TT-859 (Tourism Edition) -- Discovering Niche Opportunities in the Inbound Tourism Sector

Japan Travel
* * * * * * * * 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, Jul 24, 2016, Issue No. 859

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+++ Discovering Niche Opportunities in the Inbound Tourism Sector

Most of my friends in the IT sector, a business that I was also in for
almost 30 years, live orderly and predictable lives. So when I tell them
that I'm now in the travel sector and what a hotbed of opportunity it
is, I'm often told I have one of the best jobs around - getting to
travel and innovate the sector, and yet still enjoy the stimulation of
creating systems and technology solutions. Of course it's not all plain
sailing and competing with the likes of Expedia and TripAdvisor is no
small challenge. But by being nimble, and looking after niche markets
such as custom and adventure travelers, we are experiencing steadily
rising demand. Better still, currently we have very little local
competition in either sector.

Our typical custom traveler is either a family or business group.
Usually they have some very specific objectives and so need specific
research and negotiations by us on their behalf. Usually the group is
just big enough that they can't easily use, which maxes out
at about 6-8 people, and logistics are difficult enough that they can't
be sure of getting enough LCC or train seats to move everyone together.
Then of course there is the need for the special suppliers and events -
requiring some serious imagination and customization that most of our
package-obsessed Japanese competitors don't want to deal with. So this
is a very promising niche.

Our biggest custom traveler source markets are SE Asia, particularly
Singapore, where people have the budgets and previous visit experience
to value new and interesting opportunities; the Middle East, where they
typically have larger families and thus have a greater need for
logistics planning; and Europe, where corporations see Japan as an
interesting new conference and training venue.

We're often asked, "Well what does your company specialize in?" because
elsewhere in the world, the custom travel business is highly competitive
and you're either an events specialist, or a package tours company, or a
religious tours company, and so on. Instead, we just tell them that we
do "whatever the customer requires -- just like a Systems Integration
company." This usually satisfies the other party and of course brings me
personally full circle back to the core concept of creating processes
and solutions for my customers... :-)

[Continued below...]

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So there is opportunity in custom tours... But even with systems in
place, having to inject expert humans into the process of helping
individual customers decide what to do still creates a serious cost
disadvantage compared to the machine-driven businesses of Online Travel
Agents (OTAs). One way to avoid this conflict is to focus on segments
where human knowledge and interaction are actually valued and thus not
up against a Trip Advisor "time-limited 25% discount".

One segment that sits high on Maslow's Hierarchy of Needs and thus lends
itself to value-added human interaction is adventure travel, meaning
sports and thrilling experiences. This is because the customers are
usually traveling for something they are passionate about, and thus they
are more likely to:
* Travel to more remote places rather than just Tokyo, Osaka, and Kyoto,
and one of my personal goals is to help open up rural Japan
* Be more willing to travel outside of peak (seasonal) periods, since
their activity is THE purpose for travel
* Be more financially committed to making their experiences happen, and
thus have the budget to do something interesting and over a sustained period
* Have more technical expertise in their activity and thus value
artisanship and skill of the suppliers over lower price and
simple-minded convenience
* Spend their budgets on services rather than things, creating a channel
of income for local people who don't have the resources of financiers
and factories
* And perhaps most importantly for us, be more likely to keep coming
back to Japan, since the best customer is the repeat customer

For us, "Adventure" means cycling first and foremost, since this is not
only an activity, it is also an effective and low-cost way to transport
people around the country. But there are tons of other summer
activities/sports such as kayaking, white water rafting, diving, hiking,
paragliding, bungy jumping, drifting (as in car drifting), ziplining,
sailing, to do in Japan and that are worth traveling for. And, of
course, there is snow sports in the winter. Yes, some of these
activities, such as sailing, are still emerging, and the sophistication
of the practitioners and their equipment is still low. But if there is
one thing no one ever accused the Japanese of, it's an inability to
learn and learn quickly.

I'm convinced that Japan will become East Asia's adventure sports
destination for the following reasons:
* In the region, Japan has one of the best unspoiled seasonal
environments left
* It's safe, no matter how far into the countryside you go
* The infrastructure and equipment and tour leaders/guides are all reliable
* Japanese love "gear" and so will ensure their guests are well prepared
* Easy access by public transport
* Undervalued land and labor inputs in the countryside, make Japan quite
* In winter, Japan already has snow sports well covered

So where are the opportunities? They are almost everywhere you look.

Take that comment on "gear", how things are currently unsophisticated,
and how improvement will attract a lot more repeat visitors. I was
referring to sailing, but a much better example of how "gear" will bring
guests is cycling. Right now, there are virtually no carbon road bike
rental companies in Japan, and yet the nation's roads are smooth and
fast and perfect for good quality equipment. It seems that the word has
got out, because the demand (2017 season) for road cycling tours from
Europe and particularly the UK market is starting to really ramp up.
Experienced travel wholesalers are excited to be able to offer Japan as
both rustic countryside and high-tech equipment married together.

Seeing the gap in supply as an opportunity, we went and negotiated a
deal with a leading Japanese cycling retailer to get bikes that they
would keep maintained for us. To be honest, I don't want to go into the
cycle rentals business, but for the want of someone able to supply them
and this being a big "plus alpha" for travelers until a more substantial
vendor comes into existence, we decided to help fill the gap. I see a
similar kick-start opportunities in other sectors as well - basically
wherever there is a need for equipment and support of that equipment.

Where will this all take us? Well, if you look at the snow sports
sector, Japan today is a leader in both the sports themselves and the
gear to handle them - making the country a top destination in the
winter. I believe that on the back of special interest repeat tourists
from around Asia, some of Japan's summer sports, such as cycling and
kayaking, will enjoy similar popularity and the country will become a
mecca for adventure travelers in these newer sports 5-10 years from now.

...The information janitors/


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