Australia and Japan reverse tourism relationship

Australia and Japan reverse tourism relationship

Australia and Japan reverse tourism relationship

Updated 16 January 2018, 18:10 AEDT

Once the tourism relationship between Australia and Japan was Japanese visiting Aussie beaches, playing golf and hugging koalas, but now it's Aussies slaloming down Japanese ski runs.

When the Nagano Olympics were opened by Emperor Akihito in 1998, most Australians had little idea of where the historic alpine city was, nor did they really care.

Back then, the picturesque and high-quality slopes to the west of Tokyo were almost entirely populated by locals.

Now you can barely slip on the ice outside the central train station without bumping into an Aussie.

Back in 1998, at the height of our summer, Australian beaches were populated with Japanese tourists escaping the cold of the northern hemisphere winter.

Now, hundreds of thousands of Australians escape the humidity of the southern hemisphere summer in search of snowfields such as Hakuba, close to Nagano, or Niseko on the northern island Hokkaido, which has been described as the Bali of snowfields because of the influx of Australians.

Travellers are attracted by the remarkable quality of the snowfields and how cheap it now is compared to home.

Relationship flips

At the end of last century, the tourism relationship between Japan and Australia was one-sided.

Plane trips between the two countries were populated almost entirely by Japanese on both legs.

The Japanese came here in droves seeking sunshine and surf in a country that appeared relatively cheap despite the necessary long-haul flight.

Australians, though, didn't return the favour and looked to other locations for their holidays. In part, put off by Japan's deserved reputation for being expensive.

But, in the last 20 years, that relationship has shifted dramatically, driven by a transformation of economic fundamentals.

Well before China's economic growth drove its citizens to seek out Australian beaches and koala cuddling sessions, it was Japanese tourists filling the pockets of operators in the 1980s and '90s.

The peak was in 1997 when more than 814,000 made the journey south.

Two decades later, in 2016, the number was basically half, with only 417,900 making the same trip.

By comparison, in 1997 some 101,460 Australians made the trek to Japan, of which just 41,520 were tourists.

By 2016 the number had sky rocketed to 445,237 — of which 398,193 were tourists. That's a 959 per cent increase in the number of Australians taking a holiday in Japan over just two decades.

Many have blamed Lara Bingle and the lost in translation "Where the bloody hell are you?" Tourism Australia ad campaign for the drop-off in Japanese tourists.

But it's much more likely that it was economics that shifted the equation.

Interestingly, it's not the exchange rate that has made the difference.

Although it's moved around quite a lot over the last 20 years, it's now almost at exactly the same level it was at the end of 1997, with an Australian dollar worth about 88 yen.

Instead, it's down to the twin factors of diverging income growth and price changes.

Japan's lost decades

In the decades following its defeat in WWII, Japan experienced a surge of economic growth that was the envy of most of the world. But by the 1990s, that record growth was running out of puff.

It's no coincidence average earnings in Japan reached their peak back in 1997 at $973.71 in Australian terms.

By the end of 2016, average earnings were down to $826.50.

The numbers for Australia are very different.

Australia's economic performance over the last two decades has been impressive by most measures, even when stripping out the effects of our record high population growth.

Australians were earning $592 per week at the end of 1997. But the end of 2016, average weekly earnings had increased to $1,163. A 96 per cent increase over that time.

The GDP per capita numbers tell a similar (though not as stark) story.

Back in 1997, GDP per capita for Australia was $US44,406. By the start of 2017 it was $US60,500, an increase of 36 per cent.

Meanwhile, in Japan, it was $US41,609 at the end of 1997 and had increased to $US47,421 by the start of 2017 — a mere 14 per cent increase.

Japanese deflation benefits Aussie tourists

But prices have changed dramatically in that time.

Between 1997 and 2016, prices in Australia soared by over 40 per cent (42.13 per cent to be exact). If you feel like things have been getting more expensive, you're right.

Meanwhile, Japan has seen periods of price deflation (this is when things get cheaper). In Japan, prices have increased by less than half a per cent over that whole time.

Effectively, Japan became 40 per cent cheaper for Australians compared to home (the benefit of living in a country that has become really expensive, is that other countries start to look cheap).

A simple comparison of the cost of getting to the top of a mountain is indicative of how the relationship has changed. A one-day ski pass in Hakuba costs around $61. This compares to the price at Thredbo of around $125.

So Australians have become richer, but Australia has become much more expensive.

Japan has seen its income rise by far less, but prices haven't moved much at all.

That's made Japan a much more attractive destination for Australians in 2018, while for Japanese tourists a trip to Bondi looks a lot less attractive than it did 20 years ago.

Certain aspects of the relationship between Japan and Australia have stayed constant over that time.

We still import cars and electronic goods from them, while they import coal and iron ore from us.

But our exports of beach enjoyment have stalled while Japanese exports of sake on the slopes show no sign of slowing down.