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Tourism: the new engine for growth

Article - August 29, 2017

With the goal of drawing 20 million inbound tourists annually by 2020 within reach four years ahead of schedule, the government doubled the target to 40 million


Long dominated by its industrial and manufacturing sectors, and still recovering from the aftermath of the natural and industrial catastrophes at Tohoku in 2011, Japan is today looking at a still largely untapped yet highly potential new source of income: tourism.

The increase in visitors in recent years reached nearly 20 million in 2015: 47.3% up on the previous year’s total and nearly four times the 5.2 million who visited the country in 2003 when the “Visit Japan” campaign began. This notable step forward has encouraged the Japanese government to regard tourism as one of the most promising new pillars in the promotion of its economic growth strategy. Such a rise in numbers had not been anticipated until 2020, when the country hosts the next Olympics, and has prompted the government to now double its target of tourist arrivals to 40 million.

Also targeted for 2020 is a spending of 8 trillion yen ($79.6 billion) by overseas visitors, over twice its 2015 record of 3.48 trillion yen. Looking ahead, the government aims to attract 60 million visitors a year by 2030 in the additional hope that they will spend 15 trillion yen annually by then.  

The bulk of the country’s visitors come from Asia, and over a quarter of the total are well-heeled Chinese travelers, who tend to indulge in high spending city sprees during their stay, rather than check out the local culture. Only around a million visitors come from the United States at present, with a large number of potential future clients apparently deterred by language difficulties and the high cost of living they expect to encounter in Japan.

Akira Hirabayahshi, President of H.I.S. Travel Agency, which has 300 locations in Japan and 215 retail locations in 64 countries (and also operates the country’s first fully-automated robot hotel in Nagasaki), is anxious to dispel these misconceptions. “We have online booking in 15 languages at and over 13,000 staff that can talk to you without waiting 30 or more minutes on the phone. We’re even available in person at our retail locations,” he says.

“Also, the exchange rate has been beneficial and Japan is more affordable than ever before. Travelers from the U.S. will find that prices are lower and the exchange rate is favorable for the U.S. dollar. Since the 1980s ‘Bubble Economy’ many people still have the idea that prices in Japan are exorbitant but this is simply not the case.”

Ryoichi Matsuyama, CEO and President of the Japanese National Tourism Organization (JNTO), says much the same: “Everyone states that they wish to visit Japan someday, but often the perception is that it’s too expensive, too far away and that there is a great language barrier. We must now close this perception gap and create the sentiment of ‘I want to go to Japan now!’”

Also eager to encourage more Western visitors is Steve Dewire, General Manager of the 387 room, multicultural “lifestyle destination” Grand Hyatt Tokyo, one of Asia’s most dynamic landmark deluxe hotels, noted for its multilingual staff and flexible blend of new and traditional cultures.  “We have a very solid platform from which to further grow,” claims Mr. Dewire. “Japan is a very sophisticated country that is full of appeal, where attention to detail and superior quality is reflected in everything along with the mind of omotenashi (hospitality) which expands across not only tourism but also business. Visitors who come here feel a sense of safety, understand the culture, and experience the kindness of people and the ease of getting around Tokyo. When they leave they talk to their families and other people they know, creating a very positive image of Japan by word of mouth.”

“Japan is a very sophisticated country that is full of appeal, where attention to detail and superior quality is reflected in everything along with the mind of omotenashi (hospitality) which expands across not only tourism but also business”

Steve Dewire, General Manager, Grand Hyatt Tokyo

He’s aware of the country’s issues, which include a declining birthrate and parallel fall in workforce availability, and realizes that a supporting infrastructure, not just for Tokyo but the whole country, is essential to support increasing tourism, as is keeping up with the latest technological methods such as digital marketing and SNS. Mr. Dewire also thinks it’s important to promote Japan’s value as a brand as well as a country. “In order to communicate the brand effectively the citizens of Japan must continue to share their pride of their country, culture and important traditions through tourism,” he adds.

JNTO’s Mr. Matsuyama points out that a high level of promotional success has already been achieved in this direction as the Country Brand Index for Tourism recently judged Japan second after Italy and number one in the world for attractions. It also came third in food and in culture and heritage, where it closely followed Italy and France. “Despite 2011’s devastating disaster,” says Mr. Matsuyama, “Japan’s brand has generated enough good will over the past decade to perform well.”

Tadashi Inoue, President and CEO of Solare Hotels and Resorts, which owns a total of 57 properties and nearly 10,000 beds, believes strongly in the need to invest in tourism, notably since the Abe administration’s far seeing “Visit Japan” campaign opened his country’s attractions to the world.  He also wants to make the appeal extend beyond purely material facets like city shopping.

“I think we should put more emphasis on content, especially on culture, history and all these unique assets and facets that Japan has. This will add value to our tourism industry and I see this as a key element for the sector’s sustainable growth”

Tadashi Inoue, President and CEO, Solare Hotels and Resorts

“I think we should put more emphasis on content,” he says, “especially on culture, history and all these unique assets and facets that Japan has. This will add value to our tourism industry and I see this as a key element for the sector’s sustainable growth.”  He thinks the solution is to promote Japan as a whole, with each region getting its share of publicity.

Solare is highly experienced in the catering business. “We have the know how to manage and operate our hotels and we do it really well,” Mr. Inoue notes proudly. “We have also come up with some of our own specialties such as branding,” he adds, echoing the importance both Mr. Dewire and Mr. Matsuyama have attached to this aspect of marketing.

“At the moment most of our customers will choose the hotel based on price, but in the future we hope to come up with the best hotel brand in Japan. This kind of strategy is unique. We change, innovate, add and come up with a new style and new branding.”  Like Mr. Dewire he’s also strongly aware of the labor shortage in the hotel industry due to the decreasing population, and for the time being is content to concentrate on the domestic market rather than look overseas.

Akira Segawa, President of the Fujita Kanko hotel chain, laments the industry’s labor shortage and echoes Mr. Inoue’s desire to promote the country’s rich and varied cultural attractions.  His company has established global interests and operates offices and hotels in many Asian destinations. It was a pioneer in the Japanese hospitality business 60 years ago with an Onsen, or hot spring, resort in Hakone Kowaki-en and now has over 70 properties in Japan.

“We have online booking in 15 languages at and over 13,000 staff that can talk to you without waiting 30 or more minutes on the phone. We’re even available in person at our retail locations”

Akira Hirabayahshi, President, H.I.S. Travel Agency

Fujita Kanko owns several cultural assets, such as the famed Chinzanso garden, but justly regard their food department and chain of highly successful restaurants as their traditional forte. “We serve some of the best Japanese food in the country,” says Mr. Segawa, “so we preserve the special spirit that food represents in Japanese culture.”

The company is trying to break away from the traditionally long periods of time it used to take for a chef to fully master his trade–anything from 5 to 20 years–and in order to streamline the process for aspiring young staff, the company’s eating spots have smartphone applications and other time saving technological benefits. Chefs are also being taught the “science behind the cooking,” chemical elements involved and suchlike. Looking ahead, the company aims–undefined as yet–to open restaurants in key U.S. markets such as New York.

Fuji Media Holdings, which has advanced Japan’s media, television, entertainment, music and advertising world notably in recent years, also promoted a “cooking culture” through their highly popular reality TV program called “Iron Chef” in which famed chefs “dueled “ with each other in producing dishes from the same ingredient. (Such was its success that it even produced a spin-off version in the USA).  

Fuji Chairman and CEO Hisashi Hieda, however, believes Japan has not yet fully developed a similar tourist culture.  He sees a strong need to remedy this situation by looking closely at the country’s assets, benefitting from them and boosting the number of overall visitors. Today Fuji also owns several hotels and has a strong personal interest in attracting more visitors.

“Tourism is not just about people’s inflow, but about culture, nature, history, climate, food, people–there are many aspects to it,” Mr. Hieda explains. “While Japan is a country that offers rich history, culture and national treasures that we can boast of to the world, we haven’t really developed an effective global public relations campaign.” In his view tourism is one of the most rapidly growing industries in Japan. He would like Fuji to take advantage of this trend and treat tourism as a “media” business, using TV to “spread the word” to a global audience just as effectively as they did for cooking with “Iron Chef.”

Countdown to the Olympics    
Today the strongest incentive for tourist development in Japan is provided by the Olympic and Paralympic games due to be held in Tokyo in 2020. It’s anticipated that this event will accelerate universal interest in the Japanese capital, just as it did with other cities in the past, such as Barcelona after 1992.

“As the host country of the 2020 Olympics and Paralympics Japan will draw attention from all around the world and international visitors will continue to increase,” observes Grand Hyatt Tokyo’s Steve Dewire, adding that with this expanding influx of international guests arriving from different cultures, religion and places, the need to be flexible and capable of welcoming them all efficiently and warmly will be paramount. “As we get closer to the Olympics demand not only for leisure but for business travel and for the Meetings, Incentives, Conferences and Exhibitions (or MICE) industry will increase as well, so we have adapted by renovating our event venues this summer to reinforce our position as a leading international hotel with innovative facilities,” he adds.

The Minister for Education, Culture, Sports, Science and Technology (MEXT), Hiroshi Hase, an experienced, widely-travelled former athlete and wrestler, feels the Olympics will provide a much needed shot in the arm psychologically as well as economically, in the wake of the devastating earthquake that caused the cripplingly expensive nuclear reactor meltdown in Tohoku five years ago.

“The 2020 Tokyo Summer Olympic Games will be an event that showcases Japan’s recovery since the 2011 Great East Japan Earthquake,” he says. But this is not the first time Japan has shown itself to be forward-looking and adaptively creative in the face of an international influx of visitors. “During the 1964 Tokyo Olympics Japan boasted a variety of world leading innovative products to the world, such as the Shinkansen bullet train and color television,” he points out. This time he believes a whole new set of innovations is needed. “First and foremost, we must address the issue of energy by utilizing high-end devices for information and communication”, he stresses.

The Japanese capital’s torrid summers present one of various problems to be dealt with effectively. “We must develop the world’s most advanced construction material and thereby allow Tokyo to host the Olympic games in a comfortable and fashionable way,” says Mr. Hase. Another potential headache is the specter of terrorism.  To counter this now omnipresent threat, he adds, state-of-the-art security measures using identification technology will also have to be conducted.  Other innovatory adjustments will also be required. “For instance, by developing more comfortable and functional wheelchairs, training equipment, prosthetic limbs, we would be able to use those as welfare equipment too,” adds Mr. Hase. “My vision is to make the 2020 Tokyo Olympics a large-scale exhibition for all the innovative solutions that we have developed and hope to spread across the world.”

Hiroyuki Takahashi, President of JTB Corp, the largest travel agency in Japan, feels that these international sporting events provide a strong motivation for Japan to strengthen and establish itself as a better tourist-centric nation. “Our goal for 2020 is to establish a number one position in the Asian market, and ensure JTB a long-term stable growth foundation within this market. In order to establish this goal, we need to set up a stronger network in Asia which will enable us to expand our operations much further, “ he says. “In addition to that we need to ensure that our inbound and outbound operations consistently achieve growth. Our ultimate aspiration is to establish our global DMC or ‘Departing Globally, Arriving Globally’ model worldwide.”

Fuji Media Holdings CEO Hisashi Hieda, in turn, is convinced tourism will continue to flourish between now and the Olympics and that it will benefit greatly from the expansion of his company. Though it’s a relatively late starter compared with other countries, the tourist industry in Japan can, he believes, generate a lot of opportunities once the envisaged increase in visitors begins to pay off. “Our hotel business, attractions such as aquariums, museums and entertainment-service sectors productivity as a whole will likely be the driver of growth for us as a holding company,” he says, confident that this growth will also have a large spillover effect.