka, and Hokkaido. It is not yet producing economic benefits for the other 37 prefectures. In other words, the current face of the Japanese tourism industry is not in line with the initial plan. To prevent inbound tourism from being simply a transitory fad, we believe that it is important to use inbound tourism marketing to draw visitors to Japan's provinces.

The social roles of the tourism industry

International tourism, including inbound tourism, plays an important role not only economically but also socially. One of the policies of the 2003 Koizumi Cabinet was "Paving the way to a tourism nation." Various measures launched then have led to the current state of the tourism industry. This expression, "tourism nation," existed long before this policy was formulated. It first appeared in an essay by Konosuke Matsushita, in the April 1954 edition of Bungei Shunju. The essay had many suggestions that remain valid even today, but the one I find the most interesting was Matsushita's assertion that "Tourism is the greatest peace policy." Exporting products may not provide people with a love of Japan, but people may come to love Japan if they visit. This is because travel fosters greater mutual understanding, ultimately contributing to global peace. Of course, politics play a major role in the relationships between nations, but politicians take public sentiment into consideration when making decisions, so international tourism, which can deepen mutual understanding among the people of different countries, helps promote peace.
　"Investing in tourism is investing in peace." This noble mission motivates all of the staff of Hoshino Resorts. At the same time, inbound tourism isn't the only tourism of importance. Outbound tourism -- overseas travel by Japanese people -- is also important. I want people from around the world to explore all of Japan and come to understand and love this country. I also want us Japanese to travel the world and come to understand the communities and cultures of other countries and regions. That, I believe, is the way to long-term peace.
　However, does traveling to Japan really provide people with a love of the country? If it didn't, this would cause tremendous problems. In 2014, in celebration of our 100th anniversary, Hoshino Resorts decided to select 100 young people to receive a trip to Japan. The goal of this project was to determine if young people who came to Japan for the first time actually came to love the country. Applications came in from around the world, and we collected the reports of 120 participants' travels through Japan in "100 Trip Stories." If you have an opportunity, please give it a look.

https://www.hoshinoresorts.com/100stories/about/

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