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Ryokan at Japanese onsen resort goes bankrupt after 64 years due to coronavirus

18 Comments
By Oona McGee, SoraNews24

As Japan struggles to contain the spread of the coronavirus, officially named COVID-19 by the World Health Organization, the local economy is being hit hard, with businesses at popular tourist sites now facing an uncertain future.

In the city of Kyoto, local merchants have taken matters into their own hands, setting up an “Empty” tourism campaign to lure visitors at a time when tourist numbers from China and other countries has dropped dramatically.

For one longstanding business in Aichi Prefecture, however, the drop in tourist numbers has dealt a fatal blow, as they’ve now been forced to file for bankruptcy.

According to Japanese credit reporting agency Tokyo Shoko Research, Fujimisou, a ryokan located in the onsen hot spring resort town of Nishiura in Aichi Prefecture, filed a bankruptcy application with Nagoya District Court on Feb 21, after being in operation for 64 years.

The 46-room ryokan, located at the tip of the Atsumi Peninsula, was once a thriving business, with guests enjoying fresh seafood meals sourced from Mikawa Bay and each room offering expansive ocean views. Fujimisou’s financial records show a turnover of approximately 550 million yen back in December 2005. However, following a financial slump in 2013, they found themselves short on funds and were forced to come up with a solution, turning to the Chinese market to stay alive.

By shifting their focus to accommodating Chinese tour groups, the ryokan was able to turn their fortunes around, with demand from these tour groups growing in recent years.

However, with their main cashflow coming from Chinese tourists, the drop in numbers over the last month, during what was meant to be the busy Lunar New Year holiday season, proved to be too much for the business, prompting them to go into receivership.

The massive number of cancellations by Chinese tour groups that tipped the longstanding ryokan into the red is a cautionary tale for other businesses who rely heavily on the Chinese market to survive.

As COVID-19 continues to spread, with new cases of infection in Japan rising by the day, and the Japanese government now advising that large-scale concerts, festivals and events be cancelled or postponed, there are growing concerns for the future of the local and global economy.

Source: Tokyo Shoko Research 

Read more stories from SoraNews24.

-- Rakuten Travel reveals the top 5 best-rated, off-the-beaten-track Japanese ryokan inns

-- Kyoto tourist crowds disappearing due to coronavirus outbreak, creating travel crisis/opportunity

-- Learn all about enjoying a traditional Japanese-style ryokan inn from this nine-minute video!

© SoraNEws24

©2020 GPlusMedia Inc.

18 Comments
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They've been in business for 64 years and have gone bankrupt in a month? Somehow, I think they are using the virus as a scapegoat to cover up their failed business strategy.

36 ( +38 / -2 )

It was a failed business prior to the virus putting all their Chinese crackers in one basket.

19 ( +20 / -1 )

Disillusioned nailed it. I’ve been to that resort area before and the whole area is a complete dump!

16 ( +17 / -1 )

Nope. Ryokan goes under after poor planning, management, and investments. Get ready for the headlines of this virus being the reason for all issues here.

15 ( +16 / -1 )

As expected COVID-19 is THE chance to hide your business or political failings. A+++ scapegoat for failed Abenomics. Taxhike. Korean visitors stopped coming because the Goverment lack of diplomacy.

Ryokan probably sucked the environment dry for 64 years without investing, renewing to the needs of 2020 travelers or giving back and investing also to its natural surroundings.

9 ( +10 / -1 )

The rule of thumb: Don't rely heavily on foreign visitors for business. Since the "inbound" tourist boom, there have arisen complaints from local Japanese customers as saying they seem ignored or ill-treated. Over-tourism was another growing problem. The latest virus outbreak give a chance to review and reform the strategy of the industry.

10 ( +10 / -0 )

If this is all that it took, the place was surviving hand-to-mouth, anyway. How, after 64 years, had it not built up even 6 months' cash reserves?

8 ( +8 / -0 )

unfortunate that a company has gone out of business and people have lost their jobs, but after a little searching, its clear that this place was doomed. Its a big ugly concrete building in an area that is being run down. Looks more like a company pension/holiday home. It's dinosaur of a bygone era.

was once a thriving business, with guests enjoying fresh seafood meals sourced from Mikawa Bay and each room offering expansive ocean views.

sounds more like a ad than the truth.

https://www.google.com/maps/@34.7686727,137.173686,3a,75y,216.38h,94.63t/data=!3m6!1e1!3m4!1stgozhWEaP7dA_6i7u9rUFw!2e0!7i13312!8i6656?hl=en-GB

https://www.google.com/maps/@34.7676818,137.1732189,3a,50.9y,352.75h,114.2t/data=!3m6!1e1!3m4!1sahsU4o86eXVl0nweOO5ysg!2e0!7i13312!8i6656?hl=en-GB

3 ( +3 / -0 )

It's too bad, nothing better than a beautiful ryokan, but it's a lesson to not put all your eggs in one basket as a business. Hopefully it'll return

0 ( +0 / -0 )

wow not so beautiful! should have had some local artists spruce it up

0 ( +0 / -0 )

Plan B or C-never only a plan A

1 ( +1 / -0 )

While it's true that this business went under because it was a weak business, this is the case in all recessions. During the good times, weak businesses float happily along. When things get tight, they sink while stronger businesses survive the downturn. I think it was Warren Buffet who said, "you see who is skinny dipping when the tide goes out."

Still, though, the result is many lost jobs - so it's not something to take lightly.

4 ( +4 / -0 )

The hidden price of commerce with China. It could come back to bite you at any time.

1 ( +2 / -1 )

I am sorry for the people who lost jobs and it would have been a fun visit for people from abroad But it is not wise to do business with China they are not the friend of Japan. it is a sad story tho and i dont like that people are so critical without knowing the circumstances. I hope maybe they can save their place.

0 ( +1 / -1 )

hope japanese system of charging per person ends we with families cannot hope to stay anywhere

4 ( +4 / -0 )

This is a fine example of how liberal Japanese are with the expression "ryokan". They are not all centuries-old wooden buildings with lovely gardens nestling in the woods. Some are big concrete structures built as close together as possible in overdeveloped resorts. This place would have been used in years gone by for organized group trips from companies, neighbourhood associations, and the like, but those years are long gone. (Budget) Chinese trips will have given them a last breath of life, but they will have middlemen and low rates. The margins will be very tight, meaning any slowdown will threaten the business. The virus will have driven them over the edge, but the big picture story is one of overdevelopment and changes to society.

3 ( +3 / -0 )

shimonmasada:

The hidden price of commerce with China.

Jesus. You make it sound as if the mainland Chinese tourists are avoiding Japan on purpose, that this was all part of a set-up to bankrupt as many Japanese businesses on purpose. This coronavirus was the perfect excuse to continue the Sinophobia all over the world.

Maybe people should start avoiding Italian food and Iranian-looking people now.

0 ( +1 / -1 )

I wonder if all the places that I stopped shopping at because they raised their prices to make more profit off the hoards of Chinese tourists will now return to normal and start treating their long time customers with the respect the once did three to four years ago? If I could look at the silver lining in all of this is that maybe sanity may return to the once 'normal' life that existed before the 'invasion' started.

0 ( +0 / -0 )

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