JTB’s president sees “bright future”, Reiwa wants to shake up outbound travel market

JAPAN’S battered tourism industry is hopeful that it
may be turning the corner on the pandemic. At the end of September, the state
of emergency covering Tokyo and 18 other prefectures was lifted and an increase
in vaccination rate (
74.91%
of the population fully vaccinated) has led to renewed confidence in domestic
travel.

The country also eased entry curbs for fully vaxxed business travellers from November 8, with quarantine restrictions shortened from 10 to three days for those on short business trips or Japanese nationals returning from business trips.

And according to latest reports, the Japanese government plans to restart the Go To Travel campaign around January or February next year, in the hope that domestic subsidies will further accelerate domestic travel.

Keeping his eye firmly on the horizon is Eijiro Yamakita, president and CEO of JTB Corporation, who remains optimistic that there is a “bright future” ahead, citing high vaccination rates as well as government measures to reopen borders.  He is hopeful cross border travel could recover by the end of next year or in 2023.

Speaking at a panel discussion on “Japanese Travel In Transition” at WiT Homecoming event, he admitted it’s been a tough time. In September, JTB sold its headquarters building as well as one in Osaka. HIS also sold its head office for a reported 32.5 billion yen. In the year ended March, JTB posted a record net loss of 105.2 billion yen and announced plans to reduce group headcount by 7,200 and close 115 domestic outlets, or about 25% of the total, while raising 30 billion yen.

(From second left) JTB’s Eijiro Yamakita, Reiwa Travel’s Takaya Shinozuka and Venture Republic’s Kei Shibata in conversation with Yeoh Siew Hoon at WiT Experience Singapore 2021

The pandemic has also thrown up new challenges calling
for shifts in marketing and development of new products and services to meet
changing consumer demand.

Kei Shibata, CEO, Venture Republic – TRAVEL.jp & Trip101, used the down time during the pandemic to build a new product, and change the paradigm of corporate bookings within Japan, to “reset a lot of assumptions in the market”.

In May last year Venture Republic Inc. and Works Mobile Japan, which operates LINE Works, launched TRAVEL jp for Business a new chat based corporate travel booking/management service that is integrated into  LINE Works.

“Corporate businesses should explore new solutions in business travel bookings and management by leveraging technologies since corporate clients no longer want to rely on making a phone call or sending an email to travel agencies, and they want the process digitised instead,” Shibata explained. “So it’s the best time for us to actually enter into the new market.”

Meanwhile, entrepreneur Takaya Shinozuka launched  a new company, Reiwa Travel, in April this year amid the pandemic. Reiwa, which is making a play for the outbound tour market, has raised US$20 million, said to be the biggest round in travel startup history in Japan.

Shinozuka was the founder of Relux, a membership-only hotel and Ryokan booking service in 2011, which he then sold to KDDI in 2017.

When asked what he was planning to do to disrupt the
tour package space, Shinozuka dismissed the notion of disruption, saying, “We’d
like to work together.”

Reiwa has three goals – one, to bring a high level of
automation and digitisation to back office operations, two, to develop a
process to make it easier and quicker for customers to make reservations and
three, “to create a highly profitable company with a small number of people by achieving
the first and second goals”.

Half of Reiwa’s team is made up of engineers and
project managers.

Covid has also changed domestic travel patterns in
Japan, with travellers moving to the drive market which does not need a lot of
hand-holding as all it takes is to book a car and hotel. This has meant
traditional travel agencies such as JTB have missed out on this segment, but
JTB’s Yamakita said JTB is looking at improving the customer experience through
the entire journey, and is not pursuing just one segment.

“So in that context this is a very good opportunity
for us to improve our capabilities at
managing each destination, which will help a lot to improve the customer
experience, that goes beyond the point of the booking.”

One perennial issue plaguing Japan’s domestic travel
industry is the decline in the youth market. Panellists acknowledged Japan’s Go
To Travel campaign was a good way to get youths travelling. The domestic
subsidy programme was launched last July but had to be suspended by December
due to the surge in coronavirus infections.

Shinozuka commented that it is very difficult to
encourage people to travel when rules keep changing. “So, I think a simple
promotion campaign is one of the ways to attract Japanese young people, like building
a scheme where hotel or government covers the cost of certain expenses. When
the Japanese government launched the Go To Travel campaign last year, hotels
and local companies benefited from the campaign. It was effective though very
temporary.”

A similar campaign would be a good start to
incentivise the young to travel again, first within Japan and then expanding to
overseas trips, Shinozuka added.

As for lessons learned during the pandemic, JTB’s
Yamakita said, “The digital transformation during the pandemic made people
realise how important real exchange and communication is. The general trend of
the tourism industry is to go to digital, and digitalisation is important, and
this is the basic infrastructure for the future” but human exchange is
valuable.

Venture Republic’s Shibata said, “Diversifications versus focus in our business. It reminds me of the days when I studied at business school when every single professor told me you got to focus, you got to focus on one market, one area, one everything. In the past we had an e-commerce business, and when 911 struck, this business complemented the travel business, so we survived 911. So we should have some other business, not just travel. Diversification really works.”

• Watch video of panel here.

* WiT Japan & North Asia
will be held as a hybrid event on January 14-15, 2022, in Tokyo

Featured image creditBamboo forest in Arashiyama, Kyoto: sheilades/Getty Images