Terrie's Take 836 (Tourism Edition) -- Government Attitude to Inbound Tourism Changes

Mon Feb 1 09:22:03 JST 2016

* * * * * * * * TERRIE'S (TOURISM) TAKE - BY TERRIE LLOYD * * * * * *
A bi-weekly focused look at the tourism sector in Japan, by Terrie 
Lloyd, a long-term technology and media entrepreneur living in Japan.
(http://www.terrielloyd.com)
Tourism Sector Edition Sunday, Jan 31, 2016, Issue No. 836
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+++ Government Attitude to Inbound Tourism Changes

Last Thursday was a beautiful if chilly day across most of Japan. I was 
in Nagoya for the day, attending the first panel meeting for the 
Ministry of Land, Infrastructure, Transport, and Tourism (MLIT, parent 
of the Japan Tourism Agency - JTA) for their 2016 Shoryudo project. The 
Shoryudo (so-called "Rising Dragon Road") is a collaborative effort by 
the nine prefectures of Shizuoka, Aichi, Gifu, Nagano, Mie, Shiga, 
Fukui, Ishikawa, and Toyama, to develop their rural destinations for 
foreign tourists.

While I'm not big on spending time with government planners, this 
project is interesting because it focuses on food as a tourist 
attraction, pairing award-winning sakes from the region's many breweries 
with equally delicious food specialties. By focusing on food I believe 
the government guys are right on the mark, since polls show that the one 
thing most (70.1% according to the JTA's massive quarterly survey) 
tourists want to do before coming to Japan is to try authentic Japanese 
food. Shopping, which is second on the list, only comes in at 53.6%.

Further, especially for Asian tourists, who are most likely to be 
repeaters and thus are probably most desirable travelers from a 
commercial point of view, food significantly exceeds their expectations. 
Take South Koreans and Chinese travelers, for example, who before coming 
to Japan scored around 60%-63% wanting to try food as an activity, 
neck-and-neck with shopping. Yet going home, 94%-96% of them felt that 
the food was a memorable experience (versus shopping at 78% for Koreans 
and 92% for Chinese). So food is a big drawing card and the Shoryudo 
folks are trying to leverage that to have Asian repeaters venture 
further from their comfort zone of the "golden triangle" 
(Tokyo-Osaka-Kyoto).

Japan's bureaucrats have always had a deep involvement with inbound 
tourism, starting (in recent times) with copious post WWII rules and 
regulations about who could guide foreign tourists around and who got to 
gate-keep the sector. That built up a group of vested interests that 
strangled Japan's inbound travel for many years. Then, because of the 
low growth, the government never took inbound travel seriously and so in 
2012 in Terrie's Take 677 (http://bit.ly/1P6NxSg) I lamented the fact 
that Japan was spending just 50% of what the Swiss do for inbound travel 
promotion. How little did we all realize that just a year later, the 
falling yen and relaxation of the visa rules would unleash a flood of 
new visitors.

Now central government is starting to get a clue. It became clear in 
mid-December 2015 that inbound tourism was headed for a blow-out year, 
in fact 19.73m visitors were finally tallied for the year, and the 
bureaucrats have realized that they have a new golden goose in their 
hands. As a result, they have since announced an increase of the 
nation's tourism budget by more than double that of 2014 to JPY20bn. 
This sudden surge of cash will apparently be spent on everything from 
free WiFi nationwide in public facilities, changing squat toilets to 
western ones at ryokan hotels, and developing more cultural assets and 
specialty products and services, to, of course, promotion and research.

[Continued below...]

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Tourism is really starting to take a front seat in Japanese public 
discourse because it's one of the few bright spots on an otherwise dark 
horizon. Last year's surge of visitors spent a record ¥3.48trn on 
shopping and services, up 71.5% from 2014. By our reckoning, this is 
amount is approximately 0.64% of the nation's GDP as a direct impact, 
and if you take into account all the related effects (tourist-related 
infrastructure and employment), probably the economic impact is more 
like 1.2%-1.5% of GDP. We got this number by comparing ratios of direct 
vs. indirect economic impact for the domestic tourism sector (for which 
there are stats). In one Nikkei report, the commentators were saying 
that the sector is now as big as the nation's auto parts sector. If 
that's true, and this sector may yet grow another 50%, then inbound 
tourism is going to become a lot more important to Kasumigaseki.

 From what I can see, what now worries the bureaucrats are the following 
points:
* How to move overall tourist spending (i.e., travel and accommodation) 
back into Japanese hands, since such a large portion is swallowed up by 
foreign or foreign-owned firms who have better marketing overseas and 
can "lock in" the tourists before they ever get here.
* How to get tourists to start traveling to economically depressed parts 
of the country and help pump more cash into local coffers.
* How to keep the whole thing snowballing and see if the 2020 target 
can't hit 30m inbound travelers.
* How not to lose control and in particular not have any really bad 
international incidents that could tarnish Japan's image.

The big realization by government entities over the last year has been 
that Japanese travel-related firms are not very good at marketing, and 
that the world is a big place that readily soaks up the budgets of the 
clueless. Therefore, if the government is to help its corporate citizens 
reclaim some market share, they not only have to understand what makes 
foreign tourists tick but also they need to create a broader range of 
attractive destinations so that more foreigners repeat travel and move 
away from the main centers (where the foreign firms are located) to 
spread the money around.

So for the first time that I can remember, the government is now 
starting to talk about "gaijin mesen" (foreigner viewpoint) and is busy 
recruiting local foreigners in the travel sector (including your's 
truly) to help provide input as they lay down plans and budgets for the 
next 3-5 years. Over the last 3 years I've sat on 5 different central 
government and regional government panels where the central issue has 
been to identify what foreigners could possibly want to do in each 
place. Usually it boils down to a mix of the obvious and the 
inspirational. "Inspiration" of course being different depending on 
which culture and socio-economic segment you are trying to motivate. 
Segmentation is something difficult for bureaucrats to understand.

One of the best panels I've sat on was one several years ago for the 
JTA, where we were focusing on the messaging for a large web video 
project (150 videos covering the whole country). The panel, which 
consisted of 5 foreigners of different nationalities (all a lot smarter 
and experienced than me), found that probably the best "asset" Japan 
wasn't the temples, mountains, or spotless cities, but rather, the 
people. While this is but one example, I feel this was a very 
fundamental mind shift for the bureaucrats involved, because the panel 
was challenging them to start investing in the guy running pottery 
classes, rather than widening the road that would get tourists to the 
location.

It's going to be interesting to see just where Kasumigaseki bureaucrats 
will take their involvement in tourism. No doubt the change will be long 
and slow in coming, but already I see in JTA advertising that people do 
indeed now feature more prominently in overseas messaging, and that more 
foreigners are being co-opted into helping craft that message.

...The information janitors/

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