Terrie's Take 863 (Tourism Edition) -- Dabbling in the Medical Inbound Tourism Sector

Terrie's Take terrie at mailman.japaninc.com
Mon Sep 5 08:40:00 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.

Tourism Sector Edition Sunday, Sep 04, 2016, Issue No. 863

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+++ Dabbling in the Medical Inbound Tourism Sector

Over the last few weeks, Japan Travel has been approached by many 
Japanese companies who are finally waking up to the fact that inbound 
tourists could make them some money. As usual with Japanese businesses 
it takes a while for a new trend to register then suddenly you get a 
herd instinct effect, where everyone gets the same message at the same 
time. Is this a function of the media? Possibly, since they are full of 
inbound articles every day. But more likely it's a function of the 
annual fiscal cycle.

By this we mean that 2014 was the first fiscal year that Japan woke up 
to the idea that it would be hosting the 2020 Olympics, and the 
unfolding tourism boom become tangible. Then 2015 was the fiscal year 
that many larger B2C companies started appointing managers to focus on 
inbound tourists. Next, the current year of fiscal 2016 is the year that 
those managers have received some exploratory budget and now they are 
trying different avenues and opportunities. Following that, 2017 will be 
the year that competition and the ad spend will start to increase.

About a year or so behind the B2C companies are the B2B2C companies, who 
are following a similar schedule, and then a further year or so behind 
them are the pure  B2B companies - who will try to sell the other two 
with better/cheaper systems. So a whole ecosystem is starting to spring 
up around inbound tourism. This means lots of buzz, lots of meetings, 
and chances to forge early alliances and customer relationships.

As a good example, about four weeks ago we were approached by a B2B2C 
Systems Integration company that wants to get into the medical tourism 
market. They support medical devices and are now trying to connect that 
piece of business with the inbound tourism phenomenon. While this may 
seem a bit of a stretch, the opportunities in the inbound medical 
tourism market are actually very compelling, and I'm sure their 
competitors won't be far behind.

To make the leap between the sectors, the company has to firstly 
reinvent part of their business to deal with individuals versus 
businesses, then secondly they need to do a Proof of Concept (POC) to 
get long-term Board buy in (and investment). So to get that POC kicked 
off, the Manager selected to be in charge of Inbound strategy started 
last year to lay the foundations of the new business he is conceiving by 
busily visiting likely collaborators. This year, he is working on the 
other side of the equation, sourcing suppliers like us.

[Continued below...]

------------ Cycling Tours Trial Run in 2016 --------------

In a follow up to our ad in TT861 last month, we are calling on any 
readers who would like to participate in our special discounted "guinea 
pig" cycling tours to contact us with expressions of interest. We have 
decided to change the departure dates and base them on demand, although 
October is still a likely candidate for one or both.

Tour One: This 6-day, 5-night tour by road bike takes you from Hiroshima 
to Shikoku via the Shimanamikaido bridges, then back to Hiroshima via 
ferry and backroads. Highlights of the tour will be the bridges, which 
are spectacular, quaint fishing villages on each of the islands, low 
traffic and great road surfaces, and of course lots of coastal scenery. 
Japan Travel can assist with transfers to get to Hiroshima. Group size 
will be 5-15, and the fitness level needed is "medium", which for us 
means that you ride less than 100km a week normally and can do about 
60km-80km per day of sustained flat country riding or 40km-60km per day 
of medium-level (10% grades or less) hill climbing. Hotels will be 
3-star and minshuku. Price will be approximately JPY150,000 plus airfares.

Tour Two: This 5-day, 4-night tour by road bike takes you from Nikko in 
Tochigi to Inawashiroko in Fukushima, via countryside areas south of 
Aizu Wakamatsu, Ouchijuku and Lake Tenei. Highlights of the tour will be 
the turning leaves, country backroads, spectacular coastal riding around 
Inawashiro Lake, and onsen. Japan Travel can assist with transfers to 
get to Nikko. Group size will be 5-15, and the fitness level needed is 
medium-to-difficult, meaning you ride less than 100km a week normally 
and can do about 80km-100km per day of sustained flat country riding or 
50km-70km per day of medium-level (10% grades or less) hill climbing. 
Hotels will be 3-star and minshuku. Price will be approximately JPY135,000.

Special Note: A requirement of both trial tours is that you bring your 
own bike (easily done since most airlines offer sports equipment luggage 
discounts), and the group will not be using a support car. Otherwise the 
itinerary and scenery will be much the same as the commercial version 
next year. Minimum number of riders will be 5. A decision to go ahead 
with either tour will be made mid-September.

If you are interested in joining either group, please contact us at: 
tours at japantravel.com.

As mentioned, the SI company's plan is typically Japanese in that they 
are creating a consortium of interested parties. This is complicated, 
and involves lots of face-to-face meetings, but doing so has ensured 
that they have trust-relationships well in place long before their 
competitors do. The consortium will involve hospitals to provide the 
base services, local authorities who want to promote medical tourism to 
fund the POC, and also travel agents to create and sell value-added 
packages - and that's where we come in.

Their target, which is not hard to imagine, is mostly Chinese medical 
tourists who don't trust their own medical system. Our role is to 
provide some "value-add" so that customers are not just comparing 
hospital fees - namely, we will be tasked with developing tourism 
packages located in the vicinity of the hospital, for the patients and 
any accompanying relatives. I imagine these packages will include food, 
special transport (for invalids), and order-in entertainment. We'll have 
to create some of these from scratch, with English and Chinese support, 
which will be interesting.

I believe that the inbound medical tourism business will expand in the 
future to include people looking for surgery, but right now most of the 
action seems to be high-level exhaustive medical check-outs, otherwise 
known as "Ningen Doku". I have heard a number of stories from around the 
country of wealthy Chinese coming in with their whole family and paying 
for a full check up taking around 3 days. These checkups are incredibly 
complete and can cost between JPY400K to JPY1.2MM per person each, so 
they are profitable for the hospitals. Then of course there is all the 
traveling and spending that happens in association with each visit. An 
important point to note is that Japan's regional hospitals are almost 
uniformly good at doing these health check regimes, and so visitors can 
go to picturesque places you normally wouldn't associate with medical 
tourism - like Asahikawa, Hokkaido (I heard JPY900K is the going rate 
there), for example.

So will medical tourism grow to be a big business? That's a good 
question. There are supposed to be about 1.3m US dollar millionaires in 
China now and that is expected to hit 2.3m by 2020. Not only do many of 
these people not trust their own medical system, in addition if they are 
diagnosed with something they'd rather it didn't reach public ears and 
damage their stock prices. Then of course there are actual follow up 
surgeries and other treatments needed. Given that Japan is only 1.5-2.5 
hours away for most of these people, and given that gourmet and 
sightseeing side trips are easily bundled with blood tests and MRIs 
(which are both are said to be cheaper in Japan than Shanghai for the 
same professional level), then we imagine such trips here will soar. 
That said, visas and political climate will be the modifiers.

 From a numbers perspective, we imagine that over the next 3-5 years up 
to 1% (my guess) of wealthy Chinese could be motivated to come to Tokyo 
for checks and eventually operations. There are about 7,474 general 
hospitals in Japan, and so broken down, this means an average 174 
patients per hospital spending about JPY70m (JPY400K each), or a 
national Ningen Doku income of JPY520bn in total - so these are not 
numbers to be sneezed over.

That said, the law of economics will also quickly come into play: i.e., 
where there is demand, there will be supply, and where there is 
excessive supply, there will be price drops. So I expect then that the 
inbound medical tourism market, after a strong increase initially, will 
run into the same issues that the other tourism segments, such as 
cosmetics, have fallen into over the last 3 years, and that even as 
overall numbers grow there will be a downwards push on value. But 
remember, given that China's millionaire population will almost double 
in the next four years, and that there are 100 times more upper-middle 
class consumers who can afford these services, the potential is really 
quite huge.

Yeah, so this is an interesting prospect for us, and just another 
reminder that the Japanese inbound travel market is rich with 
opportunity and still many spaces to be a first mover in.

...The information janitors/


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For inquiries, contact terrie at lincmedia.co.jp

---------------- ICA Event - September 9th ----------------

Title: "Tokyo Bay Cruise ICA Summer Networking"
Details: Complete event details at 
Venue: Tokyo Takeshiba Terminal http://www.nouryousen.jp/cruise.html

Date: September 9th (Friday)
Cost*: ¥3,000 ICA members; ¥4,000 non-members. Special offer on the 
night. Join the ICA for ¥5,000, a 50% discount, and you will be admitted 
at the members rate! Note: You must be at Tokyo Bay - Takeshiba Terminal 
by 6:35pm as the ship sets sail at 7:00pm sharp. Meeting point is at the 
Big Ship Mast at the front and if on arrival you are unable to find this 
location then please call 080-4169-9660 ASAP.

RSVP: Tickets will be limited and you must register with the ICA by 
September 2nd by 5pm.

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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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