GIVEN the weakened Japanese yen, the land of the rising sun has become the land of bargains and this will give a further impetus to inbound travel to this most popular of destinations, the audience at WiT Seoul 2022 heard.
Quoting one of Japan’s most prominent economists, Jesper Koll, Kei Shibata, co-founder CEO, Venture Republic – TRAVEL jp & Trip101, gave these startling comparisons.
- A Big Mac costs ($2.60) ¥390 in Tokyo versus $5.50 (JPY825) in Los Angeles, making the dollar’s purchasing power (more than) double this side of the Pacific
- Japanese labour costs are down to $33,000 per year on average, less than half the $69,000 payout in the United States
- A Tokyo-based software engineer now comes about 30 percent cheaper than one based in Ho Chi Minh City, Vietnam
- And at ¥180 to the dollar, a nurse in Manila would earn more than one in Tokyo
Jeremy Bek, general manager, global country management department, travel business, Rakuten, Inc, said that since the official announcement of Japan’s full reopening was made on September 22, the OTA has seen 3,100% increase in bookings from Hong Kong, 1,077% from Korea, 545% from Taiwan and 106% from the US.
“In June, when Japan allowed package tours, the uptake was very slow but since July, we started to see a significant increase in search demand from Korea which coincided with our new booking platform launch in July.
“From August, the increase in search demand became exponential when self-guided tours were allowed and in September, all the floodgates opened.”
Korean travellers, he said, were shifting towards mid upper and luxury four and five star hotels, with Rakuten seeing 50% higher average booking value compared to pre-Covid. They are also choosing ryokans, with 59% opting for these Japanese-style accommodation, particularly the luxury ryokans in Kanagawa, Shiga, Hokkaido and Hogyu prefectures.
Bek said Koreans were also getting more adventurous, exploring new destinations such as Gunma, Shiga, Nagasaki, Hyogo, Kanagawa and Oita.
Shibata believes inbound numbers may get pretty close to pre-pandemic levels by next year, even without Chinese visitors which make up 37% of arrivals to Japan. He said that while China remaining closed was bad in the short run, it may turn out to be a good thing in the long run.
“In order for Japan to achieve a continuous and sustainable growth, it has to attract more travellers from the Western markets and the travellers who tend to stay longer and travel outside Tokyo, Kyoto and Osaka. This is a good opportunity for Japan to change its focus,” he said.
Shibata believes one opportunity market for Japan is digital nomads and urged the authorities to consider issuing digital nomad visas.
He also said that Japan should consider tapping into the potential of the India market, which “is one of the most attractive markets in the world right now”. “Our biggest surprise at Trip101 is that this year, India became our second largest user base in the world, after the US.”
He said Japan needed to improve direct air connectivity, offer more vegetarian food options and “inform Indian travellers that Japan is no longer an expensive destination. That was their perception but that’s changed with the weak yen”.
Bek had a different view of India. “We’re not seeing any spike in search trends for Japan travel from India yet. And it’s a market that relies a lot on traditional agents and tours due to dietary restrictions. And Japan is not very food friendly for Indians. Despite the huge market opportunity, it’s not an easy market to capture due to its fragmentation and large market share of key local players who have built a strong brand preference.”
He said that Rakuten would focus on two key areas – vacation rental/alternative accommodation as well as sustainability. “Our business unit, Rakuten Stay, is growing 48% year on year and we feature 100,000 rooms in Japan as well as overseas, including Hawaii, Guam, Thailand, Vietnam, Singapore and Australia.”
On sustainability, a study conducted by Rakuten showed that 74.6% of Japanese travellers are aware of sustainability issues such as “inappropriate waste at travel destinations, food waste at hotels, carbon emissions, preservation of local culture”.
“Rakuten Travel is taking active steps to raise the awareness of sustainability issues and have created a programme that includes giving sustainable badge to hiotels are that active and advanced in sustainability and listing the actions being taken by hotels.
“At Rakuten Stay, we have procured renewable energy certificates and using 100% renewable energy in real terms for operations of all self-managed accommodation facilities in Japan since 2021.”
Conversely, the weak yen is not helping the outbound market. Bek said that despite the increase in international flights, outbound travel is getting expensive for Japanese travellers. Sharing data from the Japan National Tourism Organisation, he said month-on-month growth has been modest since March and is forecast to slow down from September.
Shibata added, “Although we see it recovering compared to last year, growing at double year on year, we still see very limited recovery compared to 2019.
“The outbound leisure market in Japan typically relies on packages and our traffic numbers (travel.jp) for packages in recent weeks show only a single digit recovery compared to 2019. Hotels and flights numbers are better – somewhere around 30% of 2019 levels. I assume that experienced Japanese travellers have started going abroad while the majority of leisure travellers are staying home still.”
What’s recovered well is business travel at Travel.jp For Business. “We started seeing that before summer and according to our major clients, their business travel to overseas, particularly South Korea is nearly back to pre-pandemic level.”
As for which global player would do well in Japan post-pandemic, Shibata cited Airbnb. “They strengthened their position the most during the pandemic. Their brand and supply are strong and unique, and they are spending the least amount of marketing dollars on performance marketing of all the major global OTAs.”
Bek meanwhile maintains that while global OTAs reduced their resources and support during the pandemic, local OTAs like Rakuten supported hotels through various activities, both financially as well as operationally, including “rescue hotel” project which helped turn hotels into quarantine facilities, as well as supporting the vaccination rollout for hotel staff and guests.
“This has helped us to continue to validate and strengthen the relationships with our partners who are now in turn showing their support to Rakuten Travel with the opening of Japan inbound.”
Featured image: Oita (Beppu, Yufuin), one of the new destinations in Japan being discovered by South Koreans. Photo credit: Rakuten Travel