JAPAN MARKET REPORT SHIGEYOSHINOTOAND KOICHINUMATA - VISIT FINLAND MARKETING REPRESENTATIVES
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Japan Market Report Visit Finland Marketing Representatives
ShigeyoshiNotoand KoichiNumata
May 2018 XX
Semiannual Report – JAPAN Winter season 2017-18 and outlook for summer 2018 CONTENTS • Factors affecting the results of the winter season 2017-18 • Outlook for the summer season 2018 • Prospects for the autumn/winter season 2018-19 • Trends and other relevant travel related topics • Facts and figures - Market review data
Factors affecting the results of the winter season 2017-18 The number of overnights by Japanese travellers this winter 2017-2018 has decreased by 5%. Monthly overnights were NOV:15,425 (+4.7%), DEC:16,309 (-6.4%), JAN:12,152 (-6.6%), FEB: 19,670 ( -2.5%), MAR: 14.293 ( -39.1%). Unlike the healthy growth in the past few years, the situation turned out to be more challenging for Finland compared to the other markets. There are several reasons, trend and marketing intentions for this outcome to be further evaluated. 1. Capacity and increasing land costs While the winter aurora tour programs continued to be the driving products in Japan, the biggest reason for the decline trend could be attributed to the challenges with both domestic flights to/from Lapland as well as the availability of accommodations. There were 28 weekly direct flights to Helsinki by Finnair and Japan Airlines, however we experienced shortage of connecting flights to resorts in Rovaniemi. Same situation was observed for hotel accommodations in Lapland due to the surging traffic from Chinese and other Asian markets as well as European active holiday seekers have been increasing. European charter flights to the region also had major impact. The selling price for the aurora package tours has been rising. This environment seemed to have hindered investments and promotional activities by the Japanese travel trade. 2. Northern light myth with 11 year cycle It is widely believed that the best time for northern lights comes in every 11 years in the Japanese market. While there is no scientific proof to forecast activities and probability of this nature phenomenon, some media and travel industry used “catchy phrases” to draw consumer attention to boost sales activities in the past. Since the last claimed to be “the best aurora” season, 2017-2018 winter was just half way until the next peak cycle. This psychological effect is one of the reasons for limited media coverage and exposures. The market was relatively silent. As a result, consumer demand was weaker compared to the peak winter.
Factors affecting the results of the winter season 2017-18 3. The shift from winter to autumn Japan market had a very strong autumn season in 2017 with the market growth of 8% year over year. Related to the capacity problems, Visit Finland together with Finnair has been making effort to promote autumn period (September, and October) emphasising on an unique experience of double Aurora in the sky and reflection on the lake along with Finnish lifestyle nature activities such as berry and mushroom picking. Hotel occupancy and room rates in autumn are much lower and attractive to Japanese travel trade. Especially products in autumn season are friendly to senior market segments, who tend to be concerned with health condition under the extreme climate environment in winter time. Due to our successful campaign initiative, this shifting of the seasonality extends business opportunity to our customers in Lapland region. We believe the value of autumn products is very important from this point of view. 4. Development of new destinations Traditionally Japan is very strong in several destinations such as Saariselkä and Rovaniemi. Sometimes there were too much concentration and lack of balance with other destinations. For this reasons, we encourage travel agencies and tour operators to develop new destinations in last few years. Especially we promoted Ruka / Kuusamo area in cooperation with Finnair organizing several fam trips, organizing seminars and offering special conditions to travel agencies. As a result, the number of the overnights in Kuusamo / Ruka increased by 28.5% (November,2017- March,2018). Kittilä was another emphasis, but it’s still on the way and the increase was only 7.8% (November,2017- March,2018). As non-leisure development, Oulu region has focused on education tourism and technical visit from 2016. This area indicates rapid growth even in winter time by 61.4% (November,2017-March,2018) 5. The result in March The sharp decline in March by 39.1% is primarily due to the last year’s Figure Skating World Championship in Helsinki between 29 March and 2 of April,2017. There were around 3,000 avid Japanese supporters travelled to Finland for this winter game. If we compare to the figure in 2016, we are in the strong position with 10% growth in this slowest month of the year.
Factors affecting the results of the winter season 2017-18 Supplement Economic Outlook The Japanese economy has grown for nine straight quarters, which now registers as its longest expansion since the mid-1990s, Annual GDP in 2017 was estimated 4.8 trillion USD and growth was 1.6%. A key indicators suggest that while growth may slow a bit in the first quarter in 2018, but the GDP expansion will continue in the whole 2018. The current unemployment ratio is only 2.4% which makes Japanese society quite stable. Although the employment conditions continue to improve, the pace of recovery in income is likely to continue to be slow. Private consumption expenditure is likely to recover mildly. Japanese visitors to Finland Japanese outbound in Total NOV: +12.8% NOV: +4.6% DEC: -8.2% DEC: +0.9% JAN: -6.1% JAN: +9.9% FEB: +0.3% FEB: -6.9% MAR: -24.5% MAR: +3.5%
Outlook for the summer season 2018 The overall outlook for the coming summer is expected to be quite positive with 5-10% growth projection. Several factors are influencing the number of arrivals and overnights. On the other hand, surge of fuel surcharge is becoming a concern in the industry as it would have impact on consumer decision making. In addition, ongoing increase of inbound travelers to Japan could escalate capacity issues for the outbound business. Another essential matter is not just only increase/decrease of overnights, but also changing phase of the Japanese travel trade distribution, especially competitive situation between international OTA and changing of trade map brought by new forces. We need to keep eyes on the market. Positive 1. Flight capacity increases Finnair is celebrating its 35th anniversary since its inauguration to Japan this year. They continue to add more capacity and increase frequency to/from Helsinki in the summer schedule. In total, there are 38 weekly flights including codeshare flight with Japan Airline, which makes them the largest European carriers in the market. Helsinki Vantaa- Airport is now the second biggest hub airport from Japan in Europe. This increase will push up the summer market. 2. Improvement of labor market and increasing of salary and summer bonus Japanese income, basic salary and bonuses are slightly increasing with shortage of workers. Especially family market will be stimulated in summer period. Job hunting market for new graduate looks quite promising next spring, which encourages them for graduation memorial trip even from summer period. 3. Continuous positive outlook of outbound tourism from Japan The number of Japanese overseas travelers in 2017 was 17,889,300 (estimated) that increased by 4.4% year-on-year. Yearly change in percent was smaller than in 2016, but the number continues recovering again in 2017. This trend continues in 2018 between January to April, which counts 5,978,000 departures and 3.6% increase.
Outlook for the summer season 2018 4. Good calendar during Golden week Japan has many national holidays, so sometimes the holiday calendars plays significant role in the consumer decision making process. Especially Golden week is late spring or early summer important traveling season. Golden Week in 2018 had quite good calendar and even 10 days off was possible by taking two days paid holidays. 23.4 million people were expected travel both domestic and internationally according to JTB prediction. The popular destinations in Golden Week this year were Asia and Europe. Especially Europe was expected 8.9 % increase comparing with the last year. Golden Week is a bit early to get full benefit for Finland and Scandinavian area, but some package tours were already available in the market. 5. Early exposure for 100th Anniversary of the diplomatic relationship between Japan and Finland 2019 is a special year for both countries. We have already seen some travel agents and press starting their preparation for this commemorable year. We could expect more press coverage and media exposure toward the end of this year. Negative 1. Fuel surcharge Surging fuel prices could influence the travel motivation especially to long haul destinations. Fuel surcharge is charged separately on top of traveling cost. 2. Capacity competition with inbound traffic Inbound tourism to Japan has been increasing drastically recently, which could reach 32 million travelers by 12.3%. The flight booking competition against inbound tourism will be harder.
Outlook for the summer season 2018 New product 1. Sauna related slow Finland products Sauna is booming among Japanese millennial and young generation. This new fad has been a domestic phenomenon. It is now creating overseas travel desire and dream for an authentic experience to the origin of sauna, Finland. Visit Finland will launch Sauna campaign in 2018. 2. Education tourism Visit Finland started Education Tourism Project, which also targets Japanese market and already some areas already started product development on this field from 2016. We will see the specific result and new products in the market. New travelers segment 1. Solo travelers Japanese travelers are famous as group travelers, but it is shifting towards individual traveling, further solo traveling. Due to difficulties to synchronize the holidays with travel mates, this trend will be further developed and we need more and more products for this segmentation. 2. Families Our first Finland fan generation has become mothers. They do not hesitate to bring small kids to Finland and security issue in several European countries encourage other mothers to Finland, too. Naturally Moomins and Santa Claus are good motivation for them, but some of them are keen on children care system in Finland.
Outlook for the summer season 2018 Marketing opportunities Cross industry cooperation Benefitted by Business Finland new organization, there are several new cross industry cooperation in spring/summer period. • Sauna campaign with Sauna industry both in Japan and Finland. • Summer Nordic consumer fair at Hankyu Department flagship store in Osaka (30 May-6 June) 80% of the Nordic sellers and the featuring products are Finnish. The main theme is Midsummer Festival, Juhannus. • Room deodorants package with Finnish taste design and tourism information • Arctic Tourism seminar will be held in Sapporo, Hokkaido ( June ) Don’t forget 1. 2019 is 100th year anniversary celebrating diplomatic relationship between Japan and Finland 2. Opening of Moomin park in Japan spring 2019 Moomin Valley Park will be opening in March, 2019 at Hanno-city in Saitama prefecture next to Metsa village to be opened in November, 2018. (https://www.moomin.co.jp/category/news/themepark)
Prospects for the autumn/winter season 2018-19 What trends should be considered in product development to increase the demand in the autumn/winter time? Due to anticipated capacity problems of flights and accommodation in Lapland, Japanese market will strenghten promotion on autumn aurora products while trying to maintain the winter business. We will continue to work with new destinations such as Kuusamo / Ruka, Inari and Levi. Market share by online travel agents in winter time will be increased. This trend will trigger new products for Japanese such as cottage stay. Citybreak mainly by ladies under the theme of ”Live Like Locals” will continue to be popular even in winter time. Which present target groups should be considered to increase the demand? Education tourism will be important segment especially in Autumn period. Many school related groups are organized between September to December. Education Tourism promotion has just started in Japanese market from 2016 and this segment has huge potential including teacher’s technical visits. According to the Ministry of Justice, the Departure Ration(*1) of the female segment between the age of 20 and 29 is all time high level at 28.5% in 2016. It is primarily due to the economic stability and improved job availability. Note *1 The share of each generation segment for the total overseas departure Which new target groups should be considered to increase the demand? As mentioned in this report several times, 2019 is 100th anniversary celebrating diplomatic relationship between Japan and Finland. Ad hoc groups celebrating this events should be considered especially in MICE business and international relationship related groups.
Trends and other relevant travel related topics Trends General trend is almost same as before 1. Shifting group traveling to individual traveling. 2. Shifting Sightseeing type of products to experience 3. Security is the first priority in the overseas traveling. 4. Local cuisine and gourmet sampling becomes popular activity New distribution channels, Online channels 1. Ctrip comes to Japanese market !! They announced to step into Japanese market recently. So far they have the products only to short haul destinations and inbound products to Japan, but they will get European destination in the scope in the future. 2. Evolable Asia acquired DeNA Travel and become the 9th biggest travel agent in terms of turnover in Japan after JALPAK. Evolable Asia was inbound agent, but they will expand business are to outbound tourism by this M&A. 3. JTB group reorganization JTB had several subsidiary companies such as JTB World Vacations and local area JTB’s. They reorganized whole JTB group into JTB Corporation. This reorganization means preparation of drastic environmental changing in Japanese travel trade. The contact address, e-mails are changed to new one from April. 4. Rakuten Travel has announced its decision to postpone the new platform launch. Rakuten intended to develop new innovative platform for both domestic and overseas products, but the plan will be delayed without new deadline.
Trends and other relevant travel related topics Competitors’ actions Iceland Iceland has grown to become a emerging competitor to Finland especially in Aurora business. The volume is not so big, there is capacity problem, and tourism is becoming a social problem. But Iceland looks always on the table for the comparison with Finland among travelers. There is not official representative of Visit Iceland, but they are active in press coverage. Norway Sometimes Norway is destination combined with Finland, which is beneficial for us. Nowadays the number of package tour including Hurtigruten has been increasing under the theme of the northern lights. Naturally on bard trip is longer than normal destination stay and Many of them are Norway mono destination tours. Naturally there is no benefit for Finland. France France has been really successful in attracting pent-up demands for people who had been concerned about security and possible terrorism activities.
Trends and other relevant travel related topics Visit Finland looks for the candidates for 100 Best Sauna in Finland ! Visit Finland will launch Sauna campaign in the Japanese market between 2018-2019. Now we are looking for the candidates for 100 Best Saunas in Finland. We expect joint campaign with 100 Best Saunas with the idea of stamp rally among them. If you are interested in this campaign, please contact us.
Japan – Market review data
Japanese overnights in Finland 2017
Year 2017: 238 300 (+11%) Winter (Nov-Apr): 101 400 (+14%) Summer (May-Oct): 137 300 (+10%)
18% 34% 8%
42 % 58 %
2% 1% 3% 1%
1% 1%
1% 1%
2% 1% 2%
1% 1%
2% 1% 3% 82%
72% 58%
Source: Visit Finland Statistics Service Rudolf, Statistics FinlandJapanese overnights in Finland
Lapland
Seasonal overnights in 2017 - 2018 Winter 2017: 24 100 (-7%)
Spring 2017: 5 900 (-11%)
Finland Summer 2017: 1 500 (-13%)
Autumn 2017: 15 900 (+11%)
Winter 2017 (Dec-Feb): 53 800 (+1%)
Winter 2018: 19 800 (-18%)
Spring 2017 (Mar-May): 47 400 (+32%)
Summer 2017 (Jun-Aug): 76 300 (+11%)
Lakeland
Autumn 2017 (Sep-Nov): 61 800 (+8%)
Winter 2017: 1 900 (+15%)
Winter 2018 (Dec-Feb): 51 100 (-5%)
Spring 2017: 1 900 (0%)
Summer 2017: 4 900 (-3%)
Autumn 2017: 3 300 (+31%)
Coast & Archipelago Winter 2018: 2 000 (+4%)
Winter 2017: 1 600 (+15%)
Spring 2017: 1 600 (-6%) Helsinki area
Summer 2017: 4 600 (+1%)
Winter 2017: 26 200 (+7%)
Autumn 2017: 2 300 (+18%)
Spring 2017: 38 000 (+47%)
Winter 2018: 2 400 (+52%)
Summer 2017: 65 300 (+14%)
Autumn 2017: 40 300 (+5%)
Winter 2018: 26 900 (+3%)
Source: Visit Finland Statistics Service Rudolf, Statistics FinlandYou can also read
