11 Feb, 2008
Japan Outbound Slumps, Inbound Surges
Japan’s outbound travel boom appears to be over after reporting three years of stagnation. The good news is that Japanese arrivals to Thailand are bucking the trend.
According to the Japan National Tourism Organisation, outbound Japanese travellers totalled 17.4 million in 2005, rose by a fractional 0.8% to 17.5 million in 2006 and are projected to have slumped 1.3% to 17.3 million in 2007. On the other hand, inbound arrivals are surging, from 6.72 million in 2005 to 7.3 million in 2006 and up again by 13.8% to 8.3 million in 2007.
Although the goal of attaining 20 million outbound travellers by 2010 is now looking slightly elusive, the goal of 10 million inbound travellers in the same year is looking well within reach.
Many of the destinations once hugely popular with Japanese visitors are reporting downturns.
Arrivals to Australia were down 12% to 573,000 in 2007, according to Tourism Australia. The U.S. Office of Travel & Tourism Industries reported Japanese arrivals down 4% in November 2007. “Japan accounted for 55 percent of all Asian visitors so far in 2007 and is the only major market this year with a decline in traffic,” the U.S. OTTI said. Arrivals to the Philippines were down 6.4% to 395,012.
However, some countries are doing well, Thailand being one. Japanese visitors at Bangkok’s Suvarnabhumi airport totalled 1.17 million in 2007, up 4.8% over 2006. This number will be even higher after the direct arrivals into other international gateways like Phuket are tabulated.
Arrivals to Malaysia in Jan-Nov 2007 were up 3% to 335,230. Full-year arrivals to Vietnam, a popular new destination for the Japanese, were up 7% to 411,557. Booming strongly is China which recorded 3.65 million Japanese visitors during Jan-Nov and is clearly set to achieve a full-year 2007 total that will exceed the 3.74 million Japanese arrivals in 2006.
Japanese travel industry analysts are puzzling over the changes.
Kentaro Sakai, a consultant at Japan Tourism Marketing (JTM), “Ever since overseas travel was deregulated in 1964, Japan has seen decline (due to) five factors: the second oil crisis in 1980, the Gulf War in 1991, Asia’s financial crisis in 1998, 9-11 terror attack in 2001 and SARS epidemics and the Iraq War in 2003.
“The decline in overseas travel in each year was clearly explained by these factors. Then what could be the factors for the drop in 2007?
Added Mr Sakai, “Recent travel trends including market’s maturity, young people’s loss of interest in overseas travel and slow growth in senior travellers can also lie in the background but few of them are actually examined in-depth.”
Another report by Japan Tourism Marketing points to the “effects of the fluctuations in the financial and capital markets mainly caused by the subprime mortgage loan problem and developments of oil prices on the Japanese economy and overseas economies.”
According to a December 2007 JTM report, “the record high crude oil prices are becoming a serious social issue in Japan today,” especially the resulting higher fuel surcharge for international air tickets.
The surcharges were introduced in February 2005 and, reports JTM, were “raised substantially” again as of January. The new surcharges levied by Japan Airlines are up by 4,000 yen one-way to 17,000 yen for the U.S./Europe/Oceania routes and by 2,600 yen one-way to 12,500 yen for the Hawaii routes.”
This says the report, “is affecting price-conscious FITs in particular, because they are likely to avoid expensive surcharge. The continued escalating fuel surcharge could be an obstacle to the Japanese government’s numerical goal to send 20 million Japanese abroad by 2010.”
The JTM report said that the ability to further probe this trend is being affected by the increasing use of the Internet as a means of making direct bookings by Japanese travellers.
It said, “Most travel products are sold via travel companies. Companies can get hold of consumers’ travel preference and trends through direct contact with consumers, which they apply to product development and sales promotion.
“Recently, as the distribution of travel products shifts toward the Internet, travel trade has fewer opportunities for personal contact with consumers, which consequently means that customer behavior and psychology are less visible for travel companies now.
“A finding in a recent group interview of six consumers was shocking; all of the interviewees made overseas travel arrangements entirely without help of travel companies. Together with the fact that the number of Japanese travelers abroad is shrinking, the travel industry should be awakened.”
Meanwhile, the Japanese government is stepping up its promotion of inbound tourism.
On January 29, the Japanese Cabinet adopted a bill to create a new tourist agency under the Land, Infrastructure, Transport and Tourism Ministry. According to the Japan Times, the agency will be launched in October with 103 officials by unifying six sections of the ministry.
The government also plans create “tourist regions” to promote visitor stays of more than two nights. Local governments and businesses would be eligible to receive support subsidies from the central government, with ¥270 million authorised for that purpose in fiscal 2008, Japan Times reported.
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