Japanese people used to be famous for their passion for overseas travel, but now they stay more at home.

Weakening yen, high ticket prices, and weak wage growth have made outbound travel far below pre-pandemic levels. According to data from the Japan National Tourism Organization (Japan National Tourism Organization), only 1.22 million people traveled abroad in March, a decrease of 36.8% compared to the same period in 2019. Meanwhile, the number of tourists visiting the island country last month set a record. This week, as Japan began its annual national holiday, Golden Week, local visitors chose a large number of other popular attractions such as Kochi Prefecture in the south, Atami near Tokyo, and Okinawa and Hokkaido. In response, Japan Airlines Co., Ltd. (JAL) and ANA Holdings (ANA Holdings Inc., ANA) allocated a significant portion of their seats to inbound travelers and profitable regions where demand is stronger. According to government data, a recovery in outbound travel will not occur until next year at the earliest.

“It will probably be a while before I travel abroad again; now the prices are too high — food and everything,” said Tomoyo Shimoya (Tomoyo Shimoya), 39. Earlier this month, she celebrated her birthday at the Hatoya Hotel (Hatoya Hotel) because it's cheaper there. An overnight stay at this hotel a few hours by car from Tokyo, including breakfast and dinner, costs around 15,000 yen ($98) per person. In comparison, the average hotel room in Hawaii is $375 per night.

Hatoya was a popular seaside resort during Japan's post-war economic boom. In the shadow of luxury resorts at home and abroad, it is now enjoying a rebound.

Shigeru Haraguchi (Shigeru Haraguchi), president of Fuji Shoji Co., Ltd. (Fuji Shoji Co., Ltd.), said that maintaining our old image is a good thing. Fuji Shoji Co., Ltd. operates “Hatoya” and its sister property “Taiyo Hatoya.” In 1945, his grandfather bought the property from a magician who used pigeons to perform magic tricks. Pigeons are called “sky pigeons” in Japanese. We will continue to provide food and service at the right price and quality.”

Haraguchi anticipates 80% occupancy during the upcoming Golden Week holidays. Since it was built in the 1970s, the Hatoyama Hotel's architectural style has remained largely unchanged, so it has become a popular Instagram destination for those looking for a retro vibe, a ballroom, dinner shows, and a hot spring with an aquarium.

Interest in local destinations has been translated into domestic spending by Japanese tourists, which has returned to pre-pandemic levels, reaching 21.9 trillion yen by 2023, government data shows. Coupled with strong entry demand, a record 3.1 million visitors visited Japan in March, which pushed hotel prices to levels not seen in 30 years.

According to CoStar Group data, the average daily housing price last month was about 20,986 yen, the highest level since August 1997, and nearly 20% higher than the same period last year.

Analyst Eric Zhu said that despite reporting solid results in the third quarter, All Nippon Airways (ANA) and Japan Airlines (Japan Airlines) are at risk of losing international market share. He said that sluggish outbound travel “may limit ANA and JAL's profit potential this year because the two companies need to fight an uphill battle with foreign airlines in terms of inbound tourists.”

During Golden Week, ANA increased the number of seats on domestic flights, and the passenger occupancy rate increased by 3.8 percentage points over the same period last year. According to reservation data from Japan's largest airline, international flights fell 0.9 percent.

The lack of motivation for outbound travel is also reflected in the number of Japanese people with passports. According to data from Japan's Ministry of Foreign Affairs (Ministry of Foreign Affairs), as of December last year, only 21.5 million people had passports, accounting for 17% of the Japanese population.

Masahiko Inada (Masahiko Inada), president of the Japan Association of Travel Agents (Japan Association of Travel Agents), said the government needs to urge people to obtain passports to encourage travel abroad. Some are calling for lower fees, and airlines are even providing subsidies.

Inada said outbound travel will eventually resume, and young tourists will visit nearby countries during the recent spring break. He said the travel agency “has already received reservations for the fall and end of the year.” “I hope this trend continues.”

Japan Airlines (Japan Airlines) CEO Mitsuko Tottori (Mitsuko Tottori) said last week that she is concerned that due to the weakening yen, young people will reduce their adventures outside of Japan. ANA CEO Koji Shibata (Koji Shibata) expressed similar concerns.

“We often discuss that a level of 130 to $1 would be a good thing for the yen,” Tottori said in a group interview last week, after which the yen fell to a 34-year low of 156 against the US dollar. “This is a huge problem.”