Japanese travel trade

When is the exit for Japanese travel trade from COVID-19 ?

Posted Foresight Marketing

When is the exit for Japanese travel trade from COVID-19 ?

General Situation

The situation of novel corona virus in Japan is still slightly better than some European countries. The daily number of new infections confirmed and death are relatively small. But there were three peaks from February 2020 to February in 2021 and the third one which is now getting calm down is the biggest one. The medical system in certain areas reached close to the capacity. The Japanese government issued state of emergency announcement twice, one was between 7 of April and 25 of May in 2020 for whole Japan, the other is now going on from 7 of January 2021 which has already lifted except for Tokyo metropolitan area including Tokyo, Kanagawa, Chiba, Saitama and it’s expected to be lifted on 7 of March. And other good news is vaccination had started at 17 of February from medical people followed by people over 65 years old. On the other hand, vaccination to ordinally people is expected to come around Autumn time.

Travel Trade

However the situation of travel trade in Japan won’t be eased so far. Even travel trade is the industries who got the biggest support from the government such as “Go to Travel” campaign, the prediction of the future is unclear. “Go to Travel” campaign helped recovery of domestic traveling in short time around October-November, 2020. However this successful campaign was called off on 28 of December, 2020 due to the third wave of infection and it’s not resumed, yet.

In this situation, many agents already temporary closed office and laid off staff with governmental support money. Several major agencies announced re-organization plan as below. Many staff worked for overseas traveling department are assigned to domestic one and some are seconded to other industry. Some agents organize virtual online tours, but it’s not profitable enough to cover real tours. Some start other businesses such as noodle restaurant and support of domestic DMC’s. The most two shocking news were

  • Nippon Express Travel, which was one of the most traditional agents, totally demolished tourism business in the end of March. Luckily all staff were soaked into parent company, Nippon Express.
  • JTB makes capital reduction from 2.3 billion JPY to 100 million JPY in the end of March. By this measurement, JTB will be legally categorized to small and medium sized company with lower company tax payment.

It’s becoming survival game and fighting against time with cash flow.

Expected Recovery

Starting point of recovery will be end of the summer. There are several movements among agents and also by JATA (Japan Association of Travel Agents). They are preparing recovery products and sales activities while watching the situation carefully. Naturally Olympic and Paralympic games are important event to re-open the boarder. Not only inbound tourism, but also outbound travel trade especially major agents are expecting these events. So late spring or early summer is the timing to re-start activities for national tourism organizations and DMC’s.

I picked up several points for consideration:

  • Check your database on travel trade again. There were huge movements onthe personnel in the trade.
  • Balance between B2B and B2C promotion. Overseas travel department might be shrunk at the beginning of recovery.
  • Start from the core fun.
  • One of the important themes in recovery is Sustainable Tourism. Japanese travel trade started to recognized on this theme last year and movement was slow. It should be good chance to introduce sustainable idea products.