The Japanese Market
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Analysts remain divided as to the future growth potential of the Japanese
outbound market. One thing is certain: Japan is no longer seen as one of the
world's most dynamic travel sources – as it used to be. Over the next few years,
it is likely to be overtaken by China and, some believe, even South Korea.
Outbound trip volume has actually declined over the past five years, and the
annual growth was a relatively modest 4% in the ten years to 2001.
Admittedly, demand has been negatively affected by continuing economic
upheavals since the economic and financial crisis of 1997-98. Also, concerns
over safety and security have had a significant impact since 11 September last
year, especially on two key segments – middle-aged and elderly females and
the educational travel market.
For the UK, where Japan has long been an
important source market, additional fears associated with BSE and FMD led to
the collapse in Japanese arrivals in 2001. Despite all this, the Japanese market
still offers good growth potential for the UK – but only as long as suppliers
recognise that the market has changed, and that new products and services,
coupled with pro-active marketing, are needed to stimulate and satisfy
- In the last 18 months, Japanese outbound travel demand has been very negatively
affected by the weak national economy, the depreciating yen and concerns over
safety and security following the terrorist attacks of 11 September 2001.
- The UK has been one of the worst-hit destinations since it also suffered last year
from the FMD crisis and negative publicity about the perceived high cost of a
holiday in the UK. In 2001, Japanese trips to the UK were down 34%, nights down
42% and spend 40%.
- Leisure travel – including holidays, honeymoons and VFR – accounts for some 74%
of all Japanese outbound trips. The corresponding share for Europe is close to 80%
but, for the UK, it is much lower (62% in 2001), perhaps highlighting the growth
potential of this sector.
- As Japanese travellers become more adventurous, demand for fully-inclusive
package tours to the UK has declined rapidly over the past few years; now they
account for less than half of Japanese holiday trips in the UK.
- Despite declines in trip volume, the Japanese remain among the highest spenders
of all visitors to the UK, averaging £82.50 per day in 2001.
- Over half of all Japanese visitors to the UK are under 35 years old; single women
aged 15-29 are the predominant market segment.
- School/study trips are already important for the UK and both English language and
general education trips offer much potential if appropriate products can be created.
- The rapid ageing of Japan's population is likely to have a major impact on travel
demand over the foreseeable future and this, in turn, has serious implications for
destinations looking to tap the Japanese travel market.
- Japan is currently the second largest Internet market in the world and travel is one
of the main growth sectors in online e-commerce. UK travel suppliers need to
ensure they are exploiting this form of dissemination of both travel and lifestyle
The data contained in this report comes from several different sources, among the most
important of which is the JTB Report 2002, the latest annual publication on the
Japanese outbound travel market from Japan Travel Bureau. The report compiles
statistics from two annual surveys conducted by the Japan Tourism Marketing Company
(JTM) – Factual Survey of the Overseas Travel Situation and Opinion Survey of Overseas
Travel Preferences. Prior to 2000, such data was collected through surveys carried out
by the JTB Foundation.
Caution must, nonetheless, be used in interpreting this data since the sample size for
both surveys is small – 2,259 and 1,437 respondents/travellers respectively.
Further useful sources of data have been the Japan Association of Travel Agents and
Travel Journal International – an English-language newsletter from the publishers of
Travel Journal, the leading Japanese-language travel trade magazine. Data on Japanese
travel to the UK was obtained from the International Passenger Survey (IPS), and from
British Tourist Authority (BTA) research. Other sources are quoted where relevant.
In addition, face-to-face and telephone interviews have been carried out with the travel
trade, retail outlets and airlines in both Japan and the UK.
The progress of Japan's outbound travel market has, for many years, mirrored the
performance of the wider economy and the strength of the Japanese yen. In the 1980s,
Japanese consumers believed they could rely on rising asset prices and jobs for life, and
this confidence fuelled outbound travel. Even after Japan's bubble burst in the late
1980s, international travel as a whole did not decline, although business travel
suffered. There was a brief downturn in outbound travel in 1991 – the year of the Gulf
War – but between 1992 and 1997 the number of Japanese travelling abroad increased
Growth was, nonetheless, very modest in 1997 and, in 1998, outbound trip volume
declined by one million trips, or 6%, due to the Asian economic and financial crisis,
finally shattering the myth of the invincible Japanese market. The market picked up
again in early 1999, showing renewed growth during that year and the next, resulting
in an all-time record of 17.8 million trips in 2000. But the prolonged economic
recession, the weakening yen, and the events of 11 September combined to dampen
demand yet again, resulting in a 9% decline in outbound trips last year.
It is interesting to note that this was only the fourth year of decline since outbound
travel restrictions were lifted by the Japanese government in 1964. Nevertheless, in the
five years to 2001, outbound trip volume actually declined by 3% and, over the ten
years from 1991 to 2001, the average annual increase was just over 4%.
|TABLE 1: A DECADE OF JAPANESE OUTBOUND TRAVEL, 1992-2002|
|Year||Trips ('000)||% annual change|
The situation did not improve in the first half of 2002, either, with overall trip volume
falling a further 13%. The FIFA World Cup in June (held in Japan) dampened further
demand for outbound travel that month but it reportedly picked up in July. In fact, the
results of a survey conducted by the Japan Association of Travel Agents (JATA) in July
showed that forward reservations for some destinations – notably China, Oceania and
Europe – were almost up to last year's level for the months of July and August, and
looked likely to exceed last year's level for September.
The middle-aged and senior female markets, which were the most adversely affected
by 11 September, are also reportedly showing signs of revival. Unfortunately, there are
few hard facts as yet, but anecdotal evidence from British and other European suppliers
and ground handlers seem to confirm the market's turnaround.
Economic indicators are not particularly favourable but not all of them are negative.
Prices have fallen faster than wages thanks to deflation. Unemployment is running at
over 5%, which is very high for Japan, yet more and more young people are opting out
of full-time employment in favour of part-time, or short-term, jobs so they can spend
time travelling. There is evidence of this in the UK, where a growing number of young
Japanese (mostly girls) are taking short language courses, but staying on to work parttime
and experience the British lifestyle.
Measured in US dollars (which, of course, causes some distortion in real trends), Japan
is the world's fourth-largest outbound travel market in terms of spending abroad on
travel, accounting for a 6% share of total world expenditure on international travel. It
was ousted out of third position by the UK in 1998. The estimated spend by Japanese
abroad in 2001 was US$28 billion, down from US$32 billion in 2000.
Some 12.7% of the Japanese population took a foreign trip in 2001 – up from 8.6%
in 1991, but down from 13.6% in 1996. Over the ten-year period, the level of triptaking
of Japanese males increased from 10.7% to 14.3%, and male travellers
accounted for a 55% share of total Japanese international trip volume last year – down
from 61% in 1991. The level of trip-taking among the Japanese female population is
still lower, at 11.3%, but it has risen much more sharply over the past decade – from
just 6.6% in 1991. It peaked at 12% in 1996.
The most populous region of Japan, the Greater Tokyo Metropolitan, accounts for the
largest share of outbound travellers (39%), but all nine regions of the country have
shown similar trends in outbound travel growth over the past decade.
Although there were already signs of a slowdown in Japanese outbound travel in the
first half of 2001, in line with the weakening yen and sluggish economy, the terrorist
attacks of 11 September had a major impact on demand. A JATA survey conducted in
late-2001 showed that 36% of Japanese cancelled their trips after 11 September, 8%
switched to other foreign destinations and 11% decided to take their trips in Japan.
Female travel fell by 11.5% overall, as against a decline of less than 7% for travel by
Japanese men. The worst affected sectors were young people aged 10-29 and middleaged
female travellers aged 40-59. This latter group is the sector that has shown the
greatest resilience in recent years.
The decline in demand from young people was largely attributed to the fact that
virtually all educational travel abroad – school excursions, study trips, etc – was put on
hold after 11 September.
Despite its sharper-than-average decline, the 20-29-year-old female age group is the
largest sector of the Japanese outbound market, followed by men in their 30s.
|TABLE 2: OUTBOUND TRAVEL BY SEX AND AGE, 2001|
|Age group (years)||Male ('000)||% change on 2000||Female ('000)||% change on 2000|
|Source: Ministry of
Justice, cited in JTB
The rapid ageing of Japan's population is likely to have a major impact on travel
demand over the foreseeable future and, in turn, has serious implications for
destinations looking to tap the Japanese travel market. The following table, compiled
for the US Census International Database from statistics provided by the Japanese
Ministry of Health & Welfare, reveals some fairly startling truths.
By 2020, the three youngest segments of the population – ie people up to the age of
34 years – will decrease dramatically in size. Over the same period, Japanese aged 65-
years-old and over – largely the product of the post-World War II baby boom – will
increase in number by 56%. This sector has already more than doubled in size over the
past three decades.
|TABLE 3: JAPAN'S POPULATION BY AGE, 2000-2020 (mn)|
|Age group (years)||2000||2010*||2020*||% change 2000-20*|
|Sources: Ministry of
Health & Welfare,
Japan; US Census
The 'single women' category – formerly referred to as 'office ladies' – continues to be
one of the strongest outbound travel segments, although it has registered some of the
worst declines in recent years. Because most of these women live with their parents,
they do not have housing costs and so most of their income is disposable. They have a
reputation as avid travellers who like reasonably upmarket accommodation and love to
go shopping for branded products. They are very conscious of trendy fashions and
lifestyles, but also love cuddly or cute characters – including Peter Rabbit and Winnie
the Pooh – which helps to explain why the Beatrix Potter Centre in the Lake District has
become such an important attraction for Japanese visitors to the UK.
Although the recent economic situation has reduced their buying power somewhat and
they are increasingly choosing holiday destinations closer to home, this demographic
segment cannot be ruled out as an important future long-haul market.
The Japanese working population enjoys far fewer paid holidays than, say, Europeans
– 18 days a year plus 13 public holidays – and, according to data from the Ministry of
Tourism, they only consume about 50% of these. It is little wonder, therefore, that the
propensity for foreign travel is still relatively low.
This also helps to explain why the 'silver generation' – the 65-plus age group – is viewed
as such a powerful consumer market, worth an estimated US$700-800 billion a year.
Thanks to generous pensions and low-cost health care, as well as a high level of
personal savings, they enjoy one of the highest levels of purchasing power in the world.
Just as interestingly, as far as the travel industry is concerned, they are young at heart,
physically fit – they enjoy healthy lifestyles – and are accustomed to travel abroad. And
they want to spend a significant share of their leisure time travelling and participating
in an increasingly wide range of activities, such as mountain climbing, cruising, skiing,
or simply working out.
A high percentage of mature travellers from Japan – the silver generation – travel to
Europe: 67% of men and 70% of women in 2000, for example. And they spend much
more on travel than the average Japanese does – around ¥377,000 as against the
Long-haul destinations account for just over 50% of total outbound trips from Japan,
but they have been losing share since the end of the 1990s and are likely to lose further
share in the next few years. This is in line with the trend towards more frequent, shorthaul
trips at the expense of longer holidays that has also characterised European travel
in recent years. The trend has also intensified since 11 September 2001, since people
have adopted a wait-and-see attitude to booking leisure travel, increasingly making
last-minute decisions and preferring to opt for destinations closer to home.
China and South Korea top the list of the most popular destinations visited by
Japanese, and China has continued to gain market share, while most other destinations
in Asia suffered declines in 2001. The most important long-haul destination is the USA,
which attracted just under 4.5 million Japanese in 2001 – to the US mainland, Hawaii,
Guam and Saipan. Not surprisingly, the US was one of the most negatively affected
countries last year, with the exception of the UK.
Italy has now overtaken the US mainland in popularity, despite a 7% decline in 2001.
Europe overall attracts around 13% of all Japanese outbound trips and, after Italy, the
favourite countries – for all types of travel combined, and in order of importance – are
France, Germany, the UK and Spain.
Hong Kong is the destination that has lost most ground since the mid-1990s. The
former British colony – which has been visited by roughly 25% of all Japanese
outbound travellers – suffered a 43% drop in 1997, the year in which it was handed
back to China, and the market has been soft ever since.
|TABLE 4: SELECTED LEADING DESTINATIONS FOR JAPANESE OUTBOUND TRAVEL, 2001|
|TRIPS DESTINATION||('000)||% CHANGE ON 2000|
|Saipan (Northern Marianas)||374||-2.1|
|Total (incl others)||16,216||-9.0|
|Sources: JTB Report
national tourist offices|
Hawaii, which has been visited at least once by more than 66% of all Japanese
travellers, still ranks as favourite destination in the Japanese wish list, and has actually
increased in popularity since 2001. This is despite a sharp drop in actual trip volume to
the destination following 11 September. It is a favourite with families and
honeymooners and, according to JTB, has maintained its popularity as a result of
continued, timely advertising and promotional campaigns.
Despite losing share, Australia has also retained its second slot in the 'most desired
destination' ranking, ahead of Italy and Switzerland. The UK ranks well behind Italy and
Switzerland, and even comes behind France and Spain, in 13th position. In the ranking
of 'preferred destinations', however – which allows for multiple responses – the UK
ranks a much more respectable seventh.
|TABLE 5: MOST DESIRED DESTINATIONS FOR JAPANESE OUTBOUND TRAVELLERS,
2000-02 (% OF RESPONSES)|
|West Coast USA||3.6||2.3||2.4|
|Source: Opinion Survey
of Overseas Travel
The UK is most popular among single Japanese women and married men aged 40 and
over. Italy and Spain, both of which have shown a sharp rise in popularity over the last
few years, appear high up the wish list of all age groups, although, according to actual
travel trends, are especially popular with middle-aged Japanese women aged 45-59
The following table highlights the differences in attraction of selected European
countries for the Japanese. In 2001, the UK's share of the educational and study tour
market was higher than average, but this sector has shown a sharp fall since 11
September. Nevertheless, the sector can be expected to pick up quite strongly once/if
fears associated with a possible war with Iraq and terrorist activities in general subside. Also very important for the UK – again partly for study trips – are single women aged
15-29 years. And the UK is more popular, relatively speaking, than either France or
Germany among women aged 45-59 years.
|TABLE 6: MARKET SEGMENTATION BY SELECTED DESTINATIONS, 2001
(% OF TRIPS)|
|Single women (15-29 years)||12.7||8.2||8.5||21.9||9.1|
|Single women (30-44 years)||8.3||8.2||8.5||3.8||6.9|
|Working wives (under 44 years)||2.0||2.2||2.0||1.9||4.7|
|Non-working wives (under 44 years)||0.5||1.5||0.5||1.0||3.5|
|Single men (15-44 years)||6.3||4.5||3.0||3.8||6.9|
|Married men (15-44 years)||9.3||9.0||11.0||9.5||11.1|
|Middle-aged men (45-59 years)||11.2||12.7||13.5||8.6||17.4|
|Middle-aged women (45-59 years)||16.6||17.9||21.5||20.0||12.9|
|Elderly men (60+ years)||13.7||16.4||14.5||10.5||10.8|
|Elderly women (60+ years)||8.8||7.5||8.5||8.6||8.7|
Holidays generated 67% of all trips abroad by the Japanese in 2001, up from 64% in
1996. Leisure travel overall – including visits to friends and/or relations (VFR) and
honeymoon trips – accounts for more than a 74% share. The respective share for
Europe/Russia is close to 80%.
There are no details of shares for individual destinations in Europe, but data from the
International Passenger Survey (IPS) seems to suggest that leisure travel overall is much
less important for the UK. True, the UK attracts a higher than average share of
study/school trips but this would tend to suggest that there is plenty of room for
growth in this sector of the market.
|TABLE 7: PURPOSE OF JAPANESE OUTBOUND TRIPS, 1996 AND 2001 (%)|
|Overseas study/school trips||2.0||1.3||2.1|
|VFR = visits to friends and/or relations|
Survey of Overseas
Family or relatives were cited as travel companions by more than 24% of all Japanese
outbound travellers in 2001, and married couples travelling together accounted for just
under 16%, taking the total for travel with extended family members to over 40%.
Although the share remains significant – and is even higher for travel to Europe/Russia
– it has been gradually declining since the late 1990s.
The percentage of those travelling with friends or acquaintances increased over 2000's
level, but remains down on the level reached in the mid-1990s. Meanwhile, the number
of Japanese travelling alone is slowly increasing.
|TABLE 8: TRAVEL COMPANIONS FOR JAPANESE ON OUTBOUND TRIPS, 1996 AND 2001
(% OF TRIPS)|
|Travel companions||All destinations||Europe/Russia|
|Husband or wife||13.3||15.8||23.8|
Most Japanese travel (over 70%) to short-haul destinations such as Guam and Saipan,
but also other parts of East Asia, is for four days or less.
The majority of trips to Hawaii, the South Pacific islands, Oceania and Southeast Asia
last from five to seven days, and over 80% of travel to Europe/Russia, the Middle East
and Africa is for eight days or longer. Obviously, a long-haul trip tends to include more
than one destination – and usually a minimum of two to three in the case of Europe.
Destinations attracting the highest repeat visits are Hawaii (66% of Japanese visitors
have been there at least once before), the US mainland (58%) and China (54%). More
than 40% of visitors to all three destinations have made three or more trips.
|TABLE 9: DURATION OF JAPANESE OUTBOUND TRIPS BY DESTINATION, 2001|
| ||Average length of trips (days)|
|South Pacific islands||6.5||58.1||35.5||0.0||0.0|
Since many Japanese lead busy lives in congested cities, it might be expected that they
would like to relax when they travel on holiday. But this is not the case – the typical
Japanese traveller is usually keen to do something more active than just basking by the
pool. Indeed, some destinations which other nationalities select for relaxation might be
too dull and quiet for Japanese travellers.
Visiting natural and scenic attractions was popular with 61% of Japanese outbound
travellers in 2001 – up from 58% in 1996 – and with an even higher 75% of those
visiting Europe/Russia. But, in the case of Europe, the favourite activity is visiting historic
and cultural attractions. Shopping comes third in the ranking and is especially popular
among young females.
|TABLE 10: MAIN ACTIVITIES UNDERTAKEN BY JAPANESE IN TRAVEL DESTINATIONS,
1996 AND 2001 (% OF RESPONSES)|
|Natural and scenic attractions||58.1||60.7||74.5|
|Historic and cultural attractions||44.6||46.3||79.4|
|Rest and relaxation||27.5||27.5||9.2|
|Visiting art galleries and museums||29.0||27.3||67.8|
For young people especially, the USA has particular appeal. Theme parks such as Disney
World – even though there is a Disney park in Tokyo – and destinations such as Las
Vegas, where something is always happening, hold the most attraction. The Japanese
do not visit Las Vegas for gambling as much as for the spectacle of the big shows,
entertainment at the hotels and the high quality of accommodation and cuisine. Many
of these attractions are relatively inexpensive because they are, in effect, subsidised by
Perhaps surprisingly, Japanese visitors feel secure and happy in the gambling capital's
huge and glittering modern hotels. Yet nightlife and even theme parks rank much
lower for travellers to Europe.
The World Tourism Organization says that Japanese expenditure for international
tourism (excluding fare receipts) totalled US$26.5 billion in 2001 (quoted in US dollars),
a decline of 17% on the previous year.
Although the respective data is not strictly comparable, JTB and the Japan Tourism
Marketing Company (JTM) put the average per capita expenditure per trip at ¥296,000
last year, or around US$2,368. This figure has been declining since 1990, when
expressed in yen. When expressed in US dollars, there has been less movement,
although the general trend is still downwards.
There are two main reasons for the decline, which are difficult to corroborate. First,
outbound travel has become cheaper but, more importantly, a rise in shorter trips has
reduced average length of stay and, therefore, spend.
Travel costs are obviously linked to the destination's distance from Japan, but also there
is a higher share spent on shopping in East Asia. Europe and Russia are the most costly
Elderly and middle-aged women and housewives spend more on shopping than any
other segment, while average total travel spending by single women is about
¥260,000, of which shopping accounts for around one-third.
Average travel expenditure also varies according to purpose of trip. The lowest spend
is for VFR trips and the highest spending – surprisingly, perhaps – seems to be for
study/educational trips and honeymoons. However, the renowned honeymoon
business appears to be fading, with the daily spend having fallen almost 40% in the
|TABLE 11: OVERSEAS TRAVEL EXPENDITURE BY JAPANESE, 1992-2001 AND 2006|
|Year||Spend per person (¥ '000)||% annual change|
Data provided by the JTM survey, the Factual Survey of the Overseas Travel Situation,
shows that 51% of trips are package tours, booked individually, and 7% are group
tours. Interestingly, Europe/Russia's share of group business is slightly lower than
average. More experienced travellers – 34% of the total market – said they organised
their own trips independently last year.
Among those taking package tours or participating in group travel, 53% were on fully
inclusive packages, in which all meals and sightseeing were included and which were
accompanied by tour guides. Some 43% of package tour travellers, on the other hand,
opted for partially-packaged tours allowing for free time. As an example, more than
70% of honeymooners prefer free-time packages.
|TABLE 12: ORGANISATION OF JAPANESE OUTBOUND TRAVEL, 2001
(% OF TRIPS)|
|Organisation||Overall||Trips to Europe/Russia|
A separate survey, conducted by JATA, suggests that up to 90% of all Japanese use the
services of the travel trade to book their holidays – whether through traditional outlets,
by mail order, or via the Internet. Few really make all their travel arrangements
completely independently. This demonstrates the importance of the travel trade –
referred to as travel firms in Japan, as all are involved in both wholesaling and retailing.
Japan's five leading travel firms all suffered double-digit declines in sales in 2001, with
the exception of Hideo International Services (HIT), whose performance was
nonetheless well down in the last four months of the year. The top 50 between them
recorded a drop in sales of 11%.
Worse, in the first half of this year the overall decline was even greater, at -17% – a
much poorer performance than for the outbound market overall. This confirms – if
confirmation were needed – that the decline since 11 September has been primarily in
leisure travel. The only relatively good news, according to Asia specialist Travel Business
Analyst, is that Japanese travel firms have survived bad years before. In both 1998 and
1999 most of the leaders reported declines.
|TABLE 13: INTERNATIONAL OUTBOUND SALES OF TOP FIVE TRAVEL AGENCIES IN JAPAN,
1998-2002 (US$ MN)|
|Agency||1998||1999||2000||2001||% change 2001/00||Jan-Jun 2002||% change on Jan-Jun 2001|
|Japan Travel Bureau||3,933||3,686||3,929||3,399||-13.5||1.600||-21.5|
|Kinki Nippon Tourist||1,903||1,795||1,866||1,557||-16.6||781||-18.7|
|Hideo Int'l Services||1,149||1,273||1,378||1,398||1.5||839||-12.7|
|Nippon Travel Agency||1,161||1,103||1,139||1,000||-12.2||487||-15.9|
|Top 50 agencies||12,019||17,926||18,736||16,747||-10.6||8,206||-17.4|
To highlight the huge potential of the Internet as a distributor of travel in Japan, it is
interesting to note that Internet usage increased by 73% overall in 2000, to reach 47
million people online – 37% of the population. Nearly 50% of all Japanese households
own personal computers and, of these, 78% subscribe to Internet providers. Over 50%
of Internet users access the Internet via their mobile phones.
In 1998, consumer e-commerce represented a mere 0.2% of total household
expenditures in Japan. This has been rising rapidly, fuelled by the travel industry – and,
more specifically, an increase in the online purchase of airline tickets.
Lastminute.com launched a Japanese version of its website in September 2002. The
joint venture is with investors which include Mitsubishi Corporation/MC Capital Fund
as well as Kinki Nippon Tourist Company and Nippon Travel Agency. These last two will
package exclusive travel products and provide access to international late availability
JTB says that its online sales jumped 92% in 2001, year on year. This was mainly
attributable to domestic travel sales, but the group predicts that e-commerce sales will
grow by another 66% in 2002 and will reach ¥100 billion by 2005. Among the notable
trends in travel e-commerce, Japanese women account for 55% of package tour
purchases online, and Japanese between the ages of 30-40 account for 26%.
A recent poll conducted by the Japan Association of Travel Agents (JATA) reflects the
growing importance of the Internet. It indicates that more than 50% of Japanese
consumers finalised their travel decisions last year after finding information online. Men
in their 20s and women in their 30s are most likely to browse the Internet for travel
information (70% and 62% respectively). About 43% of respondents rely on travel
agencies' websites. However, with a share of 34%, brochures remain the most popular
method of obtaining overseas travel information for the Japanese travel market,
followed by the Internet with 24%.
Japan is a major contributor to UK tourism revenue, ranking sixth in total visitor
spending by individual countries in 2000, and tenth in 2001 after a 40% decline in
overall Japanese spend that year. The Japanese are among the highest spenders of all
nationalities visiting the UK, with an average daily spend of £82.50 in 2001. In terms
of numbers of visits, Japan ranked 13th in 2000 and 15th in 2001, following a 34%
drop in trips to the UK.
Japan has long been the largest Asian market for the UK and, in 2000, generated 85%
of all visitors from East Asia. Even in the exceptionally poor year of 2001, Japanese
visitors made up 65% of East Asian visitors, with Hong Kong a distant second (26%).
Yet, compared with the UK's major international market, the USA, Japan's contribution
to UK tourism is relatively small – 369,000 visitors in 2001 as against the USA's 3.6
million; and £272 million in spending compared with the USA's £2.3 billion. While the
USA contributed 19% of all international visits to the UK last year, Japan's share was
1.7%. Similarly, the USA's share of spend was 21% last year, while Japan's was 2.5%.
Japan was the UK's worst-performing major market in 2001, with trips down 34% on
2000, nights down 42% and spend down 37%. These declines look particularly poor
in the context of the UK's international arrivals as a whole, which declined by 7%, while
spending was down 14%.
The Japanese market has been lacklustre for the much of the past decade, with just
four years of growth in arrivals since 1990 – in 1992 (after the Gulf War), 1994, 1995
and 2000. Expenditure peaked in 1995 and stagnated in the second half of the 1990s.
In 2000, however, all three measures – trips, nights and spending – picked up, with
particularly promising growth from the leisure sector. But any optimism generated by
that year's performance was dashed in 2001 when the FMD outbreak, coupled with
continuing fear over BSE and renewed economic gloom in Japan, took their toll. The
impact of 11 September and the fear of further terrorist attacks, particularly given the
UK's perceived political alignment with the USA, put the final nail in the coffin.
|TABLE 14: JAPANESE VISITS TO UK, BY TRIPS, NIGHTS AND SPEND 1997-2001|
|Year||Trips ('000)||Change (%)||Nights ('000)||Change (%)||Spend (£m)||Change (%)|
|* Change in methodology (giving more accurate data on travel to/from Ireland)
so years preceding 1999 not strictly comparable with those that follow|
UK ground handlers, hoteliers, retailers and attraction managers have noted an
improvement in the Japanese market since summer 2002 – particularly in July and
August after the World Cup – but none believes it will recover as fast as West European
markets. The trade is anxiously watching the final quarter of 2002 to see if the impetus
extends through into the traditionally quieter fourth quarter.
The BTA in Tokyo reports receiving more enquiries than in 2001 and JTB says that, by
June 2002, package tour bookings to the UK were up by over 300% on 2001. Demand
was boosted by the centenary of the publication of Beatrix Potter's Tale of Peter Rabbit,
by the popularity of the first Harry Potter film, and by enthusiasm for David Beckham,
who has struck a chord not just with football fans but with Japanese girls and indeed
Retail outlets popular with the Japanese, such as Harrods, Fortnum and
Mason, and the Wedgwood factory in Staffordshire, all confirm that business picked up
in mid-2002 after a disastrous 2001. However, coach tour operator Evan Evans (15-20% of its business is Japanese) says that late autumn sales of its products for Japanese
have been disappointing.
Japanese average length of stay has declined over the past few years, from 11.6 days
in 1999 to 10.9 days in 2000 and 9.6 days in 2001. However, average spend per day
has increased over the past five years, reaching £82.50 a day in 2001. Japanese
business travellers tend to stay longer than holidaymakers – averaging 6.1 days in 2001
(compared with 5.9 days for holidaymakers). In 2001, business travellers spent an
average of £158.50 a day, compared with £98.90 for holidaymakers. VFR visitors stayed
12 days on average, spending £52.80 a day, while Japanese who are studying in the
UK stayed 48.3 days, spending £43.50 a day.
The Japanese market has a better seasonal spread than many other major sources for
the UK, and operators view the Japanese as one of their best year-round markets.
Results for 2000 illustrate a more typical pattern than 2001, when there were
exceptional declines in response to the FMD outbreak in the spring and to the events
of 11 September in the fourth quarter. The first quarter of 2000 attracted 21% of visits,
the second quarter 23%, the third 35% (July, August and September are peak months
for Japanese outbound travel) and the fourth quarter 20%.
|TABLE 15: JAPANESE ARRIVALS BY QUARTER 1997-2001 ('000)|
|* See note on Table 14|
Unsurprisingly, the bulk of Japanese visitors arrive by air – 89% in 2001 and 83% in
2000. Eurostar has proved popular with Japanese groups and individual travellers, with
Paris often combined with the UK in a single trip to Europe. The percentage share of
those using the Channel Tunnel increased over the past five years to 14% in 2000, but
dipped in 2001 to 12.5%, reflecting the decline in leisure visits.
|TABLE 16: JAPANESE VISITS BY MODE OF TRANSPORT 1997-2001 ('000)|
|* See note on Table 14|
Japanese visitors to the UK are relatively young, with over half under 35 years old. The
largest age group is the 25-34-year-olds, followed by 16-24-year-olds, according to IPS
data. Other data from JTM (see Table 6) refines this further, showing that single women
(aged 15-29 years old) are a particularly strong market segment for the UK.
The 45-54-year-olds group ranked third in 1997 and 2001, but 35-44-year-olds took
third place in 1998-2000. Again, JTM identifies middle-aged women (45-59 years old)
as being an especially strong segment within the middle-age groups. Broadly, the
shares of each age group identified by the IPS have remained much the same over the
past five years, with the exception of the 16-24-year-olds group which has declined,
while 25-34s have increased.
Over half the UK's Japanese visitors come from the Kanto region – 59% in 1998, which
was the last time that this survey was conducted. This is the region which incorporates
the cities of Tokyo, Yokohama and Narita, the Bo-So Peninsula and surrounding densely
populated plain. The Kinki region, which includes Kyoto, Osaka and Kobe and
surrounding areas, is the second-largest region for UK travel, producing 17% of visitors
in 1998. The Tokai region, the eastern seaboard between the Kanto and Kinki regions,
produced around 9% in 1998, while the rest of the country, including the vast sparsely
populated regions of the north, only produced 15%.
|TABLE 17: JAPANESE VISITS TO THE UK BY AGE GROUP 1997-2001 ('000)|
|*See note on Table 14|
|Source: IPS|| |
Holidays are the main reason for Japanese visits to the UK – constituting 59% of all
Japanese UK trips in 2000 and 51% in 2001. But holiday trips contribute a lower
proportion of total Japanese spend – 37% in 2000 and just 20% in 2001. Business
travel ranks second in terms of trip volume – 20% in 2000 and 25% of the total in
2001 – and, as would be expected, contributes a comparatively high share of spend, ie
26% in 2000 and 31% share in 2001. VFR trips made up around 10% of trips in 2000
and 11% in 2001.
The 'study' component is higher than for most major markets, taking an 8% share of
all trips in both 2000 and 2001, even though volume fell substantially in the exceptional
year of 2001. This is also an important sector in terms of spend, contributing almost
one-third of all Japanese expenditure in the UK in 1998, although in the exceptional
year of 2001, educational travel's share was a lower 19%.
|TABLE 18: PURPOSE OF JAPANESE VISITS 1997-2001 ('000)|
|*See note on Table 14|
|TABLE 19: JAPANESE EXPENDITURE BY PURPOSE OF VISIT 1997-2001 (£m)|
|*See note on Table 14|
London is by far the most popular destination in the UK for Japanese visitors. In 2001,
78% of Japanese visitors (285,000) stayed at least one night in the capital, while 28%
(104,000) visited somewhere else in England. Only 5% stayed in Scotland (with
Edinburgh the main leisure and business destination) and 2% in Wales. In terms of nights, however, London's share is much less dominant – 53% of Japanese nights were
spent in London, 41% in the rest of England, 4% in Scotland and 2% in Wales.
Around 14% visited the South of England for at least one night (the numbers would
be boosted by those attending the language schools on the south coast, as well as trips
to Bath, Stonehenge and so on), while 10% went to Central England (the area which
includes Oxford, Stratford-upon-Avon and the Cotswolds, all favourites with Japanese
holidaymakers), and 8% went to the North of England (where cities such as York,
Chester and Liverpool, as well as the Lake District, are popular leisure stops).
The UK travel trade identifies one key trend in the Japanese holiday market over the
past few years – the growth of the independent (FIT) leisure market and of customised,
or 'free-time', tours at the expense of all-inclusive packages. Major operator JTB, for
instance, says that three or four years ago 80% of its business was fully-inclusive
packages; now inclusive packages constitute just half its sales.
Other major ground
handlers of UK Japanese visitors, Miki and Gullivers, note a growing number of clients
who request simply accommodation for a London-based stay, with a half-day tour of
the capital, and perhaps one set of theatre tickets. Requests for a fully-escorted tour
with a Japanese speaker are diminishing, says Miki, and there is a tendency for clients
who come a second time to make all their own arrangements. Japanese are Internetsavvy,
and a growing number book their own accommodation in London online, say
the agents. (One operator said 5% of its clients booked hotels through its
The bulk of FITs tend to stay in London, although agents note that more – particularly
younger travellers – venture off to Oxford, Cambridge, Liverpool (for the Beatles
connection), Edinburgh, Glasgow, Bath and Bristol on their own. But agents comment
that language difficulties are still a major barrier to independent touring; very few
destinations outside London can offer any Japanese-speaking tour guides. Although
most well-established major attractions provide Japanese information, this is an obvious
area for improvement.
Edinburgh, which recently conducted a survey on venues providing Japanese language
information, found audio or written information in popular retailing outlets for
Japanese tours such as the Whisky Heritage Centre and the Crystal Centre, as well as
key sights like the Castle, Holyrood House, the Royal Yacht Britannia, and National Trust
properties. However, more could be done to help the more adventurous, independent
Japanese tourist experience other aspects of the city.
Another trend noted by agents such as JTB, Gullivers and Miki is a growing demand to
stay longer in UK and explore single destinations more thoroughly; demand for tours
which cover seven European cities in a fortnight have dwindled. The agents/operators
also detect growing demand to experience and participate in English life – instead of
just eating a typical English tea, for instance, clients actually want to know how to
make the scones. Their clients are keen to experience local or regional cuisine wherever
they go, and this is a product area which operators/agents feel the UK has barely begun
There is scope to develop more regional specialities on the lines of Scotland's salmon or
whisky, say the operators, and tap into the UK's varying ethnic cuisines – especially
Chinese, which is particularly popular with Japanese visitors. The Japanese are
increasingly celebrity-conscious and want experiences that bring them closer to their
heroes. One operator, for instance, reports requests for groups to meet television chef Jamie Oliver, following the success of his programmes in Japan and high-profile
magazine interviews with him.
Since the World Cup, agents have been inundated with requests for football tours –
ideally to see David Beckham play or, more realistically, to attend a League match, or
perhaps visit Manchester United's home ground. UK tour operators say that fans
(women as well as men) tend to take a week off work, giving them five nights in
London when they would attend two football matches.
Japanese star player Junichi
Inamoto, who plays for Premiership club Fulham, is another focus of football trips.
Fulham FC's website currently takes around a third of its hits from Japan, and there is
a special link for Japanese supporters to buy tickets. Inamoto's more fanatical fans come
to England in the hope of buying his shirt on match day.
Travel industry views are mixed on whether Japanese football mania is a passing fad, or
will produce a new, more permanent source of business. Certainly, Premiership League
matches are shown on Japanese TV and there appear to be supporters who are
dedicated enough to come to the UK to see their team play.
Despite some adventurous products for individual travellers, the major operators/agents
largely offer much the same itineraries within the UK in their group series programmes.
Aside from London, the most popular destinations for the Japanese are the Cotswolds
– which epitomise the Japanese view of pretty English villages and picturesque
countryside – the Lake District, where Beatrix Potter and the dramatic mountain scenery
are the main draws, and the heritage cities of York, Chester, Edinburgh, Oxford,
Cambridge and Bath, as well as Stratford for the Shakespeare connection. Among the
'must-see' attractions outside London are Windsor, Stonehenge, Warwick Castle, the
Beatrix Potter Centre at Bowness-on-Windemere and the Wedgwood Story at Stokeon-
Visits to English gardens are increasingly popular with Japanese tour groups, with
Cotswolds gardens such at Hidcote Manor and Barnsley House (home of author and
horticulturist Rosemary Verey) regularly included in tour programmes. National Trust
property, Sissinghurst Castle Garden in Kent, is an important day-trip attraction for
London-based Japanese. 'English'-style gardens are fashionable in Japan, and garden
accessories (handmade terracotta pots for instance) are popular purchases for shipping
Other gardens are now looking to exploit the Japanese interest. Tatton Park, for
instance, in Cheshire, which incorporates an important Japanese garden and is home
of a successful Royal Horticultural Society flower show, is a key element in a new
strategy devised by the county of Cheshire. The aim is to persuade the Japanese who
come for a quick visit to Chester to stay longer in the county and use it as a base for
exploring other attractions in the region – as well as Snowdonia or the Lake District.
In the increasingly price-competitive market, package wholesalers are paring down tour
contents and offering as much as possible as options. Attending at least one London
musical show, for instance, used to be seen as an essential part of a trip, but operators
now find the tickets too expensive at £45-£55, and shows tend to be a last-minute
option. UK ground handlers say hotel and meal budgets for Japanese tours are
substantially lower than a few years back, and attractions that charge entry fees are
being axed in favour of those with free entry. The Tower of London and Windsor Castle
are among the few attractions that Japanese tour operators will pay for.
Nonetheless, Japanese still regard shopping as an important part of their holiday. They
may try and cut air travel and hotel costs, but the tradition remains of taking back
souvenirs for relatives, friends, neighbours and colleagues in the office. Traditional
favourites are tea, shortbread and other types of biscuits, a piece of English porcelain,
and accessories such as a scarf or handbag – probably a well-known international
brand which, with VAT refunded, would be cheaper than in Japan, although not as low
as prices in France or Italy.
Souvenirs at UK attractions are important – the World of Beatrix Potter, for instance,
relies on sales of small souvenirs (notepaper, paperweights etc, rather than the actual
books) as a vital part of its income. Similarly, Japan represents 10% of business for the
Wedgwood Story shop, and is its second most important market after the USA. But
strong brand loyalty does not come easily – Wedgwood, for instance, has spent
considerable time and money in Japan since the 1970s, building up its brand following.
Newcomers find it hard to break into the Japanese retail market.
In London, a typical tour still allows for a souvenir-shopping trip, often in either
Mitsukoshi or Isetan, depending on commission arrangements. These are the only two
Japanese department stores in the capital to have survived economic crisis, and they
stock English and international brands, but selected with the Japanese market in mind.
Harrods and Fortnum & Mason – both with long-established strong brand images in
Japan – remain popular; both offer incentive deals to Japanese groups and also employ
Japanese-speaking staff to help with shopping, shipping and reclaiming tax.
For both, Japan is still their second most important market after the USA. This year, for
the first time, Harrods has struck a deal with JTB that gives a packet of Harrods tea if a
JTB card is produced. If a JTB customer spends £500, he or she receives a Harrods
voucher. Harrods says the decline in Japanese spending at the store began in mid-2000,
and continued through 2001. Sales started to pick up in 2002, but were not up to pre-
2001 levels. Louis Vuitton is the major international brand for Japanese customers in
Harrods, but they also love Harrods-branded gift items, with tea and teddies top
Business travel has changed significantly over the past five years, directly reflecting the
difficulties in Japan's banking sector and financial institutions which first emerged in
1997. Over 50 representative offices of major Japanese institutions closed down in the
City of London and those that remained cut staff, and cut costs. In the new climate of
austerity, Japanese business visitors to the UK reduced expenditure on hotels and
entertaining. Many of London's restaurants and clubs catering to Japanese
businessmen have closed, and golf clubs favoured by the Japanese also note a decline
in Japanese business entertaining.
Although the Japanese expatriate community is still
estimated to be around 50,000, the make-up is now different. The number of highspending,
middle-to-senior management has decreased, while there is a growing
number of young Japanese (especially women) who have come to experience life in the
UK, typically taking a short language course but also working part-time (immigration
laws allow Japanese students to work 20 hours a week). There is no likelihood of a
return to the buoyant pre-1997 days of Japanese business, with associated high-income
Unsurprisingly, London benefits most from Japanese business visitors, according to IPS
data. In 2000, for instance, the capital received 80,000 business trips from Japan –
70% of all business visitors to the UK. Around 12,600 (16%) of business trips to
London were to attend a conference and 1,500 (2%) trade fairs.
Despite the collapse of the educational market in 2001, the travel trade say it is picking
up quickly and note strong demand for the UK, both as a general educational
destination and as a language destination (English is now compulsory in secondary
schools). While the most important destinations for school trips are South Korea and
China, demand for educational trips to Europe is outstripping that to Australia and New
Zealand. JTB in London handles around 10,000 students on secondary school trips, but
there are numerous other agents in Japan who deal directly with the receiving academic
establishments in the UK (thus avoiding VAT).
JTB identifies two basic education segments. There are small groups of 10-14 who
come to do a language course lasting between 1-4 weeks at a language school,
typically in Oxford, Cambridge, Brighton or Bournemouth and usually in spring or
summer. These constitute around 30% of JTB's education business. The larger segment
is large school groups (up to 300 students), who come on a one-week trip as part of a
compulsory school activity to improve general education.
Typically, these groups are based in London for sightseeing and take a day-trip to
Oxford or Cambridge. Paris might also be included in the same trip. Although some
schools would also like to include Italy, it is more difficult to find accommodation for
large groups in Italy, and there are time constraints.
Language school students want
'homestays', but demand is far greater than supply, and some of those that are placed
are disappointed with the reality of English homes, say agents. London is the most
sought-after destination for all Japanese students, and those on language courses are
mostly not keen to study further than two hours away from the capital. However, there
are signs that Edinburgh could be a new hotspot, partly because of direct air access
In general, the demand from Japanese schools for participation in British school life and
activities far outweighs current possibilities. Requests to spend a week in a UK school
are very difficult to organise, say UK handlers (unlike in Australia, where the
government encourages such schemes and helps organise them). Similarly, a growing
demand for football or rugby tours with matches against English schools, and also for
short programmes of voluntary work with UK charities, cannot always be met because
of logistic difficulties encountered by the organisers in the UK.
The UK education system is simply not geared up for receiving international groups like
this, say agents, and is losing a good opportunity as a result. There is also growing
demand for longer educational stays in the UK – a result of changes in the Japanese
education system which now recognises a year spent in a UK school as a valid part of
the secondary education.
Current forecasts from JTB project a 2% rise in Japanese outbound travel by the end of
the year, to 16.6 million trips. Although first-half trends suggest this is overly optimistic,
it is true that the 'dead cat bounce' syndrome will come into play in the last four
months of 2002. This means, given the sharp fall in outbound trip volume from
September through to December 2001, there should be solid double-digit growth over
these months this year.
Demand should also pick up much more strongly in 2003 in line with a forecast
improvement in the economy and a strengthening of the yen. This, however, assumes
the looming war with Iraq will not become a reality and that there will be no more
terrorist incidents such as the recent Bali bombing.
There is every reason to assume that the UK will benefit from the expected revival in
Japanese outbound travel, although it does face formidable competition from other
European destinations and, perhaps even more importantly, the growing trend towards
shorter-haul, shorter trips. Like other maturing markets, the Japanese are increasingly
opting to make several shorter trips a year – sometimes at the expense of long holidays
that require lots of advance planning. Nonetheless, the Japanese have already shown
they are less averse to a one-week long-haul trip than many other long-haul markets.
There are also growing signs that the Japanese will move closer towards the Western
tradition of taking summer holidays. According to a survey conducted by the Ministry
of Health, Labour and Welfare, 79% of Japanese companies now plan to close an
average of 6.8 consecutive days for summer holidays. Nearly all (91%) manufacturers
plan on taking a summer break and 67% of firms say they will close for some time. This
would presumably encourage more summer travel, especially by families with schoolage
For the UK it is not realistic to expect a return to the halcyon days of the early 1990s –
nor even a rapid return to 2000 levels of trips and spend. The BTA believes that the
Japanese market could recover to 1999 levels in 2003, but it will be several years before
it regains 2000 levels.
Although Italy and France already receive more Japanese visitors than the UK – and
Switzerland and Spain are higher up their destination wish list – the Japanese do feel a
warmth towards the UK. They appreciate Britain's history, tradition and culture, the
countryside and the retail opportunities, and younger visitors, in particular like aspects
of UK lifestyle and fashion. Japan's growing interest in the English language is another
very obvious advantage for the UK.
However, the Japanese find the UK
expensive compared with its European competitors, and tend not to be impressed with
the food or service levels in hotels, restaurants and public transport, nor with the
The UK fits well with the main preoccupations of Japanese travellers in Europe, outlined
in Table 10. Its natural and scenic attractions are strong and it is rich in historic and new
cultural venues, with galleries and museums to match those in competing European
destinations, and arguably a better range of performing arts on offer than anywhere
else in Europe. It has numerous niche products for the more adventurous traveller, and
these could be tailored relatively easily to Japanese requirements, and it has the
potential to build up many more study or educational opportunities.
One problem is persuading the Japanese travel trade that the UK is able to cater to a
wider range of demands. While UK-based Japanese operators and ground handlers are
generally open to new ideas and products, the wholesalers in Japan – who tend to be
the decision-makers on final brochure content – are often very cautious, and prefer to
stick with tried and tested itineraries. Hence, whole rafts of the UK are barely touched
by the Japanese travel trade.
The UK travel trade is mixed in its views on how best to approach the Japanese market.
Some highlight the difficulty in introducing new products – established attractions and
brands say they have worked on promotion and developing relationships with their
Japanese partners for many years. Regular visits to Japan are necessary, they say, and it
may be several years before a contact translates into actual business.
At the same time,
however, there appears to be a need for the UK's travel industry to be ready to identify
and respond rapidly to new fashions in the highly susceptible Japanese marketplace.
The surge in demand for football-related travel products is a case in point, or the
growing interest in antiques or Western cuisine. In this context, theme-based tours and
special-activity products have considerable potential.
Some change is likely in the BTA's approach to Japan, once the results of new consumer
research, currently underway, are known. Particularly interesting, says the BTA, will be
the better understanding of the young and the middle-aged women's market
segments, both of which are important to the UK. Also important for the Japanese
market is the BTA's new drive to better exploit the potential of new media – this was
announced in November 2002 as part of a major overhaul of the BTA.
Japan was not included among the key seven markets that were targeted in the BTA's
post-11 September marketing campaign. The BTA's marketing programme in Japan was
cut right back to press and PR activities. Whether or not this made economic sense at
the time, it was a move that has allowed some other destinations to be quicker off the
mark in attracting back the Japanese, once they started travelling long haul again.
Jill Trew and Nancy Cockerell are, respectively, Senior Editor and Editorial/Research Director of The Travel Business
Partnership (TBP), which provides customised research and consultancy for the travel and tourism and related industries.
TBP publishes two monthly newsletters: Travel Markets and City Profiles. For further information, please contact