* * * * * * * TERRIE'S (TOURISM) TAKE - BY TERRIE LLOYD * * * * * *
A bi-weekly focused look at the tourism sector in Japan, by Terrie
Lloyd, a long-term technology and media entrepreneur living in Japan.
Tourism Sector Edition Sunday, October 27, 2014, Issue No. 778
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+++ TOURISM TRENDS
Given that last week's Take was number 777, we're feeling lucky and
from today are introducing a new schedule of Takes. Every other week
we will continue to put out the usual column and news, so that those
readers who like the format can continue. However, now that we are
getting more deeply involved in the travel sector, we see all kinds of
interesting trends and opportunities that are just begging to be
shared. So for that reason, starting from this week there will be a
fresh newsletter format -- being one column only, about some aspect of
the travel sector in Japan. If we find that people are not responding
to the new format (e.g., link click-throughs drop significantly) then
we will revert back to the existing format and schedule.
Why travel? Well we first got into the sector by way of the
crowdsourced www.japantourist.jp, launched in November 2011. Back
then, travel to Japan was probably farthest from tourists' choice of
destinations due to the radiation scare and the shocking images of the
3/11 tsunami in Tohoku. That year (FY2011), tourism fell dramatically
by 25% to 6.2m and it was difficult to imagine then any kind of early
turn-around. However, through good luck and good management, Japan
managed to win the Olympics, and this coupled with the public's short
memory (and limited awareness of ongoing Fukushima problems), has
caused tourism to rebound.
We think it is highly likely that the government will hit its stated
target of 20m visitors by 2020.
The Olympics are a once-in-a-generation PR opportunity, and the
Japanese government is seizing it with both hands. In particular, the
decision several years ago to loosen travel restrictions for mainland
Chinese, then last year for Thais and Malaysians, this year for
Indonesians, and soon, it is rumored, for Filipinos and Vietnamese as
well, means that the 2020 goal is not unrealistic.
For example, if the Indonesians take up travel to Japan at the same
rate as the Thais have done, then on a simple per capita basis, there
will likely be about 150,000 Indonesians traveling to Japan every
month next year. Put in perspective, it could possibly make Indonesia
overnight the fourth largest source of tourists, behind Taiwan at 2.8m
(JNTO 2014 figures extrapolated), Korea at around 2.5m, and China at
2.4m. Indonesia will probably contribute about 1.8m new tourists
a year. Then, turn on Vietnam and the Philippines, and you conceivably
could generate another 3m newly-sourced tourists in FY2015.
Inbound tourism apparently generates about 0.4% of GDP (no counting of
trickle down effect on employment) based on 2012 figures. So we
imagine that if you are going to double the number of tourists, and if
the yen stays where it is or falls even more, then the potential for
tourism earnings by 2020, and not including the one-off effect of the
Olympic games, will be about 1% of GDP -- or about JPY5trn a year.
This is equivalent to about 10% of the government's total tax income,
and is certainly more politically acceptable than raising taxes again.
Furthermore, it's amazing to think that this increase will happen in
just five years, with no significant expenses or effort by the
government. Yes, the Immigration Bureau will be busy, but investing in
hundred extra civil servants is nothing compared to the benefits of
the no-strings flood of cash on its way. By "no strings" we
mean that the country receives tourist spending, but has to provide
few-to-no social services to earn that cash. This of course is why
inbound tourism is so attractive and hotly pursued by governments all
over the world.
So we think travel is on a significant upward trajectory.
What sectors will be hot in the upcoming travel boom? There are many,
and all have to do with servicing the tourists or servicing the folks
who service them. So, a few of our picks are:
* Building and renovating hotels. Japan has a shortage of hotel space
already, and this will become more acute over the next 2-3 years. For
example, we just attended the largest cycling event in Asia, based
down in Imabari, Ehime -- in which 5,000 cyclists took part.
Practically all hotels within a 50km radius (including Matsuyama and
Niihama-Shikokuchuo) were booked out, leaving latecomers and unaware
foreign tourists having to drop this area from their itinerary or base
themselves 130km away in Kochi.
* M&A within the hotel sector. Japan has many smaller hotel operators,
especially business hotel chains. We foresee a flurry of M&A activity
based on the fact that these establishments can be refurbished for a
fraction of the time and expense of building.
* Alternative forms of transportation, for people and goods. For
example, there are very few multi-day bicycle adventure tours, despite
the fact that Japan has some of the world's best roads and most
courteous drivers (some hard core truckers excepted). Also, let's see
more foreigner-friendly rental cars and motorcycles, inter-hotel
parcel/luggage delivery, etc.
* Attractions. With the exception of some mega-sites like Disneyland
and Universal Studios, the Japanese don't seem to have gotten the
knack of entertaining tourists with purpose-made attractions. Instead,
they rely on existing things such as temples, scenic views, and eating
and shopping. This is a big opportunity for more savvy foreign
business people in the entertainment business.
* Authentic travel stays/tours. It's strange to say, but sometimes
foreigners understand what other foreigners think and feel about Japan
more than the Japanese do themselves. This is highlighted by Kyoto
historic "ochaya" houses that have been refurbished by foreigners.
* Souvenirs. Ever felt you had enough of washi paper and plastic
jewelry boxes? The person who can combine the Japanese aesthetic sense
with western desire for durable, authentic-materials collectibles, and
who can distribute these goods broadly and at reasonable price, will
make a fortune. In the past art and antiques partly filled this role,
but now that Japan is no longer a developing country, the locals have
snapped up what's left.
* L, XL, 3L and larger apparel makers.
* Supplying (recruiting) bilingual staff for the industry.
* A telecoms system that works for foreign phones. Maybe it's
widespread WiFi, or maybe something else -- but it's badly needed.
Without a network connection, tourists can't log in and see all the
great new information that is available around them and which will
enrich their stay experience.
* Food for foreigners. The company that comes up with an on-demand
supply for smaller hotels of breakfast cereals, exotic juices, and
baked goods that do NOT contain anko (bean paste), so long as the
prices and distribution are there, will also do very well financially.
* More Low Cost Carrier (LCC) airlines. Due to competition, they will
start selling accommodation and tours within their customer
environment, just as Jetstar is doing these days.
That's it for today. Thanks for reading.
...The information janitors/
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