Rethinking Japanese Tourism and Regional Development
Well, thank you very much, everybody, both offline and online, for selecting and joining this session among a very competitive set. We could not have a better timing to discuss this topic than today. On October 11th. Tomorrow, Japan will fully open the borders for inbound tourists. Individual tourists will be finally allowed to get in. No PCR tests are required as long as
the visitor has three vaccinations. And meanwhile, Japan took the number one spot in the World Economic Forum's latest Travel and Tourism Development index. The key factors there were transformation, transportation, infrastructure, security, and which natural and cultural assets which tourists can enjoy. So in the short term, Japan will surely receive lots of tourists from abroad and it will help restore the sector from the damage caused by the pandemic in the recent years. And the Government still maintains
its aggressive target of ¥15 trillion revenues of inbound tourism. And this means actually, the tourism will be the largest export sector, larger than the automotive industry, which generated about ¥12 trillion exports in 2019. But in the mid-term and long term, we need to address several key issues, including attracting more luxury customers and the long haul travellers, upgrading our travel infrastructure and service capability for luxury and more sophisticated customers while significantly improving the labour productivity in the sector. The labour productivity for hotel industry, for example, is about 5.1 million yen per person versus the
industry average of 7.5 million. So it's about two thirds of the industry average. That tells you something. In essence, we really need to be reconsidering the approach to tourism, especially looking from mid and long term perspective. And today we have a group of three panelists who are obviously diverse and relatively young and fresh and do lead a very interesting work in their respective fronts. Alex, to your left.
President of Kotaku, a consultancy focusing on regional tourism. He also advises the Kagoshima Prefecture and Kagoshima City both, and he led experience development at Sengan-En Gardens with the rich cultural heritage maintained by the feudal Lord Shimazu family in Kagoshima. Yuko Inamasu in the centre, runs the TOKI, Inc. corporation and they focus on the culture of tourism for luxury customers. And she helps develop tourism experiences around traditional culture themes, in particular combining her business and design skills, and Sawako to my left side is a CMO of Oki Islands Geopark Management Bureau. Oki are very mysterious islands north of Shimane, full of natural wonders, and she also called it the development of a leading boutique hotel called Entô. If you Google Entô, E-N-T-O
you'll find phenomenal pictures of that hotel. And on top of that, the islands are also rich in unique culture and lifestyles. I believe she is going to touch upon them. Takumi myself serves as a moderator for for today. I have chaired the Government Committee on Developing Luxury Tourism, and the committee was launched about two years ago. I have also worked on several projects with Japan Tourism Agency on adventure tourism content development, as well as the Agency for Cultural Affairs on developing cultural tourism. My team, consisting of several
experts from private sector, has worked on more than 100 projects tourism content development projects over the past four years. On the study we produced two years ago for Japan Tourism Agency, and the theme was exactly the same as today's tourism, cultural development and urban development. And why did we do that? Because we have seen so many cases. Actually, those three tourism, culture and urban development don't go well hand in hand.
For example, travel agents. I want to send as many travellers to cultural destinations as possible, but that could be damaging from cultural preservation perspective. Property developers tend to aggregate all the districts and build modern retail and residential complex. As a result, old folk houses have been broken down and the town loses the historical touch, which was so important for visitors.
That kind of misalignment is everywhere. That is why we wanted to align those three elements hand-in-hand and have a better approach to tourism overall. So keywords we will discuss today include culture tourism, regional development and modern luxury tourists as well as more broadly sustainable tourism. And we have our ideal panel groups here. So the first question goes to everyone here. The first question is. Please describe your effort of
tourism development. What type of visitors either domestic or inbound do you receive? What kind of experiences do you provide and how does your work relate to preserving or reviving cultural or natural heritage? Alex first, please. Okay, So as introduced before, my name's Alex. I've been living in Kagoshima, which is in the south of Kyushu for about 20 years now.
And I work with the Shimazu family, the stately Home and Gardens Sengan-En, which is also a world cultural heritage site. On developing inbound tourism and promotion abroad as well. So Kagoshima actually has quite a few inbound visitors. Just talking Sengan-En is a kind of micro study. Sengan-En gets about half a million visitors a year. 70% of those are from the domestic market, 30% are from overseas. This is a pre-COVID of course,
and of that 30%, the lion's share come from Hong Kong, Taiwan, Korea, the East Asian markets with direct flights into Kagoshima. So in recent years, as we started to ramp up our English language promotion, we actually did see quite a large increase in Western travellers, mainly the so-called fits the free independent travellers who might jump on the Shinkansen and ride it all the way to the end down in Kagoshima city. And we were seeing good growth up until COVID in that particular segment. People looking to go a little deeper into the countryside, see something beyond the sights of Tokyo and Kyoto and perhaps try to get away from the crowds as well. So as far as the kind of experiences we're trying to develop, really myself, living in Kagoshima for such a long time and also participating in traditional culture for around 20 years as well, I actually practice a style of swordsmanship that's local to the region called Jigen-ryu. This is kind of give me a foot in both camps and I've seen the tourism industry exploit local culture for profit, and I've also seen traditional culture people reject tourism on the basis that they feel that they're going to be exploited or they don't understand the benefit that will be given to them by accepting tourist visitors.
So I'm really trying to stand between those two camps and negotiate a position where it's a win-win situation where traditional culture can be sustained for another generation by the revenue generated from tourism. And a lot of these places really are struggling. You know, they don't have any steady revenue stream. Often the numbers of practitioners are dwindling. With an ageing population, there are less young people joining. Younger people these days don't want to spend 10 to 20 years studying an art with no real name value for themselves. They want to get something
quickly and to be known for it. So it's a very, very difficult situation. But by, you know, bringing small groups of tourists who are genuinely interested into the region, we can provide some kind of revenue for them and hopefully that will allow these things to continue on for another ten years, 20 years, 50 years, even a hundred years into the future. So that's really what I'm trying to do at the moment. And in recent years, I've also branched out beyond Kagoshima to work with regions all around Japan in collaboration with the Japan Travel Agency and also the Cultural Affairs Agency as well.
Okay. Well, thank you. Well, as of today or as of pre-COVID days, what kind of experiences have you really offered at Sengan-En and to those inbound tourists? Okay, at Sengan-En really what we're providing is the basic level would be just more detailed guiding. So literally being able to get the story of the place across to travellers in an understandable way. So most of the guides were actually catering towards the domestic market originally, and domestic travellers have a much wider knowledge of Japanese history and culture obviously. Right, So they can understand the stories much more readily and go much deeper.
The foreign visitors really didn't know what was going on. In fact, I've had people from cruise ships come up to me at Sengan-En and say, Which city is this? They really don't know even where they are in Japan sometimes. And that's a challenge getting across 800 years of history from the Shimazu family into a 30 minute bite sized segment was very, very difficult. So a lot of it was things like that, signage, making sure the signage blended in with the environment so it wasn't disruptive. Simple things like menu development, staff training so they could speak in English payment systems, website development promotion, many, many different things like that. Experience wise, we have had a slight disagreement in what constitutes a decent experience for inbound travellers.
There is a slight element of kind of dressing up like wearing samurai armour and kimono and things like that, right. Which I feel is a little bit too surface level perhaps. And I would like to dig deeper, but actually the domestic market is quite satisfied with that kind of content. And take taking pictures. Yeah, and taking pictures and stuff like that as well. So we have tried to create new and interesting content, relate to actual traditional culture. But again, that requires the cultural
stakeholders to to give up their time and to put their effort into actually accepting visitors as well. So it's an ongoing battle between the tourism side and the culture side. But I think Shimazu Limited is in a good place where they've managed to generate revenue from traditional culture, but also provide it for the next generation as well. So we also run a lot of events at a loss. So for example, Kyokusui-no-en, the yearly Poetry Festival doesn't really end as any money, we've done things like yabusame (mounted archery) before at the grounds and that also loses money, but that is for the promotion of this traditional culture and also the brand as a whole as opposed to just a one off revenue stream. I see. Well, thank you. Yes, please.
How did you find Shimazu? I mean, Shimazu and Kagoshima Sengan-En. So I arrived in Kagoshima purely by accident. So I was on the JET program originally, and I just turned up there one day and Shimizu really found me. So I run an event called TEDx in Kagoshima, which is like a talk event. Oh, TEDx Yeah. So I wanted local people to have a space to be able to exchange ideas and opinions. So I created that. Shimizu graciously sponsored
that event. And then after that finished, they said, Well, you look like an interesting person. How about working for our company? And it began there.
You know, it's a very kind of organic entry into travel and tourism. And it's been 20 years now. It's been 20 years in Kagoshima, almost, I think eight. I was with Shimizu and now I'm an independent consultant with them as well. Thank you.
So maybe Sawako. Can you go next? From another very interesting destination. Okay. Hi everyone. I'm Sawada. I'm from Oki Islands, so I'm not originally from Shimane Oki Islands, so I joined the local sector of Oki Islands four years ago. Then this is for to develop the attraction of the local resources to the tourist. So. I actually live on the islands to have
a discussion with the local people and to understand what they have, what they want, and how they want to be connected to the outside of the islands. So I try to find out what can tourism be done for the local people. So now actually what I'm doing is to identify one of each uniqueness and authentic attraction of the island and also try to rebrand to into the to match the international standard, because sometimes people are local people or local government are thinking that marketing is only for discount. They are. They sometimes sell to cheap. So I tried to stop it then to
rebrand. They are. I mean, like there are resources, really very authentic and only one in in the world can be only one world. So I tried to talk to them to make a strategy how to develop their tourism. But by the way, you have been in many places, including Singapore and Fukui Prefecture. Yeah, I used to be in Singapore for in Singapore I was doing a marketing as well to. Tourism marketing as well to
introduce Japanese culture to the Singapore and also Southeast Asia. I see. And after that I moved to Japan. Then I tried to think about belonging to the local area because I think it's quite unique and they, the local region, need more people to work together. So I thought I can be somebody like an intermediate between world and local region.
So I started to look for some places can can be involved in. Then I firstly joined Fukui Prefecture. Actually, I'm originally from Kanagawa Hiratsuka and so I didn't have any contact or relation with Fukui Prefecture, but I have a friend there that I visited. In Wakasa? In Wakasa.
I love it. Love visit. Then I started to work with them. So what about Oki Islands attracted you? Because they have. There are no, there are not many people. So I so I thought I have an opportunity to work with them if when I'm in Tokyo. Actually I didn't feel like I have to say I'm not do I really need in Tokyo what do I developing in Tokyo but in local area in good way I, I think I felt like I can do I can help a lot so that's especially Oki Islands especially Ama Town only has 2000 people so there are lack of human resources for every industry. So they are like open to everything. So I was kind of I thought I can
work with them. Well, actually earlier this year I first visited Oki Islands and I met with you. I was so impressed. But the people there were so open minded actually, to outsiders. Is it because of the history or what? Yeah, actually, because 800 years ago, Emperor Go-Toba was exiled to the Oki Islands. Right.
So he, he was the the first we said as a kind of joke, but we are saying that he is the first person to move to the island to be involved in the local people. So I'm the he's a senior. That was junior. Okay. Interesting. So Yuko, Yuko has a slightly different position, but you work as a travel consultant as well as you help many groups to develop their cultural content as well. So please elaborate on. Yes. So I started a company called TOKI back in 2014, and before that I was working in consulting and design. And actually the reason I became in it came into travel is not because I was wanting to start up a travel business, but when I was working at my previous consulting firm, we had a lot of visitors, our colleagues or a lot of our partner designers, clients coming to Japan.
And they really wanted to explore Japanese culture and especially designers they love, like all the design elements of Japan and the really unique culture. For example, like something like tea ceremony doesn't exist elsewhere. And, and they so they came to the Japan office wanting to do something really authentic, really real.
But if you think about back in 2014, the inbound industry mostly didn't exist. So when you Google inbound, the the, the word that comes out for inbound was mostly for marketing and nothing came out for like travel purposes. And so that's how small the market was. And if like, even if we went to
a hotel and wanted to do a tea ceremony, like they would only serve tea and like a café style. And that wasn't what the the international guest was wanting, they really wanted a real authentic experience and they actually did a lot of studies, like my colleague. They watched the Doc or the Cold Documentary show about tea ceremony and they brought in white socks because that's like a polite etiquette to to join a real like ochaji, like a tea ceremony. But they ended up going to like a, you know, a table sit down and a tea offered by a part timer. And none of the questions that they wanted to ask was the answers weren't provided by the supplier, basically.
And I thought it was a really how do you say 'mottainai' like a really lost opportunity because so many people wanted to really experience the local culture and they were willing to pay a lot of money. It was for a consulting project and inspiration project for high executives. But we the Japan wasn't really ready to offer that. And even for Japanese people, most of my friends have never attended a tea ceremony and there is actually like a hierarchy. So you would have to learn tea for years to be invited to a tea ceremony if it's really authentic.
And so people just give up and just basically don't know about the culture anymore. But if I like and we had a chance to like talk to a real master and they were actually really willing to kind of offer the experiences and share their what they've been doing, their philosophy, especially to the international market. Japanese market is a little bit difficult because yeah, there is the hierarchy and all of that, but they're really willing to share their culture to the outside market. And so I thought it was like, you know, if I can make the bridge between the authentic culture people and international guests in the in a smooth way, so they needed English or Chinese assistance, also kind of like a guide, but not a regular tourist guide, a culture guide to kind of bridge the between the two about the cultural backgrounds. And so we started working with various artisans or craftsmen, also culinary. So like chefs, traditional chefs, architects mainly. We started because of the interest
of the international market. So most of the customers actually are international. I think a lot of the customers abroad are much more interested in traditional Japanese culture than the Japanese people here and are willing to spend time or experience the culture. So still we say like 50% of our
customers, it's American or and maybe 30% Chinese. And then the rest of the world, including including Japan. And we a lot of our clientele is actually quite high end because they are really.culturally well educated clients, and they also feel the need to sustain culture.
So deriving from our business, we set up a cultural foundation to be able to help sustain the cultural houses as well. Well, you said high end customers. How high end? It can be. It really depends. But some people can be, you know, a regular, you know, high earning like investment banker or like real estate, for example. How much do they spend on one trip? That also really depends, but maybe from a couple million Japanese yen during their stay in Japan to ten couple million, 10 million or like 15 million sometimes. So it's a really, really high end. Yes.
And so you start from their interest first and develop tailored experience. Yes. Actually, surprisingly, a lot of people that come to Japan, they've done a lot of studies and they they have certain knowledge of like what they want to do. But obviously they don't know the background or like they don't know everything. So we would kind of first listen to what they want to do and then we start curating. So you mentioned tea ceremony, craft- Yes, craft visits.
Culinary also really obviously popular would be like sumo, geisha and like katana or something that only exists in Japan. I see. Or maybe martial arts. Yes. So, I mean, that's something we could potentially offer in Kagoshima as well. But again, you really need to match the client with the supplier as well. It's very, very difficult to just introduce somebody with no knowledge whatsoever to something that's been going on for perhaps 400 years or so and has never, ever welcomed a foreign visitor before. Often, you know, as you said, that they are very receptive to welcoming overseas guests. But the problem is that the image
of the domestic travel industry has often given them a negative impression because Japan's domestic travel industry tends to swing towards entertainment. Essentially, it's not really a deep dive tourism experience or whatever. And I suppose that's that's fine to some degree. But I was recently speaking to a potter in Kagoshima called Chinju-kan, who's the 13th generation head of his kiln. And he said to me, The craftsmen have to create their audience. You have to show them high quality crafts in order to raise up the level of the customer.
Otherwise, the craftsmen will just deteriorate over time to meet the needs of the market. And I think this has happened with the travel and tourism sector in Japan, particularly the domestic market. The level of the consumer has dragged down the quality of the products or the quality of the product has forced down the level of the consumer. I don't know which way round it is, but something really needs to be done about that in order to to improve the situation. And hopefully inbound tourism can take the lead and perhaps show, you know, a different model, one that sustains local craftspeople, you know, regional crafts properly and gives them the attention and respect that they deserve. So you are fearing that inbound tourists are actually becoming an important driver to make it happen? I think it's possible. I think many DMCs (destination management company),
the companies that provide these experiences within Japan do tend to have a very generic view of what Japanese culture is, so it tends to go in trend. So at the moment Kintsugi is a big trend, but Kintsugi is historically not a massive part of Japanese traditional culture. It's one element that's been kind of a little bit overblown, to be honest. Again, tea ceremonies, geisha meetings, things like that. There are these things, but they're
not really regionally diverse. They're very, very central Kyoto type experiences. And I think that expanding out into the regions and finding out what regional culture there is and how people might access it is probably the next step. Inbound tourism and domestic tourism as well. I see. Well, speaking about uniqueness of the destination, Oki Islands offer a lot, I think. But what are you promoting? One of the best things that we are trying to promote is to be in an extraordinary situation. Like the tourist can be away from
the busy. You know, ordinary life. They can come all the way, travel to the island. Then just forget everything that you have to do while you're dealing with or your business, your family. You just leave it. Then just face into the nature in front of you. Then just chill. Relax. And to be yourself.
To be like, honest to yourself. That is the one thing that I want to promote. But it's very difficult to promote, actually. Yeah, well, I can feel that once I'm there, but we are promoting it online.
I think analogue and offline are big drivers of this and also kind of we live in a very convenient society, so everything is digital. We can do everything very quickly. We can meet people remotely. But I think like a kind of meaningful inconvenience is really what troubles should be aiming for. Meaningful inconvenience. Yeah. So we don't have it, you know, it's not. Super easy to access per se.
It takes a bit of time to get there, but once you arrive at the destination, you have some kind of meaningful experience there. And I think places like the Oki Islands offer that. It's an escape and it doesn't have to be super curated per se. Just a normal access to daily people's lives and to to learn how people live. Their kind of low key tourism to me is something that's very, very important. Actually, we have a slogan of the islands. It's called 'nai mono wa nai'
So the meaning is very difficult to translate in English, but like, we have nothing, but we have everything. So which means when you when we talk about the luxury, it sometimes sounds like you want to have everything. But because we have a very limited capacity and also limited islands resources, so all the local people as well as we are trying to get to the tourists as well, that you can enjoy what we have in the island. So we have we just trying to promote like 'nai mono wa nai' like this island is 'nai mono wa nai', so you just enjoy scenery or nature. So how do you say it in English? Actually, I need to find a good translation. Okay. Yeah, we have. We have nothing.
But we have everything. Nothing Is everything or something? I don't know. I don't know what. Well, here we have two great consultants, so perfect time to pick brains. So you mentioned that actually there are several different types of luxury customers and JNTO, the Japan National Tourism Organization have definitions of two different types of luxury customers. One is classic luxury and the other is modern luxury. Classic luxury customers basically
demand luxury stuff. Everything. Hotel, five star hotels, they fly first class. They want to go to Michelin star restaurants every night, something like that. Modern luxury customers care so much more about authenticity, uniqueness of the destination or experience. Their keywords are like eco tourism,
sustainability, tourism, a life changing experience, etc.. So in the case of Oki, Oki is really looking looking at the modern luxury customers. Correct. Yes. But at the same time, we cannot only focus on modern luxury because the one of the biggest problem we have in the island is the very old buildings, hotels, accommodations are very old.
Then it's really difficult to renovate. So we we want to focus on one of the target is definitely modern luxury, but we cannot only be targeting on one sector. No, you also attract a more kind of middle market as well.
So when let's say we have a minshuku (family-run guesthouses), then they are really good at providing a cultural experience, especially for the cuisine. And also the tourists can feel like you are living in the your grandmother's house like that. So those tourists who can enjoy that, who can also respect the local life, those kind of people will be also our target. So I am not very sure yet that what is the difference between those interests and modern luxurious interests. It can be maybe same market, I guess. I see. Alex, how about you? Is your target a kind of modern luxury people or not? I think so. I think really, ultimately, for me,
up until now, we were looking at a lot of demographic data. So, you know, people from different countries and their different tastes and requirements and things like that. And that's kind of breaking down really. I think more we have to focus on people's level of interest, you know, what they're interested in, what motivates them in their life and their career. And if people are genuinely interested in visiting the regions of Japan and finding something a bit deeper, then we're more than happy to welcome them. And I think that the luxury element of it can be really controlled by the accommodation level more than anything else. Right?
Aiming just for luxury can also be dangerous because people do cancel very last minute. I've had situations in the past where somebody cancelled, for example, a tea ceremony with a very important tea master and you know, they said, well, we'll pay for it, doesn't matter. And he's like, I'm not doing it for money. You know,
I'm doing it for cultural promotion. And then both sides are unhappy. So just that matching is very important. And I think the modern luxury segment itself, you know, there's a lot of different types of travel now, adventure travel, sustainable travel, kind of regional, deep dive gastronomy, many different sectors coming out there. So just meeting those needs and matching the client really is the is the best thing to do, I think.
But I think you probably knows a lot more about this than I do. So what's the please. Yeah. So I think you're right. Like people are not, you know, traveling just for the checklists nowadays and like going to high end hotels. A lot of like, I would say like the modern travelers or modern luxury travelers are looking for like a theme of the travel, like a story for travel. So, for example, we would get requests saying that I want to learn about Japanese religions and interaction with Japanese culture during this trip, or I want to learn folk craft during this trip. And so, for example, full craft,
we usually don't do Tohoku so much, but we would take people to Tohoku and kind of find also ourselves, try to find new craftsmen, interesting craftsmen for them to meet. But I would say a lot of people still are looking, as you said, looking for. You know, sophisticated accommodation. So it would be really hard to send clients to a regional destination. If there's just minshuku, if there is an English barrier.
And also they're not used to the super local 'futon tatami' (traditional mattress used on a tatami mat floor) culture yet. Yeah, I fully agree. Regardless of whether it's classic luxury or modern luxury, they still need high quality accommodations. And that's critically missing in many of the rural destinations with lots of attractive content. But but no good accommodations. I often feel that regions feel that their offering is, as you know, as good as it's going to get already. You know, they just provide what
they have already and expect people to like that. And I think the real key here is to without altering what the regions are offering, to elevate it to the target market, to bring it up so that it kind of sits nicely with them. So in Kagoshima, for example, is an accommodation called Tenku, which is on top of a mountain, and that is not representative of the local lifestyle that was lived there, but it's born out of it and it's been elevated to luxury status without losing its originality. Now that's really, really important. It's very, very hard to do,
but I think going forwards, regions really need to to try and do that in order to bring out their, you know, unique offerings. Okay. I think we are closing to the ending. But before before closing, I like I like to hear from each of you about your recommendations in terms of how to upgrade Japan's tourism in general or more specifically, anything you care about to better satisfy future customers needs.
So, Sawako, you go first. Okay, so. Like when I do our tourism industry, I am trying to be like a balance of the three goods, which is good for society and good for environment and good for economy, for especially for the local region. The balance of those three are very, very important. Sometimes when we think about the tourism and also inbound, we tend to talk about like foreign capital to Japan, but not only like an economy economic term. We also need to think about the balance of society and the environment as well. So as we today's topic,
culture preservation is, of course, important. At the same time, of course, environment preservation is also very important for me. So in my organisation we always think together with the three category of business, which is the tourism first and also the other one. Other two is education and also environment. So when we want to bring more tourists to the islands, we at the same time we have to think about how to preserve the environment and what is the capacity like limit maximum limit of the capacity of the islands to avoid affecting badly to these like local lifestyle as well as the like ecosystem and the geo heritage? So. Yeah, that's my with what I'm thinking. So I always come at the question
together with the why we we need to reason to the regional local region do we really need tourism? Then, because we sometimes forgot the purpose of what is the core value and the purpose to have a tourism to the local region. You know what I mean? So. So what is your purpose then? Is I might be beyond the topic to the world peace. Because the I believe that the travel industry and the tourism can connect people each other one one 1 to 1 beyond borders, country or race or gender or language, anything. If you have a. Well, maybe I didn't ask the right question. It's your own purpose, right?
Oh, yeah. World peace. So what is Oki's purpose? To be sustainable. Sustainability of the islands' ecosystem? Yes. Okay. So we have four ideal futures. To be a sustainable island and to have a local pride and also opportunity for challenge. And the other one. The globally connected. So through the tourism, I think we can have a chance to have those four ideal islands future. Okay.
Okay. Thank you. That's very clear. Alex, your recommendations, please. Mine are quite specific. So for the public sector, public sector in Japan is very siloed. So prefecture and city don't get on with each other or city and city don't get on with each other.
They need to break down those silos to begin with and collaborate on regional basis. So for example, in Kyushu, there isn't a massive amount of collaboration between the different prefectures in the region. But if they work together, they could achieve much more substantial gains in inbound tourism.
Again, there needs to be more public and private sector partnership on a deeper and more meaningful level. Often, private sector companies are not used effectively by the public sector because it's seen as favoritism or something like that. So they don't want to give a leading local company some kind of support or anything like that because they don't want to see to be seen as being favorable.
I also think civil servants should have their, you know, their terms increased from 3 to 5, maybe ten years even. So creating meaningful travel and tourism content takes a decade. It's not something that can be achieved in a year or two years. And the same with government funding as well.
So a lot of the government funding project now a single year. Often when the project started, a couple of months of negotiation take place and it tends to be seven months or something like that. The timescale is far too short to be making anything meaningful and using quite a lot of tax money to do so. And finally, for the public sector, I think less promotion and more development is really, really important. So, so much money is wasted on
overseas media magazines. I'm sorry if anybody's attached to any of them. Instead, they should be cutting the grass. That should be improving. Signage should be, you know, just improving the destination for the people that live there and that will organically lead on to tourism. But the private sector, I think, as they call it in Japan, you know, improving technology for bookings, reservations and things like that, stop relying on public funds.
There's another thing as well. If your business isn't profitable in travel and tourism, really, it's not a very good business. You know, you can't really say much about it beyond that. It shouldn't be propped up by government funding.
And also regions really need to develop fair profitability. That's profitability not at the expense and exploitation of local stakeholders, but to be able to foster their business for the next generation or several generations to come. So that's my take. Well, thank you. Great recommendations and it can be a summary of this session. Yuko please. So I've been doing this in the travel business for ten years and I feel that in travel many people run business day by day and but they don't seem to understand, you know, the business strategy or business structure, as in other industries, for example, the growing industries like tech or like finance or insurance or whatever. So there there's a term in
Japanese called 'hakuri tabai'. It's like very low profitability sell a lot, but like resulting in no profit at all. So even the the major Japanese corporations in travel in Japan, they're very big. They they employ hundreds of people, but their EBITDA is nearly zero. And so even for smaller companies, the you know, there would be very low chance to get an investment because the multiple is kind of pulled by those major travel companies as well. So I think that's why there is very
few, you know, really funded start ups in travel and also because of the smaller companies running day by day. A lot of like small competition all over the industry. So they're kind of, you know, making like cheaper quotations to win an account from overseas agents where they can, you know, pay maybe double the price if we don't compete inside Japan. And the overseas agent is, you know, putting on a 30% margin anyways. So the clients are paying a lot of money to come to Japan. But the local companies are not gaining any profit.
So I think it's that the low profitability is a very big problem for the market and that results in, you know, very low, very low what you say like like hiring competition. Compared to the other industries, especially inbound, you would have to hire bilinguals. But even the big companies, their salary starts from (Japanese number) which is like 200,000 yen per month and it's really not an efficient way of growing the business. Yeah it. Very, very important point. Thank you. So I like to open the discussion
up for you and take a couple of questions from the floor, please. Please state your name. My name is Nakano. I am from Silver Lake Capital. I want to you know, I believe in order to (improve) tourism, you know, long stay. and accessibility are very important. Just at the beginning of the
this topic it was said you know, the government put some budget, other money. But I think that deregulation are more important than money. So for example right sharing even in Oki Islands you know, you can enjoy all the nature and the long stay but without right sharing you cannot go anywhere so the deregulations are very important don't protect the cab car industry. Sorry, so this is one thing and the same thing is happening in Tokyo for example. You know, one room mansions, one room condominium. The condominium, you know,
management don't allow the hotel use. So deregulation allowing this kind of things and then long stays are possible so what do you think about this kind of things? Thank you. Any other questions? We just happened to have Minister Kono so please may you respond to this particular question? Thank you very much. I guess we need to deregulate in many fields, unfortunately. Well. Well, things like rideshare use
a digital technology. So it comes under me and I hope we could accelerate deregulation. The tourism industry seem to have very old way of doing business, and I think we need to modernize and we need to install a lot of digital technology in this field. So. We'll try. Thank you. Thank you. Yes. Hi, my name is ( ). I'm a journalist at Japan for the English site Sankei Shimbun. I'm interested, if in your work you've seen any big changes due to COVID-19? I mean, obviously we talk a lot about, for example, working remotely, people moving to the countrysides and so on, or for example, people trying to engage in more meaningful kind of tourism, so say getting an actual connection with the place and keeping in touch after they travel and so on. I was wondering if you had any good
examples of that in your work. Thank you. Thank you. Any other questions? Yes, please. Hi. Thank you very much. My name is Yosuke Takashi. I'm leading the customer experience in SAP, Japan and Korea. And I have a question. There is a lot of great content in Japan, especially at the tourism.
On the other hand, how we promote the engagement, especially new tourists from the inbound. So how we can approach the using a channel or promotion to more effectively to invite the new tourists to Japan. So two questions. One is about migration to rural areas, including a long term workation. And the second question was about digital promotion. Who likes to pick up the first one. I can talk a little bit about domestic market, an attraction so sanguine. We saw a massive shift from group travel to individual travel in the domestic market.
That's something that had been happening for several years prior to COVID. But this really, really accelerated it. And that led to problems such as, for example, simple things like car parks where previously, you know, buses would come in in groups. Now individual cars come in. It takes up a lot more space. You know, where do you put all these people when they come and visit? So there are things like that.
We also saw ticketing shifting over to digital as well. People pre-booking a lot of things because of, you know, restrictions on participant numbers for COVID and spacing and things like that. So a lot of things that were coming anyway have just been accelerated as far as living in the regions is concerned. I have a friend who actually brings people from Tokyo to Amami Oshima to live there, and he brought programmers from Tokyo several years before COVID actually, and they would go down and work for 12 hours a day as they did in Tokyo and go out to get a meal in the evening. Everything was closed because the islanders, you know, finish early and go to the beach and chill out or whatever. So because they couldn't get used to the local lifestyle, they gave up after three months and went back to Tokyo.
So if you do move to the regions and DX is fine and everything like that, but you do need to adopt the regional lifestyle to some degree to maximise the benefit of it. So obviously research in advance is very, very important and then listening to locals and how they live as well as also a part of that, I would imagine. Sawako you may have seen many people who migrated from big cities to Tokyo Islands during the period actually the numbers of the early twenties, like a university student and twenties, people are starting to migrate to the island because they they didn't have opportunity to go overseas. During the COVID. So they tried to find somewhere somewhere like almost like overseas. So. So Oki Islands is the one with the forest and the far from the city side and different cultures. So now we have a quite many of
interns and also like a full time staff as well. Yuko any comments responding to the questions regarding a post-COVID travel? We have had enquiries. What we realised that the the trips are becoming longer. I think Americans before
especially Americans before COVID. Americans are really hard workers, so they weren't able to, you know, get a two week off vacation here and there. But now most of the inquiries that we're getting are closer to two weeks. And also same for like the Chinese clients. We had inquiries that they would spend months in Japan and so remote work really would contribute to travel, especially long haul travels coming from America and Europe. And actually another thing that
should really change is like digitalization of the travel industry, as some mentioned, and especially there like a real paper culture in Japan. And most of the people would not want like long paper itineraries and like also brochures in the local governments. So we're actually also working on digitalizing the travel operations internally as well. Yeah, I make on average I make a trip to our rural destinations every week and what I get from the local governments or the destination marketing organization, people are a bunch of paper leaflets in the back. It doesn't work. You feel so bad for throwing them away. I know it's bad for the environment and it doesn't work. So. Speaking about digital
transformation or digitalisation, Just digitalisation number one, they need to develop a user friendly homepage as well as social media account. Number two, they need to make continue the efforts to maintain or operate the website and social media account, because in many cases a government gets some subsidy out and they develop fancy looking homepage and they don't touch for two years, for example. That happens everywhere. And number three makes sure that you have mechanism to get orders before the trip. Rather than trying to sell everything on the site. So those are the really basic stuff.
The travel or tourism industry has to take. So we call it actually DX 0.0. I think that people before we always looked at demographics like English, people like this or French people like that or whatever. But I think now we've got so many social platforms that are collecting big data. There's a real possibility to dig deep into people's personal interests and target promotion directly to, you know, niche segments, people that are really interested in one specific thing. And the problem is that the people in the travel industry don't really have those skills at the moment. A lot of it is very legacy and the reason for that probably is because Japan was a manufacturing and financial superpower essentially.
And travel is kind of like a, you know, a throwaway industry really until recent times. And I think from now on, we're going to see a lot more talented people moving into this sector, doing really interesting things with IT, doing really interesting things with marketing and promotion as well. And I really think it's going to change in a big way. But we need to kind of break down those big companies that are kind of holding the sector down. I'm sorry if anybody works for any of those companies, but I think they are kind of blocking the system up a little bit, to be honest with you. Well, thank you so much for your great input and we all enjoyed the conversation. I can really summarize well the
discussion we have had today, but a few points I like to pick up from each of you. So I mentioned a very important point being good for society, environment and the economy. So that can be one definition of tourism, especially in rural destinations. Alex recommended this promotion and let's spend or invest more on content development. And also he suggested breaking down silos both between private and public sectors, as well as among public sectors like central government, prefectures and cities, which tend to work poorly in many cases. Yuko suggested stopping price based competitions.
Let's double the price and let's make sure that we have the capacity to invest more on content and also getting back more to the people who are working there. That is also very important. And I like to add one more thing, which is about more entrants into this sector, because as I said in the beginning, this industry will be the largest export sector for Japan. That will need much more entrepreneurs, good investments, good operators. And we like to encourage each one of you to think about, well, maybe let's get into this sector. That's what what's really needed to upgrade the tourism for Japan. Thank you so much for joining the session and please give a big applause to the panelists. Thank you.
2022-11-17 00:35
