Update on Niseko

Posted by Jim Ivanoff
January 30th, 2012

This January’s cold snap has been blessing ski hills around the country with an abundance of snow after a slow start to the season. However, the Fukushima nuclear crisis still looms heavily over the prospects of resorts attracting foreign tourists. In fact, for 2011 the number of tourists coming to Japan fell 27.8%. Niseko has benefitted the most from inbound tourism over the past few years so it was safe to assume that it was also being hit the hardest by this steep decline in travellers. Therefore, I recently visited the area to find out what was happening and what the prospects were for a rebound.

The first thing that struck me driving around the area was the number of construction sites that seemed to be stopped. In meeting with local people I soon learned that developers quickly put the brakes on many projects after 3/11. However, unlike past boom and bust cycles the owners of these projects are now well financed professional developers. Therefore, they have both the capability to weather the tough short-term conditions and they also have the foresight to see that over the longer term the nuclear fears will dissipate and foreign tourists will return in large numbers. Everything that has made Niseko the most talked about ski resort in Asia is still there.

One positive outcome from the current downturn is that a central “village” may finally be built in the Hirafu area. Over the years many people involved with developments in the area told me that the shoddy shape of the main access to the Hirafu lifts and the lack of a Whistler type village area was holding Niseko back from reaching the next level as an international destination. Many of the old buildings lining the main road were owned by people waiting for the area to grow further but without the means to properly develop the properties themselves. It seems that several of them were persuaded by the bleak prospects last year to finally sell. Once that part of Niseko is redeveloped, the whole area will benefit greatly from it.

Another thing that seems to be changing is the attitude towards domestic travellers. One of the amazing aspects of the Niseko success story was how it could prosper while only catering to foreigners and completely ignoring the massive Tokyo market. Hokkaido was always seen as a clean and pristine area, but that image has been further reinforced by the fact that it was one of the few areas in Japan that was spared any fallout after the Fukushima explosions. By actively pursuing the Tokyo market, Niseko operators can not only fill more rooms now, they can also build a more diversified client based so that the area is less susceptible to future shocks from overseas.

While 2011 was a terrible year for Niseko developers and lodging operators, there is some optimism returning. Apparently the number of inquiries from Australia and ex-pats in Asia has been increasing recently. Hopefully the Japanese government’s declaration in December that the Fukushima plants have achieved cold shutdown will encourage the Chinese tourists to also comeback. At the very least, the Japanese government is looking positively at 2012 by aiming to attract over 9 million inbound tourists topping the previous record of 8.6 million. Let’s hope they are right!

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