How's the Japanese tourism sector set to look over the next 5 years?

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Monday, 20th April 2015
In Japan Travel News,

How's the Japanese tourism sector set to look over the next 5 years?

A new report by Japan's Travel & Tourism Intelligence Centre has been released, offering further details on how the country's tourism sector is set to look like over the next five years in the run-up to the 2020 Tokyo Olympics. Offering a better understanding of sector expectations, expenditure, intermediate industries and services such as airlines, car rentals and hotels, the report brings together a rich wealth of data and insight that has got officials in a frenzy. Here is a quick overview of the main report points, highlighting which particular segments are sure to see the most growth.

A look at the numbers

Naturally, tourism is set to be big business for Japan over the next five years. Not only does the government hope that the Olympics will mean 20 million annual visitors by 2020, but it is hoped that the event will boost numbers even further to 30 million international arrivals by 2030.

Figures by the Japan Tourism Agency have highlighted that the number of overnight guests in Japan rose to a record high in 2014. Over the 12 months, both domestic and foreign tourists stayed a total of 472.32 million nights at hotels and inns, a rise of 1.4 per cent from the year before. Much of this increase was fuelled by a surge in international visitors, who stayed 44.82 million nights - up by a staggering 33.8 per cent when compared to 2013.

A major target market for the sector will be Taiwan, which in 2014 surpassed South Korea to become the biggest source of tourists, primarily fuelled by the increase in low-cost-carrier (LCC) flights to Tokyo.

At a time when visitor numbers from China decreased by 7.8 per cent, relations with Taiwan could not be stronger; so much so that this month saw the largest Japan Tourism expo take Taipei by storm, featuring trending Japanese entertainment and technology. As part of proceedings, three members of Japanese girl group AKB48 performed, while 100 humanoid robots designed by Tomotaka Takahashi carried out a synchronized dance.

LCCs continues to dominate

A major focus of the report was on domestic tourism, with these kind of trips having risen from 286 million in 2012 to 289 million in 2014. The major driver of this has obviously been route expansions by LCCs. One only has to look at China's LCC, Spring Group, which last year launched new flights connecting Narita with Takamatsu, and Saga with Hiroshima. Furthermore, Thai agency NS Travel & Tours expects business in LCCs to Japan to grow by 15 per cent this year.

In total, shares of LCCs in Japan have shot up, now representing 18.6 per cent of total seats sold in 2014 - a marked rise from the 7.8 per cent reported in 2010. The total number of seats sold for LCCs increased at a historic-period CAGR of 28.88 per cent, in contrast to the growth of 0.56 per cent for full service airlines.

Naturally, LCCs have dominated the landscape in recent years, with consumers struggling to place travel on top of their priorities when living in a global recession. As Western markets slowly pull themselves out of austerity, it is still unclear how far the purchasing power of LCCs will go by the time the Olympics come round.

Future technologies

Travel agencies are more and more collaborating with IT businesses to develop tourism-related apps and software. Whether it is mobile payment options, online boarding, hotel check-ins via apps or specialised itineraries set up by agencies that are available to you as soon as you buy a package with them, the options are limitless. From a top-sector business to local restaurants and hotels, firms will need to make sure they remain as innovative as ever to draw in the crowds.

With the Olympics heading towards us, this collaboration is set to strengthen, and the future of Japan's tourism industry has never looked brighter. With visitor numbers hurtling at top speed and LCCs building new connections to Japan daily, sector officials don't have too much to worry about - Japan's tourism industry certainly is one of the top success stories at the moment.