Few things bring as broad or deep a smile to Japanese faces as a soak in one of Japan's 2,000 gurgling hot springs.

Yet, at resorts dedicated to bathing, drinking, eating, massage and generally escaping from the grind of everyday life, there have been fewer smiles this year than usual.The problem, says Kazuo Ueki, who runs an inn in northern Japan, is the scorching yen and uncertainty about the future of the economy.

"The strong yen is making people still taking holidays turn their eyes overseas," Mr. Ueki told Reuters.

"And a lot of people who used to spend four or five nights at Japanese inns are now only spending two or three nights," he said. "It's not that people don't have money. They have plenty. But they're worried about the future."

The yen has risen 14 percent against the U.S. dollar since the start of the year.

A 25-year-old receptionist at one inn said that high prices at "onsen" (hot spring) hotels were driving people away.

"The average price for a single room at an onsen hotel is 15,000 yen (US$170) a night, which is as much as the big hotels charge in Tokyo," he said. "Japanese onsens are basically too expensive."

Return air fares from Tokyo make a weekend in Noboribetsu about as expensive as a week in popular Japanese holiday destinations, like Hawaii and Bali, explaining a surge in overseas travel this year.

According to the most recent Japan National Tourist Organization's (JNTO) figures, about 1.15 million Japanese went overseas in May, up 16 percent from May 1994.

Covered in deep snow in winter, Noboribetsu onsen was first discovered in the 16th century by a woodcarver and Buddhist priest called Enku, according to local legend.

But it wasn't until 1857 when Kinzo Takimoto stumbled across it looking for a cure for his rheumatic wife that he opened its first inn. The resort waited more than 100 years until the late 1980s and early 1990s to reach its zenith, before falling into its current slump.

Still, Noboribetsu isn't taking the slowdown lying in its luxurious onsen.

Local authorities have started issuing passes that let visitors try onsen at different hotels, unheard of five years ago.

Authorities are also wooing local people, who have traditionally bathed at cheaper onsen in a neighboring village, which charge as little as 300 yen ($3.40) - compared with 2,000 yen ($22.70) at some of Noboribetsu's and Japan's most expensive hot springs.

Local tourism authorities have been pushing regional officials to help raise Noboribetsu's profile.

Nevertheless, few people in this sleepy village - nestled in ancient forests between a cluster of volcanoes and northern Hokkaido island's Pacific Coast - expect business to flourish any time soon.

"I wonder whether Noboribetsu is ever going to recover," said the inn receptionist.

The inn where he works was fully booked for 35 nights in 1994 but would be lucky to reach 20 nights this year, judging from the pace of business so far, he said. He added that it was all a far cry from the early 1990s when the inn was booked solid for weeks in advance.