Japan inbound tourism quality not quantity

Japan Needs to Focus on Quality not Quantity for Inbound Tourism

Japan’s inbound tourism industry is a growing market that shows a great deal of potential, yet still lags behind that of other first world nations. Although Japan is increasing in popularity as a tourism destination and is developing rapidly in some areas, it still lacks basic infrastructure like multilingual information, signage, Wi-Fi access, and hospitality industry staff conversant in English. Head of the Japan Tourism Agency Akihiko Tamura was recently quoted in the Japan Times as saying: “Despite the visitor boom, Japan is still an “undeveloped country” when it comes to tourism”. This is largely due to Japan having traditionally focused on its robust domestic tourism market, having felt little need to attract foreign visitors until recent years when the decline in the manufacturing sector caused the government to switch their economic policy focus to the service sector, of which tourism plays a major part. Thanks to promotion through the efforts of the Japan National Tourism Organizaion (JNTO) and rising awareness of the benefits of inbound tourism, tourist numbers have indeed been increasing in record numbers over the past few years, causing the government to double their target numbers for 2020 and beyond:

  • 40 million foreign visitors a year by 2020
  • ¥8 trillion in annual spending by foreign visitors by 2020 (¥200,000 average spend per visitor)
  • 24 million repeat foreign visitors a year by 2020
  • 60 million foreign visitors a year by 2030
  • ¥15 trillion in annual spending by foreign visitors by 2030 (¥250,000 average spend per visitor)

Are these targets realistic? On the surface it may appear so, but in fact, the sense of confidence that led to increasing these numbers may have been somewhat misplaced. The current boom has been mostly driven by an unstable market, one which in fact has already started to shift, that of group tours which come for a short time, visit pre-ordained shops connected to the travel agency and primarily engage in shopping binges. While this market has until now provided a nice boost, if Japan doesn’t mature to more sustainable tourism models the government’s targets may well prove impossible to reach.

Bakugai Explosive Shopping

This binge shopping phenomenon is known as bakugai (explosive shopping) in Japanese and has been primarily driven by mainland Chinese shoppers who purchase large amounts of Japanese electronics to sell back home. These tours travel by bus convoys and are easily spotted as large, tightly-knit groups lead by a flag-waving tour guide/translator. They make whirlwind tours of popular sightseeing destinations such as Kyoto and Hokkaido, with 30-minute stops for photo ops, and tightly scheduled stops at restaurants and souvenir shops (which receive a kickback from the travel agencies). At their final stop they’re directed to shopping districts such as Akihibara and Ginza where they purchase large quantities of electronics and luxury items.

There are several problems with this type of tourism from the point of view of a sustainable model. For one, it is mercantile in nature rather than experiential and provides little opportunity to foster a deeper understanding of a destination’s history, culture, and residents, all necessary elements in order for a visitor to develop the ties with a destination that cause them to become fans, proponents of the destination, and repeat visitors (one has little reason to fall in love with a destination if it simply serves the purpose of a large shopping mall). For another, tourists arriving at a destination in large groups cause congestion issues and an overloading of destination infrastructure such as transportation. Japan is in fact uniquely ill-suited to host these large group tours, as it is already an overcrowded country with severe space restrictions. Recent issues in Kyoto have highlighted this as increasing numbers of group tours overload public buses and are causing interference in resident’s daily lives. Areas of Tokyo have seen issues with group tour buses parking illegally and blocking traffic. It’s hard to feel welcoming towards foreign visitors to your destination when they’re causing you to miss the bus and be late for work. Large groups of jostling shoppers tend to lower the esteem of the destination in the eyes of other visitors looking for a richer cultural experience. Overcrowding lowers the quality of the experience for all. Also, the focus on major shopping destinations like Tokyo and Osaka, with cultural tourism usually only extending as far as the obvious destination of Kyoto, results in most visitors only traveling this so-called “Golden Route” and missing out on all the other destinations Japan has to offer. And finally, it’s an unsteady market, as economic shifts can cause it to drop off suddenly, which is, in fact, the current trend.

Although there has been an undeniable economic benefit from this shopping until now and it has helped Japan to meet its inbound tourism targets so far, this is not a sustainable tourism development model. In fact, we are already seeing the decline of one sector of this market as Chinese visitors stop purchasing electronics and shift to cosmetics and jewelry. The reasons for the decline in spending on electronics has been twofold: partly because Chinese made electronics are now considered to be of comparable quality to Japanese made, and because the rise of domestic e-commerce retailers has made it easier to obtain goods at home. In short, this model is not sustainable simply because there’s nothing unique to the destination in the experience, and it can easily be reproduced in visitor’s home countries.

This is not to say that all shopping experiences are unsustainable. There are a few bright points for the future of Japan’s inbound tourism when it comes to shopping. Chinese visitors are already evolving past the group tour model towards free and independent travel (FIT), where they are able to take their time and shop with more discretion, resulting in fewer bulk purchases and more select purchases of quality goods. Also promising are the potential benefits of health, spa, and wellness tourism, a natural offshoot of the recent shift towards cosmetics and supplements purchasing, as this indicates a cultural interest in Japanese health and beauty products.

Sustainable Tourism Models

Health and wellness tourism is a good example of a sustainable tourism model for Japan, because unlike electronics manufacturing it is closely tied to Japan’s history, culture, and geography, and cannot be easily appropriated, which is to say it’s uniquely Japanese enough that it cannot easily be reproduced in a visitor’s home country. Sustainable tourism by definition makes use of those destination resources which cannot be easily depleted. This refers not only to the obvious natural resources or material goods a destination may produce but also intangibles like scenic value and a destination’s “charm”. The number one attraction in Japan currently is Fushimi Inari Temple in Kyoto because it is a uniquely photogenic spot, however, these days it is near impossible to get a photo of it clear of the ever-present crowds. In this sense, the scenic value of the destination has been depleted by overcrowding. Sustainable tourism development must take into account when a destination has reached its infrastructure overload point and visitor numbers need to be controlled. Recent examples of destinations limiting the number of visitors are Italy, London, Barcelona, and Venice. These destinations are limiting the amount (quantity) of visitors in order to increase the quality of the visitor experience.

The number one thing visitors to a destination want to come away with is lasting memories of their experiences. They want to interact with locals and get a deeper understanding of the destination’s history, culture, cuisine, scenery, and activities. They want experiences that they couldn’t possibly get at home. An example of how Japan can build deeper, more interactive experiences was recently presented by Yuya Ota, Deputy Director at the Japan Tourism Agency during his talk at the 9th Spa Symposium where he discussed Schemes to Make Japan a Tourist Destination. Ota discussed the potential for Japan’s traditional onsen hot spring spas to capitalize on the growing field of health and wellness tourism by promoting their health benefits. By further tapping into the interest in Japanese cosmetics, there is potential to tap into Japan’s long history of developing high-quality beauty products, for which cosmetic brands like Shiseido are internationally renowned. Onsens have long been purported to have health benefits ranging from improving circulation, alleviating the pain of rheumatism, to improving ones’ complexion. Enterprising onsen spas have combined the health and beauty benefits of onsen with locally produced cosmetics, soaps, and shampoos. This has the potential to develop into its own sub-sector within the industry.

Another example of sustainable tourism is that of sake tours. This traditional rice wine is the national drink of Japan and has a culture as rich as that of wine or whiskey. Sake sommeliers have been popping up all over Japan, and several companies are now providing sake themed tours. These tours delve deep into the history and culture of Japan, with visits to sake distilleries and sake and food pairings. One of the great aspects f these tours are that they encourage visitors to get off the beaten path and see the more traditional side of Japan which can’t be experienced in either Tokyo or Kyoto.

Off the Beaten Path

Getting off the beaten path, formally known as regional dispersion, is the keyword here. It refers to the tactic of encouraging visitors to travel beyond the most popular destinations to those lesser-known but equally rewarding. This helps spread the load on transportation infrastructure and reduce pressure on the main destinations, especially necessary in a crowded country like Japan. JNTO is aware of the need to encourage regional dispersion away from the Golden Route of Tokyo, Kyoto and Osaka, and has begun marketing efforts to encourage visits to rural areas. This is definitely a step in the right direction, and if this marketing is successful it may help achieve the government’s targets. To be successful with this initiative it’s important for Japan to understand who its target market should be. Again, this comes down to quality over quantity: the quality of visitor’s experience rather than the number of visitors alone. Why is this important? To fully understand this it’s necessary to take a look at the data available on visitor travel and spending habits. Referring to the Japan Tourism Agencies’ most recently released statistics we can see that European travelers spend more on average than Chinese. The reason for this is simple: although European travelers don’t engage in bakugai shopping binges, they tend to stay longer and engage in a wider variety of rich experiences. They are more likely to get off the beaten path, visit more areas, take part in local festivals, try on kimono, take a hiking tour, etc., which is to say they tend to be FIT. By engaging in more quality experiences FIT wind up staying longer and in turn spending more, thereby benefiting the local economy. Although their per day spend is lower than group travel visitors, their longer stays result in an average of around ¥250,000 per visit, which is the target the Japanese government has set to reach by 2030. Australian visitors are also an excellent target market as they also spend an average of around ¥250,000 per trip, visiting destinations like Niseko resort in Hokkaido where they engage in skiing, mountain biking, and rafting experiences, and benefit greatly from having direct flights to Japan.

Japan has an amazing variety of destinations to choose from off the beaten path. A few examples are regions like Kawagoe (Nikko), Hiraizumi, Kamakura-Fujisawa, Kusatsu, and Narita. Each of these destinations is currently marketed as a day trip, but are perfect candidates for a stay of 2-3 nights at least. Expanding these destinations from day trip to overnight status requires the active participation of local stakeholders such as accommodation, dining and tour providers who are able to raise awareness of what the destination has to offer and work with their local destination marketing organization to promote packaged trips. It’s essential that JNTO raise awareness on how to increase economic benefit to these local stakeholders.

Japan’s Identity as a Tourism Destination

Part of the problem is that Japan still lacks a sense of identity as a tourism destination. Because of its long history of isolationism, Japan simply doesn’t understand how foreigners think, feel, and what sort of experiences they’re interested in. Japan tends to waver between having no idea why visitors are interested in visiting their country and being over-confident that it’s due to Omotenashi (selfless hospitality). Language and cultural barriers account for some of this disconnect, but some is due to the domestic tourism market being vastly different than that of inbound tourism. The nature of Japan’s stoic working culture where the company always comes first means that most workers are only able to take short holidays, and therefore the domestic tourism market is tailored for short-term visits. This thinking is evident in areas like Kanagawa Prefecture, where even the official multilingual tourism website bills itself as “Tokyo Day Trip“. Kanagawa Prefecture includes destinations like Kamakura, the Shonan Beach area, and Hakone, any one of which require at least a week’s stay to fully experience. European and North American visitors are not restricted by short holiday times though and are often able to stay 2 weeks or more. This opens up possibilities for much more interactive experiences and the ability to visit more destinations off the beaten path during their stay in Japan. Furthermore, the nature of these experiences lend themselves to making fans of visitors and turning them into active proponents of the destination who will come back as repeat visitors, bringing along friends, family, and co-workers on subsequent trips.

However, awareness amongst foreign travelers of what Japan has to offer is still very low. Beyond the cliches of sushi, kimono, Mt Fuji, anime, and crowded neon-lit cityscapes most potential visitors to Japan don’t have a clear idea of the great breadth of experiences Japan has to offer. The recent McKinsey report on The Future of Japan’s Tourism states that:

“Another reason Japan struggles to convert Western travelers is that these tourists are generally unaware of even Japan’s major tourism assets (Exhibit 5). The survey tested travelers’ awareness of and interest in 36 Japan tourist attractions. These assets are highly rated by global and Japanese sources such as Michelin Travel and Excellent Japan—A
Scenic Portfolio, 37 and include a representative mix of types: nature, culture, beach, entertainment, and shopping. Surprisingly, many of the sites that Japan residents consider
to be “major destinations” are virtually unknown to foreign travelers. Out of the top ten assets that Western tourists found attractive (once they were shown a picture and description), only
Mount Fuji, Japan’s national icon, topped 50 percent awareness; all others trailed far behind, with most at 10 percent awareness or less.
However, once descriptions of each of the 36 assets were shared, an average of 29 percent of Western tourists found each of the assets attractive enough to visit. For example, before
the survey only 9 percent of Western tourists were familiar with the Kamakura area, which—as Japan’s political capital from the late 12th to mid-14th century—is home to dozens of
historic temples and the Great Buddha, all located just an hour from central Tokyo by train. Once informed of the Kamakura area’s attributes, 42 percent of survey respondents
judged the area attractive enough to either travel to Japan to see it or to extend their stay. Similarly, just 1 percent of Western tourists were aware of Oirase Gorge—a stunning valley
through virgin forests located less than four hours from Tokyo—but 35 percent found it to be a desirable destination once informed. These results suggest that Japan’s major tourism
assets have high potential to draw more Western tourists to Japan—and that a major obstacle is a significant lack of awareness among tourists in the Western market”

Out of the top ten assets, only Mt Fuji topped 50 percent awareness with most at 10 percent awareness or less?! By any measure of marketing success Japan is failing to raise awareness for what it has to offer.

Quality of Experience

So how can Japan correct these issues and achieve its targets for 2020 and beyond? Those numbers again are:

  • 40 million foreign visitors a year by 2020
  • ¥8 trillion in annual spending by foreign visitors by 2020 (¥200,000 average spend per visitor)
  • 24 million repeat foreign visitors a year by 2020
  • 60 million foreign visitors a year by 2030
  • ¥15 trillion in annual spending by foreign visitors by 2030 (¥250,000 average spend per visitor)

The answer lies in improving the quality of the destination experience in order to encourage longer stays, repeat visits, FIT, and regional dispersion, while at the same time carefully controlling the number of visitors to areas like the Golden Route. Of all the targets JNTO has set, the most important metric is not the number of visitors per year, nor their annual spend, but the number of repeat visitors (24 million by 2020). More than any other metric repeat visitors are the best indicator of the health of a destination. If Japan can successfully increase awareness for everything it has to offer with the key market of FIT travelers from both Asian and Western countries, it has a good chance. Without excellent awareness development through carefully targeted marketing, however, Japan will most likely fall short of its targets.

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