Since 1868 in the Meiji era, economic growth for Japan has been on a steady upward trend. When the pre-war era Japan adopted the free market economy, it seems that there is no stopping the growth. The 60′s and the 80′s saw Japan going into what has been dubbed as an “economic miracle.” This growth after World War II is due to American investments and mainly to government economic interventionism. It was called a miracle because of the massive unemployment, inflation, and shortages in all areas of the country. The war essentially killed Japan economy. But they were able to climb up.

Today, Japan is obviously still an economic super power. Japan has the second largest stock exchange in Tokyo. Japan also has 3.6 million millionaires and is projected to go up by 10.7 million going into 2017. Imagine that. The question is; has the current economic depression affected Japan?

Yes it has.

Regardless of how many millionaires are in Japan, there is still a lot of belt tightening going on all over the country. In fact, Japan’s outbound travel is going down, and pundits are prognosticating that the worst is yet to come. The Japan Tourist Organization (JNTO) showed statistics that only 1,247,000 Japanese people went out of the country last January, dipping way down from the 1,451,116 recorded in 2007 of November. The Japan Economy Blog reported that overseas visitors to Japan have also been going down 18.4% in January, for sixth straight months of decline. The reason? The high cost of fuel surcharges that the airlines are putting on the customers.

The editorial in the Japan Times said that corporations have given up their sports clubs and sponsorship of events such as Formula 1 racing. Big companies, some very profitable, are scaling down their advertising budgets. People, even the most oblivious, are starting to notice the pinch. The economic downturn has been very stressful for the Japanese people that they rely heavily on alcohol and sleeping pills to sleep at night. Young women can no longer afford branded clothes, instead they just rent them.

Suicide is an all time high in Japan. According to reports in the editorial, 700,000 calls have been registered on the Japanese national suicide hotline.

The Japan economy blog reports that there are 1.4% fewer jobs in 2009 for graduate students. This is the first decline in job rate that Japan has to face in five years. 1.4% fewer jobs are laughable in the face of other country’s job rates, but you can’t laugh in solidarity with every country affected by the economic downturn.

The worry about job security and with the profitable companies cutting back on everything has infected the psyche of the Japanese people. Obviously, the economic downturn has not affected Japan that much compared to other countries, but still, the national consciousness of the people is dipping. Morale is very low. However the Japanese government is slowly realizing the perception problem.

Perhaps Prime Minister Taro Aso visiting the White House can learn inspirational leadership from President Barack Obama.

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The unfortunate downturn has caused a lot of problems for any lofty goals this year. Major Asian economic behemoths are experiencing the painful pinch. Macau and Singapore has delayed some casino projects. China just lost a major hotel in a fire. In these trying times is there no end to the delayed and canceled projects in the next few years?

The answer is simple — No. Not yet, anyway.

The economy is not yet going up. It is still on a downward trend. The United States of America is already addressing its own financial problems by passing the Obama Economic Stimulus Bill. If this billion dollar endeavor succeeds or fails, the whole world economy will surely be affected.

In Australia, the 1980′s were the turning point for similar economic reforms. These reforms strengthened their GDP from 140,987 to 926,880. All this growth with an inflation index of 30 in the 80′s and 116 in 2005. This is surely a far cry from the horrid Australian depression of the 1930′s.

Australia has shown that it can climb back. With cooperative and hardy citizens, plus a government with political will, they were able to boost their economy and become one of the riches first world countries in the world.

Now, the world is changing rapidly again. And with change only the ones who can adapt will survive. Is Australia ready to claw her way back up in this new depression?

The hospitality industry in Australia has been growing stronger since the last Sydney Olympics of 2000. However, even giants can falter when a pebble gets stuck inside its shoe. Unemployment is the pebble in the shoe of Australia. In just a few months it has increased 4.5 percent, with about over 40,000 jobs lost to the ether. Economist Riki Polygenis said that full time employment is dropping, while part time jobs are taking their place. This is bad for economic growth.

The 4.5 percent unemployment rate is projected to increase to about 6 percent according to economists. However, the movements will be gradual in contrast to the United States unemployment rate. 6 percent is no laughing matter, but it is pretty diminutive compared to the unemployment rate of third world countries. Australia is still number 11 in the world in terms of employment.

Because of the economic uncertainty, much of the hospitality projects in Australia are subject to profitability testing and future viability tests. These studies will be carried out until the market improves. The managing director of Jones Lang of Lasalle hotels said that unless financing has been secured and construction imminent, proposed projects scheduled to open in 2010 and beyond is unlikely to materialize. There are currently 6,246 rooms in the development from across Melbourne, Adelaide and Darwin. The problem is that some of these proposed constructions are yet to secure development funding.

The trend is clear. Although travel and tourism will not drop like an anvil this year for Australia, outbound travel is expected to fall 2.9% according to pundits. The reason is a weakening of the Australian dollar and an untrusting credit market.

As mentioned before, this is hardly a cause for major concern on the part of Australia. Compared to other countries whose economic wagons are barely hobbling along the Oregon Trail of depression, Australia is coasting on easy street.

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This series started optimistic that the hospitality industry will not be affected as much by the economic crunch. Apparently, nothing is immune to the growing and looming depression. Not even the technology world or the videogame world is spared from massive layoffs and inevitable restructuring. Along the journey into this series, we discovered that the hospitality industry is facing its own problems due to the downturn.

It is true that tourism has risen in some parts of the world. It is uncertain if this is sustainable in the long run. We have a lot of variables to consider like terrorism and natural disasters that can surely hamper any booming business.

Just the last year, Palm developer Nakheel started delaying their flagship projects in Dubai. Major cash problems hound them as they needed to lay off 500 employees they considered redundant. Because of the economic recession, the big UAE developer had to delay their $80 billion projects, including the much touted Trump International Hotel and Tower, Gateway Tower, and the Waterfront.

Lofty goals in Dubai are being shot down one by one almost due to the economic downturn more than anything. Even the mighty man-made islands are being delayed and pulled out of priority. Unfortunately, Nakheel is not the only Real Estate developer that is laying people off. Companies like Damac Holding, Omniyat and Tameer Holding Investment also announced some layoffs last year. It is without certainty if the layoffs will halt this year.

It was not long ago that China, Russia, and Dubai have been flying high with all of the massive infrastructures and building projects in the planning and staging level. Because of all the financial uncertainty, a lot of these projects are going to be shelved or delayed. There is a major Jumierah Shanghai hotel construction that will be delayed until the end of the year. The reason? Economic meltdown. The tourism in China dropped like a cannon ball to 5.9% from last year.

Even oil producing countries like Kuwait is in dire straits. The newest Tamdeen Mall that should cost $350 million will have to seize construction. The local Tamdeen Shopping Centre Development Company claims that they are delaying the project because they need “regulatory approval” of the mall’s design.

It seems like the death scythe of the depression is not sparing anyone or anything. As oil prices are going down, these delays are not surprising at all. Even the prosperous area of Riyadh will have to delay 2008 projects to this year. Although, Riyadh is still economically strong more than ever.

With the tourism hanging in the balance of natural disasters and terrorism, plus the construction delays and cancellations of major projects are on the horizon, it is the uncertainty that looms over the economy casting a shadow at every turn. With every depression and uncertainty the wise will always look and scavenge for opportunity. Surely after the depression, if survived by the wise, monolithic projects will rise again.

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This is the third part of the expansion series on the effect of natural disasters to the hospitality industry. Part 1 and 2 were published during January of this year. This article focuses on Indonesia – one of the most devastated countries affected by the Tsunami in December 2004.

The epicenter of the earthquake in 2004 that led to the loss of thousands of lives, displacement of millions of families, and destruction of millions of properties, was off the west coast of Sumatra, Indonesia.

Before the Tsunami, Indonesia was also one of the most frequented place for tourist. The country was already on the road to recovery from the Bali incident. The foreign visitors to Indonesia have been swarming its different known destinations. The catastrophic event created a downturn to the recovering country.

Although the places devastated by the tsunami were not tourist hot spots, the tourism of Indonesia was greatly affected. Many foreign visitors booked for the country cancelled their flights. It was worse already that their country has been affected by internal conflicts but much worse that the tsunami has added to the economic and financial suffering of the country.

International Organizations like the United Nations and ADB assisted the creation of programs that would help the country to recover. The government of Indonesia also created programs to invite foreign visitors to the country. One part of the program was to utilize the country’s volcanic crater lakes as tourist attractions.

Among the more aggressive reconstruction program is on the province of Aceh. It is said to be the largest reconstruction effort in the developing world. There is about $7 billion dollars committed to help recover one of the places most devastated in Indonesia.

As stated above, the tsunami did not hit any great tourist hot spot in Indonesia. The problem with dipping tourism happened when a terrorist attack in Bali happened on October last year. This attack drove the tourism of Indonesia down to almost 37%. No need to worry, though, as increased security and increased communication are facilitating the recovery of Bali.

China is also helping with the tourism of Indonesia. Since the Chinese people are the best patrons of Indonesian tourist hot spots. In 2004 it was estimated that over 84,000 people from the mainland China were vacationing over Indonesia. This statistic is projected to hop to 500,000 in two years. The Indonesian minister of tourism has been promoting to China that Indonesia is still a safe tourist destination.

Hobbled by the tsunami and some intermittent terrorist attacks, Indonesia is still showing resilience from all these trials. What a hardy and inspirational people the Indonesians are. Despite a lot of adversity and inner turmoil, they are still showing that they are a pride of the Asian race.

Please Note: This is the “Part 12” in a series of articles focusing on the “Expansion of the Hospitality Industry”. The next Expansion of the Hospitality Industry will discuss the issue of delayed and cancelled projects

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