tokyo travel subsidy

‘Go To Travel’ explained

Part of a larger "Go To" campaign intended to restart the Japanese economy following the damage caused by the coronavirus , Go To Travel is a campaign by the national government that offers big discounts on travel inside Japan. Only residents of Japan (including foreign residents) are eligible to take advantage of the campaign.

What is Go To Travel?

• A 35 percent discount on the total cost and
• Coupons worth 15 percent of the total cost to be spent on other travel expenses during the trip

Is there an upper limit?

Yes, there is. The maximum discount that can be received for overnight trips is 13,000 yen per person and night, while the maximum amount of coupons that can be received is 7,000 yen per person and night. In other words, the upper limit applies to travel plans that cost more than 40,000 yen per person and night.

In case of daytrips , the travelers can receive a discount of up to 7,000 yen and coupons of up to 3,000 yen per trip.

Note that children are counted the same as adults. For example, a family of four with two kids can receive a discount of up to 52,000 yen (4 x 13,000 yen) and coupons of up to 28,000 yen (4 x 7,000 yen) on an overnight trip, even if the kids stay for free.

Furthermore, note that only up to seven nights per trip are covered by the campaign. On trips that are longer than eight days, travelers will not be able to profit from the campaign from the 8th night. Note that there is no limit on how many trips can be made during the campaign.

Who is eligible?

All residents of Japan, including foreign residents.

Can temporary visitors to Japan use the campaign?

No, only residents of Japan are eligible.

How long does the campaign last?

The campaign started in late July 2020, but was suspended in December 2020 due to rising coronavirus infection numbers. It is expected to resume once the infection numbers have decreased and continue until at least summer 2021.

Are there any other conditions for participating?

Yes, all participating travelers are requested to follow the "new travel etiquette" with regards to preventing the spread of the coronavirus on their trips. Please visit our page about coronavirus manners for more details.

What is covered?

• Overnight stays at registered lodgings
• Travel plans purchased through registered travel agents

A large majority of hotels and travel agents across the country are registered. Lists of registered businesses are available on the campaign's official website .

Are all regions of Japan covered?

All regions of Japan are covered by the campaign. There is a possibility for some areas to be temporarily excluded from the campaign depending on the spread of the virus.

Does the campaign also apply to transportation, activities, meals and shopping?

The discount applies only if they are part of a travel plan. For example, the discount cannot be applied to regular purchases of flights or rental cars ; however, it does apply if a flight or rental car is part of a travel package sold through a registered travel agent. Likewise, if an activity or meal is part of the travel package, the campaign applies.

What type of daytrips are eligible?

The campaign applies only to daytrip travel packages sold by registered travel agents. The packages have to include 1) transport starting and ending at the same place on the same day and 2) at least some form of travel service besides transport in the destination area, e.g. meals or activities. For example, it does not cover 1-day bus tours that do not include any activities at the destination.

There is no limit on how many trips you can make during the campaign period. However, there is a limit of seven nights per trip that can be covered, meaning that those traveling for more than eight days are not able to profit from the campaign from the 8th night.

How can I use it?

There are mainly two ways to profit from the campaign:

• Book a stay at a registered hotel through the hotel, a travel agent or a reservation website that participates in the campaign.
• Purchase a travel package through a registered travel agent.

At the time of your booking, you pay 65% of the total cost for the accommodation or package, while the 15% in coupons will be issued to you by the travel agent or hotel.

A list of registered hotels and travel agents can be found in Japanese on the campaign's official website . Many hotel reservation websites are also participating in the Go To Travel campaign, including Booking.com and Agoda .

How do I use the coupons?

Coupons can be used to make payments at registered stores and restaurants and for transportation and other travel services in the prefecture visited and surrounding prefectures during the day(s) of your trip. They cannot be refunded. A map showing registered businesses can be found on the campaign's official website .

Links and Resources

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2022 Domestic Travel Subsidy Program: Discounts for Residents in Japan!

Japan's Domestic Travel Subsidy Program, offering discounts of up to 11,000 yen per person, launched on October 11, 2022. This article gives an overview of the travel discount program, details on participating travel agencies and reservation sites, and prefectural websites! 　

Mitoyo, Kagawa, Japan

What Is Japan's Domestic Travel Subsidy Program?

Himeji Castle. Photo by Pixta The Domestic Travel Subsidy Program , aiming to stimulate Japan's tourism industry, launched in October 2022. Eligible travelers will be entitled to discounts up to a maximum of 11,000 yen each.

Due to the sudden flood of reservations, there is concern among those unable to make their bookings. However, a national budget of 560 billion yen has been allocated for this campaign. So, travelers can expect to benefit from the generous subsidies offered by this program.

This article will introduce Japan's Domestic Travel Subsidy Program with an outline and important things to keep in mind. MATCHA readers will learn details about participating travel agencies and reservation sites. There's also a list featuring each prefecture and its respective website!

Outline of the Domestic Travel Subsidy Program

What are the dates of this program.

The discount campaign runs from October 11 until December 20, 2022. Starting dates can differ slightly depending on the prefecture.

How Much Are the Travel Discounts?

Travelers will receive a 40% discount. The discount is capped at 8,000 yen per person per night for tours that include transportation and accommodation. The discount is capped at 5,000 yen per person per night for accommodations only.

Discount coupons can also be used in certain regions for restaurants and souvenirs. Additionally, there are 3,000 yen discounts for weekday accommodations and 1,000 yen discounts for accommodations on national holidays. These are available directly at the accommodation facility.

Important Points of the Domestic Travel Subsidy Program

The Great Buddha of Kamakura. Photo by Pixta

Here are some key things to keep in mind with this subsidy program.

Limited to Japanese Citizens and International Residents

The program's main criteria for eligibility is that applicants live in Japan. This applies to Japanese citizens and international residents. A driver's license, My Number card, or another form of identification is required to show proof of Japanese residency.

Unfortunately, the discount campaign is not available to international visitors but only to international residents of Japan.

Vaccine Passport (3 Shots) or a Negative PCR Test Required

Travelers who want to receive discounts on this campaign will need to present a vaccination certificate showing they've had three shots. Those who haven't received three vaccinations must provide a negative PCR test.

To receive an accommodation discount, please remember that all group members must present their vaccine passport (3 shots), not just the group representative.

How the Word "Holiday" Is Defined

The monetary amount of discount coupons differs depending on whether it's a weekday or a national holiday. Fundamentally, a "holiday" refers to a one-night, two-day stay on Saturdays and Sundays. In other words, a one-night, two-day stay on Friday-Saturday or Sunday-Monday will be considered a weekday accommodation.

Program Details Differ Depending on the Prefecture

Each prefecture in Japan is included in the Domestic Travel Subsidy Program, making it different from the Go To Travel Campaign launched in 2020.

This is why the details of the subsidy program differ in each prefecture. Some prefectures even offer original travel discounts―in addition to the 11,000 yen maximum subsidy offered by the national campaign.

Which Accommodation Facilities Offer Discounts?

Keep in mind that not all accommodation facilities and tours are part of the Domestic Travel Subsidy Program.

Please note that at the end of this article, there's a list of websites for each prefecture's subsidy campaign. This article also features information on tours.

We Recommend Making Reservations ASAP!

Presently, accommodation facilities have received a flood of reservations, prompting travel agencies and tour companies to shut down their website reservation sites temporarily.

However, the subsidy program is backed by a 560 billion yen budget. Although many places have stopped taking reservations, there's a good possibility that they will resume bookings in the near future. So, please keep checking back with them.

Discounts in Addition to the Travel Subsidy Program

Tokushima Prefecture's Iya Valley Gorge. Photo by Pixta

As previously mentioned, each prefecture's details concerning the Domestic Travel Subsidy Program will differ. Next, we'll introduce some of the prefectures offering original discounts in addition to the national subsidy program.

Tadaima Tokyo Plus (Japanese) is the website for accessing the Domestic Travel Subsidy Program in Tokyo. This can be used in conjunction with Motto TOKYO (Japanese), a discount service for travels in the greater Tokyo area for locals.

Motto TOKYO offers a 5,000 yen discount on one night's accommodation. With the national program, travelers can enjoy a maximum discount of up to 16,000 yen!

The start date for Motto TOKYO was October 20, 2022.

Nagano Prefecture

Nagano Prefecture's Shinshu Wari SPECIAL (Japanese) offers a 1,000 yen discount (500 yen coupon x 2) on transportation for a one-night stay per person. This will help keep transportation costs down when visiting spots within the prefecture.

Nara Prefecture

Nara Prefecture's Ima Nara Campaign 2022 (Japanese) offers discount coupons for souvenir shopping and other items at participating shops in the prefecture. 1,000 yen coupons are issued for national holidays, while 2,000 yen coupons are available for prefectural citizens.

Kochi Prefecture

In Kochi Prefecture, the Kochi Kanko Recovery Campaign (Japanese)―Kochi's original discount campaign―can be used with the Kochi Kanko Tokuwari Campaign (Japanese), the national program.

The Kochi Kanko Recovery Campaign offers travelers a 5,000 yen cashback on money spent on highway fees and public transportation.

Tokushima Prefecture

Tokushima Prefecture's Minnade! Tokushima Travel Wari (Japanese) is aimed at travel packages within the prefecture that include accommodation and travel fees. It plans on giving each person a maximum of 5,000 yen cashback in addition to the national campaign's benefits.

Which Travel Sites Deal With the Travel Subsidy Program?

With the Travel Subsidy Program, discounts can be received when making a reservation directly with the accommodation facility. Travelers can also make a booking via a hotel reservation site.

Below, we've listed the reservation sites that handle the Domestic Travel Subsidy Program.

Currently, some sites are temporarily not accepting bookings due to the flood of reservations. There might be additional important points to consider, so please consult the official websites for more details.

Rakuten Travel

Join a Tour for a Worry-Free Experience

Some people might feel that it's troublesome to check the terms and conditions of the subsidy program in different prefectures.

We recommend booking a tour through a travel agency at times like this! Below, we've listed tour companies that handle the subsidy program, so by all means, please take a look.

Yahoo! Travel

Kinki Nippon Tourist

Nippon Travel Agency

Official Websites for Participating Prefectures and Cities

The prefectures and their official websites for accessing the Domestic Travel Subsidy Program are listed below. Please use this as a reference when departing on your next trip.

Note: All of the websites are in Japanese. Some websites have links to English travel content but not to the subsidy program itself.

Use These Discounts to Enjoy Travels in Japan!

Rurikoin Temple in Kyoto. Photo by Pixta With the domestic COVID-19 situation gradually improving, many people in Japan are getting the travel bug.

In addition to the Domestic Travel Subsidy Program, several prefectures are offering their own unique travel discount services.

Please use these campaigns to save on expenses and fully enjoy your travels in Japan!

Main image: Tokushima Prefecture's Iya Valley Gorge. Photo by Pixta

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Tokyo to resume travel subsidy deal for residents from June 10

By TAICHI KOBAYASHI/ Staff Writer

June 5, 2022 at 15:05 JST

The Tokyo metropolitan government will resume a program for residents that subsidizes an overnight travel tour within the capital on a trial basis from June 10, citing the declining trajectory of COVID-19 cases.

A subsidy of 5,000 yen ($38.22) per night will be offered for travelers.

Individuals who have received three jabs against COVID-19 or those who tested negative for the novel coronavirus are eligible to receive the subsidy.

An additional subsidy of 1,000 yen will be given to those aged 18 or younger who meet that requirement.

The program will cover a total of 250,000 stays until the end of July.

The start of the trial program was announced June 3 by Tokyo Governor Yuriko Koike.

Tokyo authorities greenlit the program after an expert panel advising it on how to handle the pandemic assessed that new cases were on the decline in the capital even after a vigilance period against a rebound in cases came to an end on May 22.

The metropolitan government initially began the subsidy program in October 2020 by setting aside 4.9 billion yen for the initiative.

However, the program was suspended the following month after a surge in infections.

The metropolitan government is expected to decide whether to extend the program beyond July after analyzing how many Tokyoites sign up for the deal and getting input from the public.

Koike said her government will take into account the status of travel subsidy programs offered by the central government when it considers whether to extend the offer.

“New daily cases in Tokyo are still above 2,000,” she said. “We should watch closely how they will go in the coming weeks.”

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Japan set to boost prefectural travel subsidy programs

June 10, 2022 (Mainichi Japan)

Japanese version

TOKYO -- Japan is expected to extend and expand its prefectural travel subsidy programs to revitalize the tourism industry hit hard by the coronavirus pandemic, but the central government's "Go To Travel" subsidy campaign will remain suspended.

The 47 prefectures' subsidy programs were launched as substitutes for the national "Go To Travel" campaign and are sponsored by local bodies for prefectural residents. The programs had initially subsidized only inner-prefecture travel, but the areas were expanded to neighboring prefectures in November 2021. Since April 1 this year, Japan has been divided into six regional blocs under the tourism initiative, and those who are traveling within each area have been eligible for the subsidies. The central government is subsidizing the cost to local bodies that implement the programs.

The central government is now considering extending and expanding the prefectural travel subsidy programs, which were to end this month, on the grounds that Japan has been seeing the COVID-19 infection situation falling to a moderate level and that the country would officially resume accepting foreign tourists from June 10.

Local governments can decide whether or not to implement prefectural subsidy campaigns and the applicable destination areas, making it easier for them to respond to the true state of local infections. Meanwhile, the resumption of the "Go To Travel" campaign, which had been uniformly implemented across the country, will remain suspended after its resumption was deemed "too early," according to a Japanese government affiliated source.

(Japanese original by Akira Murao and Nozomi Gemma, Political News Department)

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Japan to extend domestic travel subsidy program into 2023

Discount campaign aims to revive tourism after COVID hit

TOKYO -- The Japanese government will extend its national travel support program into next year, Tetsuo Saito, minister of land, infrastructure, transport and tourism, said on Friday, to stimulate tourism demand and help prop up the still-fragile economy, which is recovering from the COVID-19-induced slowdown.

The subsidy program, launched in October for residents of Japan, had previously been set to end in late December, but the government decided to extend it after the travel industry and prefectural governors requested the extension.

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Tokyo restarts campaign to encourage domestic travel

Tokyo will resume a travel subsidy campaign in September to support the capital’s tourism industry, which is still feeling the strain amid Japan’s slow tourism rebound.

Named Motto Tokyo (More Tokyo), the campaign was launched in October 2020 to fanfare by the public, prompting the subsidy allocation to run out in days, but has been suspended several times due to spikes in Covid-19 cases. The most recent suspension was at the end of July, but with new coronavirus outbreaks on the decline since August 3, Tokyo residents are being encouraged to travel again.

Motto Tokyo ’s two goals are “to get society moving again and to keep Covid-19 under control”, as stated by governor of Tokyo, Yuriko Koike, during a news conference.

From September 1, the joint initiative by the Tokyo Metropolitan Government and the Tokyo Convention & Visitors Bureau (TCVB) will provide financial support to Tokyo residents for daytrips and overnight stays within the capital provided they have proof of three Covid-19 vaccination shots or a negative PCR test result.

Individuals will receive 5,000 yen (US$36) per night for an accommodation that costs 6,000 yen or more per night, for up to five nights. A day tripper, meanwhile, will receive 2,500 yen per day for an excursion costing 3,000 yen or more.

A website run by TCVB has been set up to advise individuals and groups on booking with the companies registered to take part in the campaign, which include nationwide travel agents H.I.S. Co. and JTB Corporation, as well as major hotels and ryokan inns.

Sales will start at noon on September 1 for travel from September 1–30 and cease when the budget allocated to each operator reaches its limit.

The resumption of Motto Tokyo follows improvement to another domestic travel subsidy campaign called Kenminwari , which was expanded to cover the whole country and extended until the end of August to maximise travel during the summer holiday period.

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Bookings start for trips to and from Tokyo under subsidy program

Japanese travel agencies and hotels began Friday accepting reservations for domestic trips to and from Tokyo starting Oct. 1 under the government's subsidy program, which was launched in July excluding the capital due to a spike in coronavirus cases there.

The central government hopes the "Go To Travel" initiative, which currently offers a 35 percent discount and will cover half of travelers' costs from Oct. 1, will stimulate domestic travel hit hard by the virus pandemic.

But concerns remain that Tokyo's addition could trigger a resurgence of infections in other areas as the capital still sees more than 100 virus cases per day.

"It is necessary for both (travel) operators and travelers to take thorough steps to prevent the spread of the new coronavirus," tourism minister Kazuyoshi Akaba told reporters, adding 11 people who have used the program were infected with the virus.

The central government has decided to add the capital into the scheme as the Tokyo metropolitan government lowered its virus alert by one level from the highest of four on Sept. 10, citing a downward trend in the number of infections.

But Akaba, who retained the ministerial post under the newly launched Cabinet of Prime Minister Yoshihide Suga, has hinted at the possibility of delaying the inclusion of Tokyo, if infections drastically spread in the capital again.

In that case, the land, infrastructure, transport and tourism ministry plans to request travel firms or accommodation facilities not to charge cancellation fees, with the losses to be covered by the state, according to the minister.

Kichisaburo Murayama, 68, who runs a travel agency in Tokyo's Suginami Ward, welcomed the start of reservations for trips to and from the capital, saying, "As Tokyoites will be able to enjoy reasonable trips at last, I want to offer good products."

He urged the government to prevent the further spread of virus infections so Tokyo will be added to the program as scheduled.

Under the 1.35 trillion yen ($12.9 billion) travel push, tourists currently enjoy a 35 percent discount on their expenses centering on accommodation fees.

From Oct. 1, they will also be able to receive coupons worth 15 percent of total costs that can be used for food, shopping and other activities offered at destinations.

Since the program was launched on July 22, a total of 13.39 million people stayed at hotels using the campaign by the end of August, according to a preliminary report by the tourism ministry.

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How to Apply for the Go To Travel Campaign

The Japanese government has launched the Go To Travel Campaign to encourage people to travel around Japan from July 22, 2020 onwards. This is a great opportunity to travel cheaply in Japan! This campaign is not for international travelers but only for residents in Japan. So if you already live in Japan, why not go for a trip around Japan with the Go To Travel Campaign? In this article, we will explain what the Go To Travel Campaign is and how to travel cheap with it!

What is the Go To Travel Campaign?

Current situation of go to travel campaign (updated 2022), prefectural discount, motto tokyo, how to use go to travel coupons, the website you can book go to travel campaign:, how to take a pcr test in japan, tour packages, japan wonder travel tours , other articles you may enjoy.

The Go To Campaign consists of 4 different campaigns which will support the industries which have been severely affected by COVID-19 such as travel, food, and entertainment industries, etc. Go To Travel Campaign is one of these campaigns and the government will cover half of the domestic travel costs up to ¥20,000 per person per day (up to ¥10,000 for a day trip) by issuing coupons that are worth 15% of travel costs (up to a total of ¥6,000 per day) and giving 35% off discount on the travel package. There is no limit on the number of traveling with the campaign, so you can repeatedly travel at half-price in Japan during the campaign.

Go To Travel Campaign has been suspended since March 2021 .

Meanwhile, there are alternative campaigns such as the prefectural campaigns which are quite similar to the Go To Travel Campaign. (we will explain it later in this article)

Go To Travel campaign will be resumed as GoTo 2.0 when it’s ready, and the discount rate is likely to change. The discount rate is originally 35 percent of the trip cost (up to 14,000 yen) and comes with local coupons that are 15% worth of the whole travel costs (up to 6,000 yen). ▶See how it works GoTo 2.0, however, will give a 30% discount (up to 10,000 yen) with 3,000 yen (weekdays) or 1,000 yen (weekends) coupons.

At the moment, what we expect for the new Go To Travel campaign is as follows; 

• More discounts may be applied on weekdays than on weekends
• It’ll be required the vaccination certificate or certificate of the negative test result to apply for the campaign.

We’ll update the latest information accordingly when the official announcement is made.

Pre-Go To Travel Campaign 2022

From October 11 to the end of December or early January , the government decided to launch a new campaign (全国旅行支援, zenkoku ryoko shien) to encourage people to travel more. During this campaign, you can travel anywhere around Japan with a discount as long as you already got vaccinated three times or get a negative test result on the PCR test.

The prefectural discount offers to the residents of Japan, giving a discount on travel packages and a coupon ticket for local restaurants. It gives you a maximum of 7,000 yen for both a travel package and a coupon ticket (5,000 yen for accommodation + 2,000 yen for coupons).  This discount is valid until September 30th, 2022 , and you can use this discount only in the region you live in. Regions and prefectures that you can currently use Prefectural Discount (as of September 13)

You can book from the website of Japanese travel agencies such as Jalan and Rakuten Travel etc.

From September 1st, 2022, the Motto Tokyo campaign will resume for Tokyo residents. If you plan for an overnight trip that costs over 6,000 yen, you will get a 5,000 yen discount! For a day trip, if your travel costs over 3,000 yen, you will get a 2,500 yen discount. The Motto Tokyo campaign will be valid until September 30, 2022.

How does the Go To Travel Campaign work?

It is basically a package deal, and the campaign will cover half of the travel costs up to ¥20,000 per person per day. About 70% of reimbursement is an actual discount on the package and about 30% of it is with coupons that you can use for gift shops, restaurants, amusement parks, and transportation.

Here’s how it works;

• If your travel package costs ¥20,000, you can save half of the cost which is ¥10,000 with the campaign. You will pay ¥13,000 for your trip but you will get coupons with a total value of ¥3,000. With that, you can save ¥10,000 in total.
• If your travel cost is ¥50,000, half of the costs will be ¥25,000, however, the reimbursement is up to ¥20,000 per day. So you will pay ¥36,000 of the total costs and will get coupons with a total value of ¥6,000. With the coupons, eventually, you can save ¥20,000 in total.

How to apply for the Go To Travel Campaign

Book a package via travel agencies or book the accommodation directly. If you book a package via a travel agency, accommodations and transportation (trains, highway fees, airplanes, buses, etc.) will be included but if you book accommodations directly, transportation will be excluded from the discount. But either way, you will get coupons. The discount is not only valid for the accommodation but also if you book overnight transportation such as a cruise ship, the overnight ferry, or a sleeper train (excluding overnight transportation that only offers seats), you can get a discount for those too. If you want to go on a day trip, the campaign will cover your transportation fee + food or activities.

We ( Japan Wonder Travel ) are not currently operating the service. The websites you can book Go To Travel Campaign are as follows,

Either a vaccination certificate or a certificate of the negative test result will be required if you apply for the Go To Travel Campaign. There’s an English service that allows you to get a test quickly and easily in Tokyo and Osaka. You can choose the test type between swab and saliva. There’s an option to receive the negative result certificate on the same day as you take the test, so if you are in a rush, this will be very useful! ▶ Book PCR test from here

If you have any questions about coupons, please read these articles first! – Everything you need to know about Go To Travel Campaign Coupons (General) – The best way to use go to Travel Campaign Coupons in the popular destinations

Q. Is the hotel for the quarantine also included for the Go To Travel Campaign? It can be used for the quarantine hotel if you are a resident visa holder. Basically only the Japan resident can use the Go To Travel Campaign. But not every hotel accepts the quarantine, so please check with the hotel before you make a booking. If you are an international traveler and look for a quarantine hotel, please check this website for more information ( Self-Isolation Japan.com ) Q. How can we get coupons? Please check this article! ( Where can you receive the coupons? )

Q. If I want to stay for a couple of nights at my friend’s house, can I still use the Go To Travel Campaign? As long as you stay at the hotel on the same day of your arrival, your trip can be applied partly to the Go To Travel Campaign. For example, if you go on a trip for 3 nights 4 days and you stay at the hotel for the first night and stay at your friend’s house for the rest of your trip, it’s considered a 1 night 2 days trip for the Go To Travel Campaign and you will get the discount for it. However, if you only stay at your friend’s house, it is not applicable for the Go To Travel Campaign at all.

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Great article! “[…]If you already made a booking for your trip before the campaign started, you can still apply the discount if you went on a trip between July 22nd to August 31st. “ 🤓 I checked the indicated website to apply online and unfortunately it looks like the application deadline for this was 14 September. Does anyone know of this is the case or if there is another way of applying still? Thank you.

Hi Rashomon-san, Thank you for pointing it out, and that’s correct, the deadline for the application was September 14th. Sorry we haven’t updated with that information. We updated on the article as well.

I was going to request a motel quote using Go To Travel. However, found the information requested to be intrusive and not required for just my asking for a quote.

Hi Mark, Thanks for your message. In terms of the price for accomodation: you can check the prices of the hotel online yourself and add our service fee to the amount. However, we cannot only book your accommodation, as a travel agency we need to sell packages (transportation & accommodation + optional activities). If you are looking to only book a motel I recommend you do this yourself (as this is the cheapest way). For the actual booking we need to collect some information such as proof of living in Japan (and being able to make use of the Go To Travel campaign) and keep it on file. That’s why we ask for a copy of your residence card. Hope we could clarify some things for you, otherwise please send us an email or reply here again.

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Everything you need to know about Japan's Go to Travel campaign

The travel subsidy offers up to 50 percent discounts on domestic trips – here's how to enjoy this great deal

[Update, December 12] The Go to Travel campaign has been suspended in Tokyo from Friday December 18, and nationwide over the New Year holidays from December 28 until January 11.

In this age of Covid-19 coronavirus , the world isn’t exactly our oyster. Although Japan’s sweeping entry ban is still in place, those of us already here are being encouraged to explore our own backyard and see everything the country has to offer.

To promote domestic travel and to help boost local businesses, the Japanese government has set up the Go to Travel campaign , which provides residents with subsidies of up to 50 percent on transportation, hotels, restaurants, tourist attractions and shopping, all within Japan. 

Effective October 1, Tokyo is now included  in the campaign, so those travelling to and from the capital are now eligible for the discounts. 

Most of the information on the Go to Travel campaign is in Japanese , so we’ve compiled all the key details on this remarkable travel deal. 

These details are subject to change – this is a developing story and will be updated as more information becomes available. 

Recommended: How to go out safely in Tokyo, or anywhere for that matter 

Go to Travel campaign FAQs

What is Go to Travel?

The Go to Travel campaign is a Japanese government subsidy encouraging domestic travel to help boost the economy. It also aims to bring business back to local tourism and hospitality operators, many of whom were forced to close during the coronavirus state of emergency.

When does the Go to Travel campaign start?

The campaign started on July 22, and until September 31, you will receive an initial 35 percent discount on your travel expenses. From October 1 onwards, you'll receive the aforementioned 35 percent discount plus an extra 15 percent discount in the form of vouchers that can be used at your destination, for a total 50 percent off the cost of their trip. 

The campaign is expected to end in January 31 2021, although it's possible it could end earlier if and when the national budget allocated for this subsidy has all been used up.

What kinds of trips are eligible?

The discount only applies to domestic trips and can only be claimed up to a set limit. For day trips, the maximum eligible spend is ¥10,000 per day, while for overnight and longer trips, the maximum is ¥20,000 per night.

Trips costing more than these amounts are still eligible for the Go to Travel scheme, but discounts will only apply up to those limits.

Where can I get the discount?

To receive the discount, you’ll need to book your trip with businesses that are registered with the campaign. You can find a list of participating businesses on the official Go to Travel website (in Japanese only).  

Most major Japanese travel agencies and travel booking sites such as JTB ,  Yahoo Travel and Rakuten Travel are included in the promotion. Since the campaign is integrated with their booking systems, you’ll pay the discounted price when booking directly through them. 

Not comfortable booking in Japanese? Don't worry, you can also book your hotel stays in various languages through Booking.com . Here you'll get 35 percent discount on your hotel instantly when you book. The additional 15 percent, which comes in the form of electronic vouchers, will be issued on your check-in day after 3pm. Click here to find out how you can redeem these if you book via booking.com.

Are airfares included?

If booked through a travel agency as part of a package, then yes, your airfare is included. The deal does not apply to any transportation you’ve booked directly. 

You can book flight with hotel packages that are eligible for the Go to Travel discounts directly through Japan Airlines and ANA , though it's all in Japanese only.

Where can I use the vouchers?

The vouchers are distributed in physical and electronic form, and you’ll receive them via your travel agencies, online booking sites or at your hotel. They can be used at selected restaurants, souvenir shops, tourist attractions and public transport operators.

Participating venues will place a sticker or poster on their storefronts for easy identification. Do note that some outlets only accept physical vouchers and not electronic ones, or vice versa. There are also those that accept both. And, you can also use the vouchers at selected convenience stores. 

Vouchers are non-refundable and you cannot receive change when you pay with them.

Do guest houses, dormitories, hostels, capsule hotels, bungalows, tents, cottages count?

If they are registered for the campaign, then yes, stays at these types of accommodation are eligible for the discount.

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Food & Drink Travel

Japan’s “Go To Eat” Campaign: What You Need to Know

What it is, where to sign up and how to get discounts

September 23, 2020

The second stage of the government’s plans to re-energize the hospitality, travel, and retail landscape is just on the horizon. It comes in the form of the restaurant-centric “Go To Eat” campaign, a subsidy program offering discounts on dining out.

Mid-July saw the roll-out of the slightly bungled Go To Travel campaign , a government initiative to help stimulate Japan’s post-Covid-19 economy, with a focus on the previously booming travel sector. The campaign, which later barred Tokyoites from eligibility last minute to prevent the spread of Covid-19 (Tokyo will most likely be added to the campaign from October 1 unless infection rates surge again), is a subsidy program of sorts, allowing applicants to have half their travel spending covered by the government, as we informed you in an article   on it back in July . 

Reports  claim that  Japan’s restaurant industry’s bankruptcies jumped 13.2% from last year totaling around 583 throughout the country for the period between January and August. Those worst hit are specialty restaurants, like Chinese, Japanese, yakiniku (Japanese BBQ), ramen stores, and bars and beer halls. The government hopes that the Go To Eat campaign will be the antidote to this frankly scary situation. 

What is the “Go To Eat” Campaign?

This new campaign is the “dining out” version of the Go To initiative, aimed to help stimulate the local hospitality economy and drive business to restaurants and dining establishments who have suffered huge economic impacts as a result of Covid-19 . By offering to subsidize diners’ meals, hopes are it will encourage folks to give their UberEats accounts a rest for a bit and get back to dining out — safely — spending up big in their favorite local haunts. 

The campaign is for those wanting to get back out there and dine in the participating restaurants. There’s no eligibility clause, and you don’t have to be a Japanese national or resident to use the program. All you need to do is purchase the coupons from participating sellers. 

Although the government’s first Go To project hasn’t yet even been accessible for Tokyo locals, it looks like the precedent set by the campaign is achieving its desired effects for participating businesses. 

“The Go To Travel campaign has been working well for us,” explained a PR representative at Halekulani, a new resort in Okinawa’s main Naha island. “Because the rooms are subsidized, guests are choosing to spend more and book luxury level accommodations, and our upcoming capacity is sitting at 75%. Now that Tokyoites will be allowed soon, we can see they’re also booking trips using the campaign.” So, it’s fair to assume that it will offer some relief for local restaurants and hospitality establishments.

How to get the campaign discounts and what are the conditions

The campaign will see diners receive coupons with a value of 25% higher than the cost price, which essentially means that you’ll get a 25% discount on your meal. There are two systems through which customers can take advantage of the subsidy. You can either buy prepaid coupons (also referred to as discount vouchers, meal tickets, or in Japanese, premium meal vouchers) or join the points program. They’re a little different, so let’s break it down. 

Go To Eat Coupons (aka premium meal voucher)

This is a meal voucher that customers can buy from participating outlets. The voucher gives the customer an additional 25% spending power and costs ¥10,000 each; therefore, the coupon value is ¥12,500. The maximum amount of vouchers a person can buy at one time is ¥20,000 (value = ¥25,000). The vouchers/coupons will be sold until January 2021 and are valid until the end of March 2021. 

They will be region-specific, which means vouchers you buy in Tokyo can’t be used in Osaka. Also, no change will be given to customers paying with a meal voucher, so you’d better max it out. 

Where you can buy the vouchers and from when depends on each prefecture. Currently, 33 of the country’s 47 prefectures, including Tokyo, have decided to offer the vouchers. They’ll be available both as online and physical tickets, depending on the prefecture. Japanese site Travelers Navi keeps an  up-to-date list on the areas currently offering the vouchers , some are available to purchase, and others are still setting up homepages.

Go To Eat Points System

This one is   a little more convoluted than the coupon system, but if there’s one thing you’ll learn, spending money in Japan is that the industry loves point-based systems. The points program allows customers to earn discounts on upcoming meals by booking through participating in online reservation sites. 

For each lunch you book via this initiative, you’ll earn ¥500 to put toward future meals, and for every dinner, you’ll receive ¥1,000. The points are awarded after you pay for your meal. This is eligible for each customer, so say, for example, you go out for lunch with three friends, the total amount of points earned will be ¥1,500. 

To sign up and start collecting your points, you’ll have to book through one of the participating reservation sites, including Gurunavi, EPARK Gourmet, Recruit, and Kakaku. Gurunavi have already set up their  Go To Eat homepage  where you can read more about the system, but it hasn’t yet launched, so no booking just yet!

What restaurants are participating and where to find them?

As far as we can tell, there’s no definitive list of the participating outlets, unfortunately. Restaurants have to apply and be approved to be part of the campaign. The best bet is to check online via the booking sites to see whether your favorite restaurant is listed as a participating store.

When does the campaign start?

It’s touted to kick off at the end of September, but there’s no nation-wide starting date. With a focus on keeping infection numbers low, there’s also a chance that densely populated regions or areas with higher infection rates will delay the roll-out until officials deem it safe. We’ll keep you updated!  

For more information on the Go To Travel Campaign, see  here . For more information on the Go To Eat Campaign, see  here  (Japanese only). 

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Tokyo added to Go To Travel subsidy program as discount raised to 50%

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15 Comments Login to comment

theResident Oct. 1, 2020 04:36 pm JST

Brilliant. Combine this with some of the discounts on offer and there really are some very decent ''staycations'' to be had.

gaicuckojin Oct. 1, 2020 05:06 pm JST

Without the tourist Tokyo is actually bearable

theResident Oct. 1, 2020 05:28 pm JST

Tokyo is very bearable without the tourists - but it IS our duty now to offer even more support to the Restaurant and Bar industry so that they can survive. Its very nice being able to walk into restaurants without a reservation right now - but it won't last forever and nor will they without our support.

Ascissor Oct. 1, 2020 06:26 pm JST

Fresh off the Olympics....

Bugle Boy of Company B Oct. 1, 2020 06:35 pm JST

Its very nice being able to walk into restaurants without a reservation right now - but it won't last forever and nor will they without our support.

Restaurants come and go - even in a good economy. But, sure - get out and support them! Have fun!

fxgai Oct. 1, 2020 07:13 pm JST

We all need to pay for this ridiculous subsidy program.

It’s a disaster.

People are using the subsidy to go to more up-scale places than they otherwise would.

The cheaper places are suffering as a result.

When the subsidies end the cheaper places could be out of business, and fewer people will be frequenting the upscale places.

Hopefully the upscale places thank their lucky stars and don’t count on good business in future, otherwise it’s bad news for them long term too.

Government subsidies are a bad idea. No wonder the big government of japan that also distributed Abenomasks to you is doing this.

jerry Oct. 2, 2020 03:05 am JST

so much for stay home, stay safe.

MarkX Oct. 2, 2020 07:18 am JST

I agree with fxgai, this is not the hotels and restaurants that are offering big discounts, but the government using our tax dollars to pay for this. So if you don't care, or are a gambling person, you can go and enjoy yourself on everybody else's dime, while those who are more careful and prudent, stay home and foot the bill.

Why not just direct subsidies to these places? This virus is still not finished in Japan, and I fear this is just going to increase the spread.

kurisupisu Oct. 2, 2020 08:51 am JST

So, many mixed messages from the government of Japan.And no, Tokyo has never been on my places to visit except for times when it has been unavoidable...

theResident Oct. 2, 2020 08:59 am JST

@fxgai: I totally disagree - The cheaper places are not suffering at all. If anything, people who would normally not be able to eat out frequently now can. Sone of my co-workers who are on a tight budget can afford to take their family on a short domestic trip for the first time in a while. Yes - no dispute we are all going to pay for it through tax anyway so might as well take advantage.

Totally understand if you don't want to take the risk of infection and stay home - That is totally your choice and respected, however, I never supported any form of lockdown other than restricting mass gatherings such as sports events and concerts and still haven't changed my mind.

carpslidy Oct. 2, 2020 11:55 am JST

Understand both sides but personally I think go to is great.

It encourages people to travel who otherwise wouldn't, allows those on a tight budget to travel, and those with a little more cash to enjoy a little more luxury.

Many countries have similar campaigns

dagon Oct. 2, 2020 12:40 pm JST

The GoTo campaigns are enriching JTB and Dentsu and are regressive, crony capitalist corporate welfare that would be better spent elsewhere.

fxgai Oct. 2, 2020 09:19 pm JST

theResident,

If anything, people who would normally not be able to eat out frequently now can.

If we consider that a good thing, do we need to subsidize the upscale places a create unnatural temporary demand?

I’d be less concerned with targeted support to provide adequately for those in need, but the thought of rich people going to rich places on my yen grates, and in the long term I don’t think it does us good.

Totally understand if you don't want to take the risk of infection and stay home

it’s not that, it’s that I don’t see that the benefits of this program justify the costs - and I question if there really are any benefits! There is a reason for the trend away from subsidies in other countries! Japan never hit the message...

what does the government do after it becomes apparent that some have become dependent on these subsidies? What if other industries demand subsidies? Where does it end?

Lets save our taxes for assisting the needy, not distorting the economy!

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Japan to extend domestic travel subsidy program beyond April

The government is planning to extend a domestic travel subsidy program, initially slated to end in March, through the summer in hopes of bolstering the tourism industry’s post-pandemic recovery.

The discounts will also not be applicable to reservations that have already been made for travel from April. But once prefectures officially extend the program, travelers can make reservations with discounts.

“The budget allocated for the program has been carried over from the previous year and is expected to continue through the summer until it runs out,” said Kensuke Dogahana, who is in charge of the program at the tourism agency.

The discount rate will remain the same. Travelers can get a 20% discount maxing out at ¥5,000 per person per night for accommodation that is packaged with transportation. If travelers just book a hotel, the maximum discount will be ¥3,000 per person per night.

In addition, travelers will get ¥2,000 worth of vouchers per person per day if they travel on weekdays and ¥1,000 on weekends, which can be used at restaurants and for souvenirs.

The number of domestic overnight stays in 2022 was up around 43% from the previous year at 453.97 million, and only down roughly 24% compared to the pre-pandemic level in 2019. Most travelers were Japanese, with foreign guests only accounting for 3.7% of the total.

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The COVID-19 pandemic and domestic travel subsidies

Toshiyuki matsuura.

a Keio University, 2-15-45, Mita, Minato-ku, Tokyo 1088345, Japan.

Hisamitsu Saito

b Hokkaido University, Kita 9 Nishi 7, Kita-ku, Sapporo 0600809, Japan

The spread of the coronavirus disease 2019 (COVID-19) has significantly reduced tourism demands worldwide. Employing weekly data on tourist flows between Japanese prefectures, we examine the cost-effectiveness of domestic travel subsidies. Our results provide two implications for the literature. First, we identify the underlying mechanism of tourist flows during the pandemic. In contrast to infectious diseases that have only local effects, the COVID-19 pandemic has decreased tourism demand not only to, but also from, severely affected regions, deteriorating tourism businesses even in areas not severely affected by the disease. Second, we confirm the effectiveness of a price-discount strategy in mitigating economic damage to the accommodation sector caused by the pandemic.

Introduction

Tourism demand disappeared significantly after the worldwide spread of the coronavirus disease 2019 (COVID-19). International arrivals dropped by 74% in 2020, reducing export revenue by USD 1.3 trillion and putting 100 to 120 million tourism jobs at risk ( UNWTO, 2021 ). Several measures such as tax exemption and provision of loans at reduced rates of interest have been implemented to sustain tourism businesses and jobs ( OECD, 2020 ; UNWTO, 2020a ). Thereby, government spending has increased, especially in countries greatly relying on the tourism industry ( Khalid et al., 2021 ). However, since the current situation is expected to remain unchanged for years ( UNWTO, 2021 ), the cost-effectiveness of respective policies matters.

In general, cost-effective tourism policies are those directed toward the sector most severely affected by a crisis ( Blake and Sinclair, 2003 ), hence subsidies for domestic travel should be appropriate. Domestic tourism has yielded much greater revenue than international tourism at the regular period in developed countries. Although the COVID-19 pandemic has significantly reduced domestic tourism demand, it shows signs of recovery faster than international tourism demand ( UNWTO, 2020b ). Therefore, as long as domestic travel subsidies can create sufficient tourism demand during the pandemic, the governments can cost-effectively support tourism and related businesses because they subsidize tourists with only a fraction of their travel expenses.

However, travel subsidies during the pandemic may not yield adequate income for tourism businesses if the concern about the infectious disease considerably reduces consumers' willingness to travel. For example, Rittichainuwat and Chakraborty (2009) explain that discounts on airfares and marketing promotions during and after the SARS crisis did not work in Thailand. Matsushita (2019) examines the impact of a temporal travel subsidy on tourist inflow after a huge earthquake in Japan. The study finds a weaker impact in a more severely damaged area. Yet, previous studies have not addressed the cost-effectiveness of travel subsidies during the COVID-19 pandemic effectively.

Another concern is the bias in the cost-effectiveness estimate of a subsidy. The number of travelers using a subsidy is usually referred to in evaluating its cost-effectiveness. However, the following two threats to internal validity make it difficult to count the exact number of travelers induced by the subsidy. First, the number of travelers tends to rise following the ease of travel restrictions ( UNWTO, 2020c ). If the subsidy is provided just after the ease of travel restrictions, it is difficult to disentangle the impact of the subsidy from the upward trend in tourism demand.

Second, the observed number of travelers may include tourists who would travel even without the subsidy. Risk perception serves an important role in consumers' decision to travel and destination choice during a crisis ( Neuburger and Egger, 2021 ). A tourist's risk perception is situation-specific; tourists evaluate a situation, paying particular attention to several risk dimensions ( Roehl and Fesenmaier, 1992 ; Slovic, 1987 ). For instance, they may consider physical and/or social risks during the pandemic. The former is the possibility that a trip will result in sickness while the latter is the possibility that a trip will affect others' opinion of the tourists. Those who do not regard traveling during the pandemic as a risk are likely to travel even without a subsidy. Counting them as travelers induced by the subsidy overestimates its cost-effectiveness.

This study employs a gravity model to discuss the cost-effectiveness of domestic travel subsidies during the pandemic. The gravity model has been widely used in tourism literature to identify the determinants of tourist flows between countries/regions ( Álvarez-Díaz et al., 2017 ; Álvarez-Díaz et al., 2020 ; Morley et al., 2014 ; Santeramo, 2015 ; Santeramo and Morelli, 2016 ). In this study, we apply the model to the weekly tourist flow between Japanese prefectures. Japan provides an interesting case to study the effects of domestic travel subsidies. The Japanese government declared a state of emergency from April 7 to May 25, 2020 but did not impose strict restrictions on domestic travel. Moreover, to stimulate domestic travel after the lifting of the state of emergency, the government decided to implement a nationwide travel subsidy named the “Go to Travel Campaign” (hereafter, campaign) starting on July 22. The campaign was initially designed as an ad valorem type of subsidy, offering a 35% discount on travel expenses for any domestic travel. However, travel to/from Tokyo was excluded from the campaign on July 16 due to the sharp increase in the number of confirmed COVID-19 cases in Tokyo at that time. Many cancelations of travel to/from Tokyo were observed after the announcement of the exclusion, suggesting that it was unexpected by consumers.

Drawing on this case as a natural experiment, this study applies a difference-in-difference (DID) analysis to the gravity model to reduce the aforementioned two threats. Both the number of tourists traveling to/from Tokyo and traveling between prefectures other than Tokyo increased after the lifting of the state of emergency, but the number of tourists traveling to/from Tokyo after July 22 only included those who traveled without the subsidy. Therefore, we can infer the number of tourists induced by the campaign by evaluating the extent to which tourist flow between prefectures other than Tokyo increased compared to that to/from Tokyo after the implementation of the campaign. Funashima and Hiraga (2020) also evaluated the impact of the campaign, but their dependent variable includes tourists from Tokyo, who were not subject to the campaign during the estimation period, thereby biasing their estimated impact of the campaign.

In summary, our main contribution is the rigorous examination of the cost-effectiveness of domestic travel subsidies after the ease of travel restrictions. According to the Japan Tourism Agency, the Japanese government spent JPY 110 billion (approximately USD 1.1 billion) by September 30, 2020. Even after controlling for the upward trend in tourism demand after the ease of travel restrictions and the number of tourists who would have traveled even without the subsidy, we still find that the campaign increased tourist flow by nearly 50%, creating a tourism demand of JPY 255 billion. In addition, our results provide two implications for the literature. First, by estimating the gravity model, we identify the underlying mechanism of tourist flows during the pandemic. Second, by examining the effectiveness of an ad valorem type of subsidy, we confirm the validity of a price-discount strategy in alleviating the economic damage of the pandemic to the accommodation sector.

Related literature

This study is related to two strands of the literature. First, it is related to those that examine the impact of infectious diseases on tourist flow. Infectious diseases, such as COVID-19, have historically caused severe damage to the tourism industry; hence, empirical studies that attempt to evaluate their impact on tourist flow are abundant (e.g., Cooper, 2005 ; Karabulut et al., 2020 ; Kuo et al., 2008 ). For instance, Rosselló et al. (2017) employ a gravity equation to quantify the extent to which travel-related disease risk in the destination country reduces the number of international tourist arrivals. The COVID-19 pandemic differs from these diseases in that the former spreads nationwide in many countries whereas the latter, only locally. The nationwide spread of the disease affects the willingness to accept tourists at the destination. During the pandemic, there is a strong concern among residents that tourists bring the virus to their neighborhood ( Neuburger and Egger, 2021 ). Indeed, the number of confirmed COVID-19 cases in the destination increases with the number of inbound tourists ( Farzanegan et al., 2021 ; Liu et al., 2021 ). We suppose that a social concern that travelers may spread the virus at the destination likely reduces the willingness to travel to other areas, particularly among individuals in severely affected regions, yielding the following hypothesis:

The COVID-19 pandemic decreases tourist flow. The number of confirmed cases in the origin (destination) reduces tourism demand to (from) other regions.

Given that an infectious disease spreads only locally, the affected region can recover the tourism demand to that region by controlling its spread. However, in the present situation, keeping the number of infected people under control in the destination alone will be insufficient to boost tourism demand. Without controlling the spread of the disease within a nation, the declining tourism demand to other parts of the country may negatively affect tourism businesses, even in areas not severely affected by COVID-19.

This study is also related to those investigating hotels' pricing strategy during a crisis and its impact on their performance ( Chen, 2011 ). For example, reduced room rates have been observed in Hong Kong during the COVID-19 pandemic, particularly in hotels with high-star ratings ( Wu et al., 2020 ). To what extent room-price discounts increase hotel sales depends on price elasticity. Vives et al. (2019) summarize the price elasticity estimates of hotel demand in previous studies and conclude that the demand is price inelastic, implying that the reduction in room rates decreases hotel sales ( Peng et al., 2015 ). This finding is consistent with Kim et al. (2019) , who conclude that room-price discounts after the 2007 financial shocks in the United States increased room occupancy but decreased revenue per available room. However, price elasticity shows considerable temporal variation depending on social and economic conditions ( Fleissig, 2020 ). During the pandemic, many governments have requested that their residents avoid unnecessary outings. Reduced opportunities to travel likely yield a higher price elasticity of tourism demand than in the regular period. To illustrate this point, consider a linear demand function, which shows that price elasticity increases as the quantity demanded declines. Thus, quantifying the level of price elasticity is indispensable for predicting the effectiveness of a pricing strategy during a crisis.

In this study, we consider the impact of two types of travel subsidies―the campaign and those by local governments―on the number of tourists and hotel sales. Travel subsidies are not exactly equivalent to room-price discounts. However, these two types of subsidies are similar in that travelers face reduced accommodation fees in either case. Hence, quantifying the impact of travel subsidies on tourist flow allows us to infer the level of price elasticity during the pandemic. More interestingly, these two types of travel subsidies are supposed to increase the number of overnight stays in different ways; the campaign is an ad valorem subsidy, while the local travel subsidies are specific. Hence, the campaign likely encourages tourists to stay in greater luxury accommodation than they usually do, but local travel subsidies are less likely to do so.

To illustrate this point, let us assume that there are two hotels: luxury hotel A and economy hotel B. Since the campaign is an ad valorem subsidy, the room prices of both hotels will be reduced by 35%. Hence, it does not affect the relative prices between them. In contrast, because local travel subsidies provide a specific amount of money to travelers, hotel B becomes relatively cheaper than hotel A. The substitution effect implies that the campaign does not affect the relative demand between hotels, but local travel subsidies do by increasing the relative demand for hotel B. A reduction in room prices also causes an income effect. Generally, luxury hotels have a higher income elasticity of demand than do economy hotels ( Canina and Carvell, 2005 ). Therefore, the income effect suggests that both the campaign and local travel subsidies increase the relative demand for hotel A. The net effect of the substitution and income effects on the relative demand of hotels A to B is positive for the campaign but ambiguous for local travel subsidies. Consequently, we developed the following hypothesis:

Both the campaign and travel subsidies by local governments increase tourist flows. Moreover, the campaign induces the average tourist to stay in higher-class accommodation.

This hypothesis implies that ad valorem subsidies are effective in supporting higher-class accommodation, which is more severely affected by the pandemic ( Wu et al., 2020 ).

We make two additional contributions to the literature. In general, business travelers are less sensitive to a change in room prices than leisure travelers ( Abrate et al., 2012 ; Schamel, 2012 ). By distinguishing these two types of travelers in the estimation, we examine whether the difference in price sensitivity leads to a different impact of travel subsidies between them. This study also contributes to the studies that examine tourists' transport mode choice (e.g., Vergori and Arima, 2020 ). To avoid close contact with others, consumers' preference toward public transportation has been declining during the pandemic ( Neuburger and Egger, 2021 ). The government's request for self-restraint on long-distance travel further strengthens this trend. However, since the discount also applies to transportation expenses, we expect that the campaign encourages long-distance travel. We investigate how the distance between the origin and the destination affects the impact of the pandemic and the campaign on tourist flow.

The primary data source is the Tourism Forecast Platform published by the Japan Travel and Tourism Association. The association collects accommodation records and reservation data from over-the-counter sales of travel agencies and domestic and overseas online sales. The association combines these data with the figures in the Overnight Travel Statistics Survey published by the Japan Tourism Agency to estimate the daily number of overnight stays for each origin–destination prefecture pair to aid the marketing strategies of hotels, restaurants, and tourism agencies and for policymaking by local governments. Most previous studies have employed annual or monthly data on tourist flows. However, as the COVID-19 situation changes frequently, travel-related policies vary accordingly. Our data allow us to precisely control for such frequent changes in the COVID-19 situation and travel-related policies. The period from January 1, 2017, to September 30, 2020, is utilized for analysis. Since any domestic travel after October 1, including that to/from Tokyo, was subject to the campaign, its impact is captured by time-fixed effects (see Empirical methodology section). Therefore, extending the estimation period does not necessarily improve the evaluation of the effectiveness of travel subsidies.

The Tourism Forecast Platform also provides cross-tabulation data by guest attributes, such as the existence of accompanying travelers (traveling with family members, as a couple, or solo) and the price ranges of hotel rooms per person per night (below JPY 10,000; JPY 10,000–30,000; or above JPY 30,000). Using the latter information, we can estimate the average price of hotel rooms per person per night for each origin–destination prefecture pair. We can also examine whether the impact of travel subsidies differs between leisure and business travelers by distinguishing the impact between weekdays and weekends as well as between solo and family travelers.

The number of confirmed cases of COVID-19 was obtained from the webpage Dashboard & Map of COVID-19 Japan Case constructed by J.A.G Japan ( https://gis.jag-japan.com/covid19jp/ ). The webpage compiles a list of individual patients from press releases by the Ministry of Health, Labour and Welfare, and local governments. We counted the number of confirmed COVID-19 cases in the list by date of confirmed infection and the prefecture where the patient was examined. The number of residents in each prefecture was obtained from the Basic Resident Registration published by the Ministry of Internal Affairs and Communications. Regarding the national and local policies related to COVID-19, we referred to the webpages of the Cabinet Secretariat and local governments.

Below, we aggregate both the daily data on tourist flow and the number of infected cases to the weekly level to smooth out daily fluctuations. In this study, a week refers to a consecutive period from Monday to Sunday. Weekends refer to three consecutive days starting from Friday. Note that national holidays, even isolated ones not consecutive to a weekend, are included in weekends.

Spread of COVID-19, tourist flows, and policy responses

To grasp the situation of tourism demand in Japan before the COVID-19 pandemic, Table 1 summarizes the annual tourism demand in 2019. The average number of overnight stays in prefectures was more than 11 million. Travelers from their own prefectures, Tokyo, and foreign countries account for 6.0%, 14.8%, and 10.1% of overnight stays, respectively, suggesting that Tokyo constitutes a major source of tourism demand in Japan.

Tourism demand in Japanese prefectures in a pre-COVID-19 period.

Unit: Overnight stays and %.

Fig. 1 shows the average number of overnight stays and the number of infected cases in prefectures from January 6 to September 27, 2020. The box plots show the quartiles of confirmed cases in the prefectures. Since a large variation is observed in the number of confirmed cases across prefectures, we classify prefectures into two groups according to the median cumulative number of confirmed cases at the end of September. Then, the ratio of the number of overnight stays in 2020 to the number of overnight stays in the same week of 2019 for each prefecture is averaged for each group. The dashed (solid) line indicates the average across prefectures with a large (small) number of confirmed cases. Overall, the changes in the number of overnight stays and infected cases are closely related to each other. Curiously, the solid and dashed lines are located close to and move parallel to each other throughout the period, indicating that the spread of the COVID-19 has a similar impact on tourism demand regardless of the number of confirmed cases in the destination.

Overnight stays and confirmed Cases of COVID-19 in Japanese prefectures in 2020 Note: Outside values are excluded in the box plots ( Tukey, 1977 ). Source: Japan Travel and Tourism Association, Tourism Forecast Platform.

Table 2 summarizes the representative travel policies related to the COVID-19 pandemic in Japan. The Japanese government declared a state of emergency from early April to the end of May; during this time, the government requested that citizens avoid unnecessary outings and voluntarily close businesses, including tourist attractions, hotels, and restaurants. However, the government neither implemented a hard lockdown nor imposed strict restrictions on domestic travel. Regarding the state of emergency, Prime Minister Shinzo Abe stated in a press conference on April 7, 2020, that “This declaration of a state of emergency does not in any way intend to close cities or to be a lockdown as we are seeing take place overseas. Trains, buses, and other forms of public transportation will continue to operate” ( Cabinet Public Relations Office, 2020 ). Indeed, public transportation, including airlines and high-speed rail, continued to operate during that period, but at a slightly reduced frequency due to declines in tourism demands. For instance, 80% of the regular high-speed train services between Tokyo and Osaka continued to operate in April and May according to a news release by the Central Japan Railway Company. Hence, it can be concluded that changes in travel patterns observed in Fig. 1 reflected changes in the preferences of tourists.

Travel policies related to the COVID-19 pandemic.

Source: Web pages of the Cabinet Secretariat and local governments.

To stimulate domestic travel after the state of emergency, the national and local governments implemented travel subsidies. The campaign was a nationwide travel subsidy by the Japanese government, offering a 35% discount on accommodation and other travel expenses for any domestic travel, except for that to/from Tokyo. The maximum subsidy that could be received was JPY 14,000 per person per night. In other words, travel expenses that exceeded JPY 40,000 per person per night were not discounted. However, consumers could use the discount repeatedly during the campaign period. Travel subsidies by local governments differed in terms of their coverages and rates. A typical subsidy was equivalent to JPY 5000 for every resident traveling within the prefecture. Fig. 1 suggests that both the campaign and travel subsidies by local governments were effective in increasing the number of overnight stays. For example, two peaks at the end of June and July exactly match the initiation of the local travel subsidies and the campaign, respectively.

Empirical methodology

Gravity model of tourist flow.

Consider the following utility maximization problem of consumer j for a time period t :

where, N jodt is the number of overnight stays by an individual j from the origin prefecture o to the destination prefecture d ; p odt represents the cost of a visit from o to d ; Q jot denotes consumption of a composite good whose price is set to one; Z ot and Z dt are vectors of regional characteristics in prefectures o and d , respectively; and M jot is the individual j 's income. The utility maximization problem (1) indicates that given the cost of a visit, income, and regional characteristics, consumers choose the number of visits to each destination during a period of t . However, typically, they do not visit any region during that period. Morley et al. (2014) show that solving (1) while allowing for corner solutions (i.e., N jodt  = 0) yields the following aggregate tourism demand from o to d ( F odt ):

Eq. (2) is called a gravity model and is frequently used in the literature to identify the determinants of tourist flow between regions. In this study, we apply the log-linear form of Eq. (2) to weekly tourist flows between Japanese prefectures:

GTC odwy and SUB odwy , representing the campaign and travel subsidies by local governments, respectively, are included in Eq. (3) to evaluate the impact of the cost of a visit ( p odt ) on tourist flow. GTC odwy is a dummy variable valued at one for any travel except for that to/from Tokyo after the implementation of the campaign while SUB odwy measures the amount of subsidies paid to each eligible traveler. The first part of Hypothesis 2 indicates that both GTC odwy and SUB odwy increase tourist flow.

CVD rw −1 y / POP ry , corresponding to regional characteristics ( Z rt ) in prefecture r , r  =  o , d , denotes the average number of confirmed cases per 1000 residents per day in the past week w −1 of year y in prefecture r . Hypothesis 1 indicates that an increase in the number of confirmed cases in the origin (destination) will reduce the number of tourists from (to) that region. Note that the number of cases per 1000 residents interacts with d i , i  = 0, 1, 2, 3. d 0 is a dummy variable valued at one if travel from o to d is intra-prefectural (i.e., o  =  d ). d 1 is a dummy variable valued at one if travel is inter-prefectural (i.e., o  ≠  d ) and the distance between prefectures is less than 250 km; d 2  = 1 if the distance is between 250 and 500 km; and d 3  = 1 if the distance is over 500 km. The distance between prefectures is calculated as the great-circle distance between prefectural capitals. The categorization reflects the most frequent range of distance traveled by automobiles (<250 km) and high-speed rail or air (>500 km) according to the Travel Mode Survey by the Ministry of Land, Infrastructure, Transport and Tourism. This specification allows the impact of the number of confirmed cases to differ depending on the distance between the origin and the destination. For example, as the number of infected cases increases in a prefecture, residents in that region may travel more within their own prefecture and avoid inter-prefectural travel, particularly to areas that can be reached by public transportation.

We introduce a number of fixed effects in Eq. (3) . δ od are origin–destination fixed effects, capturing the push force for tourists from the origin such as the average income during the estimation period ( M o ), the pull force to the destination like unobserved time-invariant regional characteristics ( Z d ), and time-invariant travel obstacles affecting the cost of a visit ( p od ) between prefectures o and d , such as distance and travel time between the origin and the destination. δ od is preferred compared to the distance as a measure of travel obstacles because we can control for the transport networks, such as airlines and high-speed rail, available between prefectures. δ wy are time (i.e., week–year) fixed effects that consider factors that are specific to week w of year y but are common across prefectures, such as the number of confirmed cases at the national level, the economic shocks on income caused by the pandemic, and the upward trend in tourism demand after the lifting of the state of emergency. δ dw are destination–week fixed effects that control for seasonal fluctuations in tourism demand. They are specific to each week and destination pair because the degree of seasonality shows a significant regional variation, according to climate and locally available activities at the destination ( Saito and Romão, 2018 ). Finally, ε odwy represents disturbances. Table 3 presents the summary statistics of the variables.

Variable definitions and summary statistics.

Note: Family travelers include individuals traveling with family members or couples. The economy, middle class, and luxury hotels are hotels whose room price per person per night is below JPY 10,000, JPY 10,000–30,000, and above JPY 30,000, respectively.

As discussed in the Introduction, we examine the impact of the campaign by employing the DID approach in which travel between prefectures other than Tokyo belongs to a treatment group while travel to/from Tokyo belongs to a control group. Any travel in a treatment group is subject to the campaign during the post-treatment period beginning from the week of July 20, 2020 (i.e., GTC odwy  = 1). Moreover, the time-fixed effects in Eq. (3) capture the upward trend in tourism demand after the lifting of the state of emergency. Consequently, the number of tourists who would travel even without the campaign can be obtained by setting GTC odwy  = 0. In other words, by subtracting the number of tourists who would travel even without the campaign from the total number of tourists, β 1 in Eq. (3) shows the percent increase in the number of travelers induced by the campaign.

The log of Eq. (3) is generally estimated using ordinary least squares (OLS). However, F odwy frequently takes zero value. Omitting observations with a zero-valued dependent variable can seriously bias the estimates. Thus, we follow Santos Silva and Tenreyro (2006) and estimate Eq. (3) utilizing the Poisson pseudo-maximum-likelihood (PPML) estimator. Since COVID-19 has an incubation period of approximately 5 to 10 days, an increase in the number of travelers does not affect the number of COVID-19 cases in week w −1, suggesting that reverse causality is not an issue when estimating Eq. (3) .

Impact of travel subsidies on hotel sales

Next, we evaluate the extent to which the campaign contributed to the recovery of hotel sales compared to those during the pre-COVID-19 period. The sale of hotels from tourists originating from prefecture o to d ( V odwy ) is obtained by multiplying the average price of hotel rooms per person per night ( P odwy ) and the number of overnight stays ( F odwy ):

Eq. (4) shows that the campaign can increase hotel sales by inducing consumers to spend more nights in a hotel. However, the utility maximization problem (1) indicates that consumers cannot increase the number of overnight stays above their budget constraint. To examine the impact of the campaign on the average price of hotel rooms, we suppose that the same specification as in Eq. (3) holds for the determinants of the average room price:

where, ξ odwy are disturbances.

Note that the average price of hotel rooms may not be precise as it is estimated using the number of tourists staying in each of the three price ranges of hotel rooms. Hence, we check the robustness of our results by analyzing whether the campaign shifts the demand of hotels from economy (room price per person per night is below JPY 10,000) to middle class (JPY 10,000–30,000) or luxury (above JPY 30,000):

where, S odwy c is the share of overnight stays of tourists from prefecture o in category c hotels in prefecture d ; c  = 1, 2, 3 for the economy, middle class, and luxury hotels, respectively; and ν odwy c are disturbances. The second part of Hypothesis 2 indicates that GTC odwy increases the average price of hotel rooms (Eq. (5) ) and the share of overnight stays in middle or luxury hotels (Eq. (6) ). We employ OLS to estimate Eqs. (5) , (6) . The presence of zero-valued dependent variables does not matter here because room prices cannot be defined without tourist flow.

To evaluate how much hotel sales increased due to the campaign, we differentiate Eq. (4) with respect to GTC odwy :

where, V odwy | GTC =0 (= P odwy | GTC =0 F odwy | GTC =0 ) is the predicted sales of hotels if travel from o to d is not the subject of the campaign, which is obtained as the product of the predicted values of Eqs. (3) , (5) while setting GTC odwy  = 0.

The total sales of hotels in Japan during the campaign period ( V y ) is obtained by aggregating V odwy over prefectures o and d and weeks in the campaign period:

where, W denotes the weeks during which the campaign was implemented (i.e., the weeks between July 20 and September 27). Therefore, the increase in hotel sales due to the campaign is obtained as follows:

where dGTC odwy is valued at one for any travel that is subject to the campaign and zero otherwise. Note that both sides of (9) are divided by V y −1 ―the total sales of hotels in the corresponding weeks in 2019―so that we can evaluate how much the campaign contributed to the recovery of hotel sales compared to those during the pre-COVID-19 period.

By substituting Eqs. (7) into (9) and rearranging it, we have:

where TYO stands for Tokyo. The first and second terms in the parentheses measure how much the campaign increased hotel sales from intra- and inter-prefectural travel, respectively. Since travel to/from Tokyo was not the subject of the campaign, it is excluded when evaluating the first and second terms. Contrastingly, the third and fourth terms consider a counterfactual case where travel from/to Tokyo had been the subject of the campaign. In other words, the first two terms show how much the campaign actually created the total tourism demand in Japan while the last two terms measure the extent to which the campaign would have created tourism demand if travel from/to Tokyo had been the subject of the campaign.

Estimation results

The determinants of tourist flows.

Table 4 presents our baseline results. Column (1) shows that both the campaign and local travel subsidies significantly increased the number of overnight stays. In the Appendix A , we confirm that the parallel trend assumption is satisfied before the implementation of the campaign. Therefore, we can interpret the parameter on the campaign as its net impact on tourist flows, excluding those who would have traveled even without the campaign. Quantitatively, the campaign increased the number of overnight stays by 50%. As the campaign reduces the price of hotel rooms by a maximum of 35%, this figure suggests that tourism demand is price elastic during the pandemic. The number of confirmed cases in the destination decreased the number of tourists to that region, especially in regions far from the origin. Contrastingly, the number of confirmed cases in the origin encouraged intra-prefectural travel. In summary, the spread of COVID-19 caused travelers to shift their destination from distant areas that can be reached by high-speed public transportation systems to neighboring regions within driving distance.

Gravity model of tourist flow: base model.

Note: Table shows the estimation results of Eq. (3) . The dependent variable is the number of overnight stays. The constant is not reported. Column (3) is estimated by a dynamic Poisson estimator, which includes the initial value of tourist flow and the group means of the time-varying continuous exogenous variables. Standard errors clustered by origin–destination pairs are in parentheses.

The fixed effects in column (1) are able to control for unobserved factors that affect tourist flow. However, they obscure the impact of important policy variables such as the state of emergency. Hence, in column (2), we replace time-fixed effects with dummy variables representing the state of emergency in the origin or the destination and the number of confirmed cases per 1000 residents at the national level. We also substitute the log of distance between the origin and the destination for origin–destination fixed effects. The distance between prefectures is calculated as the great-circle distance as described above. The distance for intra-prefectural travel is obtained as 2 / 3 area / π ( Head and Mayer, 2004 ). The results indicate that the state of emergency, particularly in the destination, reduced tourist flow. Consumers considered the spread of the virus nationwide as well as the spread within their own prefecture and the destination when they made travel plans. Finally, tourist flow decreased by 0.4% as the distance between the origin and the destination increased by 1%.

Column (3) considers the inertia in tourist flow. We introduce the lagged tourist flow in the model. Since tourist flow takes a zero value, although it does not have any theoretical basis, one needs to be added to it before we can calculate the log. To address the endogeneity of the lagged dependent variable, we employ a dynamic Poisson estimtator ( Gashi et al., 2017 ; Wooldridge, 2005 ). Because its nonlinear estimation failed to converge upon including a large number of fixed effects, we excluded destination–week fixed effects. Consistent with previous studies (e.g., Adeola and Evans, 2020 ; Balli et al., 2016 ; Khadaroo and Seetanah, 2008 ; Santeramo, 2015 ), the results suggest that tourist flow in the previous period positively affects tourist flow today. However, the long-run impact of the campaign and local travel subsidies is 0.528 (=0.335/(1 − 0.365)) and 0.707 (=0.449/(1 − 0.365)), respectively, and is very similar to the corresponding impact in column (1). Consequently, the relationship between tourist flow and domestic travel subsidies is robust in the dynamic panel framework.

Column (4) introduces multilateral resistance terms. International trade literature argues that trade between two countries depends on trade costs between them relative to those with other countries ( Feenstra, 2016 ). For example, a reduction in trade costs between country A and B may not considerably increase exports from country A to B if country B can import goods from country C at substantially lower costs. Applying the idea of multilateral resistance to tourist flow, we expect that the campaign may not increase the number of tourists from prefecture B to A if residents in B can visit prefecture C at lower costs due to local travel subsidies. To control for multilateral resistance terms, we first estimated the model including both origin–week–year and destination–week–year fixed effects. In this case, identification comes from cross-sectional variation in the number of tourists within an origin or destination. However, since our data do not show sufficient variation to allow for the fixed effects at this level, we obtained an unreasonably large positive impact of the campaign. In column (4), instead of those fixed effects, we include both origin–month–year and destination–month–year fixed effects, assuming that the impact of multilateral resistance is the same across weeks within a month. The results are similar to those in column (1) although the impact of the campaign and local travel subsidies is still larger than the corresponding impact in (1).

Finally, we replace the number of confirmed cases in week w-1 in Eq. (3) with the average number of cases over the last 2 weeks in column (5). The underlying assumption in Eq. (3) is that consumers assess the COVID-19 situation approximately a week before they decide to travel. However, this assumption is not as strict as it seems because the variable also reflects the number of cases in the recent past. That is, the number of confirmed cases generally shows a high serial correlation within a region. Indeed, we find that the results in column (5) are very similar to those in column (1). We further confirmed the robustness of our result by replacing the variable with the average number of confirmed cases over the last 4 weeks (i.e., 1 month).

Thus far, we have examined the impact of domestic travel subsidies on tourist flow for the entire week. To focus on the difference between leisure and business travel, we estimate Eq. (3) separately for weekdays and weekends and for family and solo travelers in Table 5 . Generally, leisure (business) travel tends to be concentrated on weekends (weekdays) ( Abrate et al., 2012 ; Schamel, 2012 ) and family travelers are more likely to be leisure-oriented than solo travelers. Columns (1) to (4) of Table 5 show that the coefficients on the campaign and local travel subsidies are greater for weekends than for weekdays for both family and solo travelers, suggesting that leisure travel was encouraged more by subsidies than was business travel. Moreover, the campaign had the smallest impact on solo travelers traveling on weekdays, consistent with the low sensitivity to room prices of business travelers. Lastly, local travel subsidies only encouraged families to travel, as they mostly aim to promote short local trips; solo travelers with business purposes did not react to them.

Gravity model of tourist flow: family vs. solo travelers.

Note: Columns (1) to (4) show the estimation results of Eq. (3) for the subgroup indicated in the table header. “Family” includes travel by family members and couples. Columns (5) and (6) show the estimation results of Eq. (3) . The dependent variable is the number of overnight stays. The constant is not reported. Standard errors clustered by origin–destination pairs are in parentheses. There is a string of consecutive holidays from the end of April to the beginning of May in Japan. Consequently, the number of weekday observations is less than that of weekend observations.

The discount by the campaign was applied to transportation expenses, too. Thus, we expect that the campaign encouraged long-distance travel. To investigate how the distance between the origin and the destination affects the impact of the campaign on tourist flow, we estimate Eq. (11) :

Columns (5) and (6) of Table 5 present the estimation results. Although the campaign enhanced tourist flows for any range of travel, its impact monotonically decayed with distance, particularly for weekdays. The policy design of the campaign may explain this difference. Its discount applied to any overnight stays at registered hotels, but to transportation, dining, and shopping only if included in a travel package purchased through registered travel agents. Since leisure travelers are the main customers of such travel packages, the campaign encouraged long-distance leisure travel on weekends.

Cost-effectiveness of domestic travel subsidies

To quantify the impact of domestic travel subsidies on hotel sales, column (1) of Table 6 examines the impact of the campaign and travel subsidies by local governments on the average price of hotel rooms per person per night for the entire week. The results show that both the campaign and local travel subsidies significantly increased the average price of hotel rooms. Columns (2) to (4) of Table 6 demonstrate how the pandemic affected the distribution of hotel room prices. The table shows that both the campaign and local travel subsidies induced travelers to upgrade their accommodation from economy to middle-class hotels. In contrast, only the campaign significantly raised the share of overnight stays in luxury hotels. The results are consistent with the argument that the campaign encourages tourists to stay in higher-class hotels than they usually do, but local travel subsidies are less likely to do so.

The impact of travel subsidy on room price and tourist flow by type of hotel.

Note: Column (1) shows the estimation results of Eq. (5) . The dependent variable is the average price of hotel rooms. Columns (2) to (4) show the estimation results of Eq. (6) . The dependent variable is the share of overnight stays in the type of hotel indicated in the table header. The constant is not reported. Standard errors clustered by origin–destination pairs are in parentheses. The price of hotel rooms is not reported if tourist flows between prefectures are zero. Since we cannot obtain the average price in such cases, the number of price observations is lower than the number of tourist flow observations.

Based on results (1) of Table 4 and (1) of Table 6 , we evaluate the effectiveness of the campaign to remedy the economic damage to the accommodation sector caused by the pandemic. Our focus here is threefold. First, we examine the extent to which the campaign contributed to the recovery of hotel demand during the pandemic. Second, we argue how much the total sales of hotels would have increased if travel to/from Tokyo had been the subject of the campaign. Finally, we assess the cost-effectiveness of the campaign.

Table 7 summarizes the results. The predicted total sales of hotels during the period of the campaign relative to those in 2019 is 59.4%. By evaluating Eq. (10) , we find that the campaign raised tourism demand by 17.1% of the total hotel sales in 2019. We can obtain the impact of travel subsidies by local governments similarly. The impact presented in Table 7 shows that during the campaign, local travel subsidies created 6.3% of the tourism demand in a pre-COVID-19 period, which is much smaller than the tourism demand created by the campaign. Decomposing the tourism demand by the origin of tourists demonstrates that inter-prefectural travel accounts for 75.4% (12.9/17.1) and 42.9% (2.7/6.3) of the total demand created by the campaign and local travel subsidies, respectively. Consequently, attracting tourists from various regions, including distant ones, is key to enhancing the effectiveness of travel subsidies.

The impact of travel subsidy on hotel sales.

Note: Base demand refers to the predicted sales of hotels without travel subsidies. The campaign and local travel subsidies show the predicted sales of hotels attributed to their respective travel subsidies. All figures are of the relative sales from July 20 to September 27, 2020, per total predicted sales of hotels in the corresponding weeks in 2019. The figure in “To Tokyo” in the counterfactual case includes the predicted sales of hotels in Tokyo from tourists originating from there.

Next, the evaluation of Eq. (10) illustrates that hotels in Tokyo and prefectures other than Tokyo would have increased their sales by 1.7% and 4.3% of the total sales earned in the pre-COVID-19 period, respectively, if travel to/from Tokyo had been the subject of the campaign. Finally, according to the Japan Tourism Agency, the Japanese government spent JPY 110 billion on the campaign to subsidize 25 million overnight stays from July 22 to September 30, 2020. Note that this figure includes the number of tourists who would have traveled even without the campaign. The prediction based on Eq. (3) indicates that the campaign yielded 16 million overnight stays for July 20 and September 27, 2020. Overnight Travel Statistics Survey and Travel and Tourism Consumption Trend Survey by the Japan Tourism Agency indicate that the total expenditure on accommodation during the corresponding weeks in 2019 was JPY 1.49 trillion, implying that the tourism demand created by the campaign is estimated at JPY 255 billion (1.49 trillion × 0.171). A comparison between government spending on the campaign of JPY 110 billion and tourism demand created by it shows that the campaign more than doubled the revenue received by the accommodation sector.

Kulendran and Dwyer (2009) examined the cost-effectiveness of the destination promotion programs in Australia and showed that the return varies between 3 and 26, depending on the tourists' country of origin. The return is of a similar magnitude in Hong Kong too ( Zhang et al., 2010 ). Note that these studies measure the impact of the promotion programs on total tourism-related expenditures by international tourists while our study measures the impact on the expenditure on accommodation by domestic tourists. Therefore, although we cannot directly compare the impacts, we find that the return obtained in this study is reasonable.

Conclusions

Globally, we are experiencing a major and rapid escalation of COVID-19 cases. Many tourism-related businesses such as hotels, restaurants, tourist attractions, and tour operations have closed. National and local governments need to design a cost-effective measure to support them. We employ weekly data on tourist flow between Japanese prefectures and examine the cost-effectiveness of domestic travel subsidies. The results provide two significant implications for the literature. First, we identify the underlying mechanism of tourist flow during the pandemic. Second, we discuss the effectiveness of a price-discount strategy in mitigating economic damage to the accommodation sector caused by the pandemic.

The results are summarized as follows. In contrast to infectious diseases that have only local effects, the COVID-19 pandemic decreased tourism demand not only to but also from severely affected regions. Tourists in those regions shifted from inter- to intra-prefectural travel within driving distance. However, domestic travel subsidies during the pandemic could cost-effectively mitigate its impact on the tourism industry. We find that room-price discounts by the campaign induced a more than proportional increase in tourism demand. Particularly, leisure travelers reacted more strongly to the discounts than business travelers, by increasing their tourism demand for distant regions. The type of subsidy also mattered. Ad valorem subsidies were more likely to shift demand from economy to middle class or luxury hotels than specific ones.

In conclusion, controlling the spread of COVID-19 nationwide is of utmost priority for national and local governments to recover tourism demand. Providing domestic travel subsidies is a cost-effective tool for sustainable tourism businesses. However, the campaign was temporarily suspended on December 28, 2020, because COVID-19 was yet to show any sign of convergence in Japan. To seek a proper balance between tourism and public health, whether and to what extent the implementation of the campaign has accelerated the spread of the COVID-19 pandemic in Japan remains an important topic for further investigation.

CRediT authorship contribution statement

Toshiyuki Matsuura: Conceptualization, Software, Validation, Formal analysis, Investigation, Resources, Data curation, Writing – review & editing, Supervision, Project administration, Funding acquisition. Hisamitsu Saito: Methodology, Investigation, Writing – original draft, Writing – review & editing, Visualization.

Declaration of competing interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Acknowledgment

We thank Masayuki Morikawa, Nobuaki Yamashita, Shujiro Urata, Kazunobu Hayakawa, and other seminar participants at Research Institute of Economy, Trade and Industry (RIETI), Applied Regional Science Conference and Keio University. This study is supported by JSPS KAKENHI Grant 18H03637.

Biographies

Toshiyuki Matsuura is an associate professor at the Keio Economic Observatory of Keio University. His research interests include the determinants and consequences of foreign direct investment and the link between export behavior and firm performance.

Hisamitsu Saito is an associate professor in the Faculty of Economics and Business, Hokkaido University. His research interests include urban economics, tourism economics, and regional development.

Associate Editor: Rossello Jaume

Appendix A. Test of parallel trend assumption

To test the parallel trend assumption, we add Eqs. ( 3 ) and (5 ) interaction terms between time-fixed effects and a dummy variable valued at one, if travel from prefecture o to d belongs to a treatment group. The parallel trend assumption holds if the coefficients on interaction terms in Eqs. (3) , (5) are not significantly different from zero before the implementation of the campaign (i.e., July 22). Figs. A1 and A2 show that almost all coefficients are insignificant before the week starting July 20 but become significant after the implementation of the campaign.

Estimated coefficients of treatment effect on tourist flow note: The solid line shows the estimated coefficients of the interaction between the treatment effect dummy and time-fixed effects. The dashed line represents the 99% confidence interval.

Estimated coefficients of treatment effect on room price note: The solid line shows the estimated coefficients of the interaction between the treatment effect dummy and time-fixed effects. The dashed line represents the 99% confidence interval.

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