Japan Travel Trade Weekly News
Keeping you abreast of what's going on in the
Japanese travel and tourism industries.
News consolidated by Travel Vision, Inc. updated every week.
JTB forecasts 17.35 Million Outbound Travelers for 2008, Nearly Same
As 2007
JTB Corp. released an outlook of travel market for 2008, in which
it forecasts 17.35 million outbound travelers, up 0.1 percent from
2007, 316.1 million domestic travelers, up 0.5 percent and a positive
growth for the first time in five years, and 9 million inbound
travelers, up 8.4 percent. The forecast is based on its estimation
for 2007, that is, 17.33 million outbound travelers, down 1.1 percent
from 2006, 314.54 domestic travelers, down 0.2 percent, and 8.3
million inbound travelers, up 13.2 percent.
A negative growth of leisure travel caused by sluggish demand
from youth and local markets, high level of fuel surcharge, and weak
tone of the yen rate throughout the year - these are the factors to
which JTB ascribes the stale overseas travel market in 2007. It
predicts further deterioration of travel sentiment for the first half
of this year because of another hike of oil surcharge scheduled in
January.
However, it is generally assumed that the market has matured to a
degree and there will be no dramatic ups and downs seen for the time
being, continues the JTB spokesman. Since many travelers become
experienced in overseas travel more or less, they feel compelled in
no way to go abroad hurriedly; consequently, harmful rumors as
happened to China could trigger a downswing in the number of
visitors, while they would soon regain momentum once the bad images
are wiped out by, for instance, the success of the Beijing Olympic
Games 2008. In addition, some stimulating measures are being
conceived by Japan Association of Travel Agents (JATA) toward the
goal of 20 million outbound travelers.
So JTB has a view that outbound traveler will make a comeback
after the Beijing Olympic, possibly from September. Best-selling
destinations are supposed to be beach resorts in Asia like Bali,
Macau, and other Asian destinations.
Japanese New Year Vacation Traffic Brings JAL Nearly 80% Load Factor
and ANA Record-High 142,000 Passengers
During the Japanese New Year vacation period from December 28 to
January 6, 2008, the aggregated number of seats supplied by JAL and
ANA declined 2.3% to 731,446 and the total number of passengers
carried by both airlines fell 1.3% to 558,731 compared to the same
vacation period a year earlier. By airline groups, JAL seat supply
was down 4.6% to 536,018 seats and the number of passengers carried
was also down 3.3% to 416,709, while ANA seat supply was up 4.8% to
195,428 and the number of passengers was also up 5.1% to 142,022.
The JAL Group carried more passengers on routes that include
Transpacific, Europe, China and Korea, registering a higher seat load
factor year-on-year. On Hawaii, Southeast Asia, Oceania and Guam
routes, however, the number of passengers declined due to the
capacity reduction, although the seat load factor rose compared to
the prior-year period. The seat load factor of the whole network
averaged 77.7%, but Hawaii, Transpacific, Oceania, Guam and Korea
routes showed a seat load factor exceeding 85%.
The Group operated 35 extra flights to Honolulu, 4 to Guam, 2 to
Transpacific and 1 to Hong Kong, totaling 42 extra flights, 3 less
flights from the year-ago period. Also operated by the JAL Group were
charter flights, 10 flights each to Palau and Honolulu, 8 to Saipan
and 6 each to Fairbanks, Alaska and Denpasar in Indonesia. Other
destinations such as Siem Reap in Cambodia, Majuro in Republic of the
Marshall Islands, Macau, Alice Springs and Darwin in Australia were
also served by charter flights which totaled 54 with an increase of 2
flights from the previous year.
The ANA Group, on the other-hand, carried 57,537 passengers to
China, up 9.6% and 33,403 to Asia, up 10.3%. The transpacific route
registered an increase of 5.1% to 19,532, followed by the Europe
route with an increase of 3.7% to 15,247. Overall, the ANA Group
achieved robust traffic results, hitting a record high in terms of
passenger numbers, exceeding the last year's winter vacation period.
2 flights operated from KIX to Guam were the only extra flights by
the ANA Group.
H.I.S. Posts Declined Profit despite Record-high Revenue, Looks into
Store-scrapping as Transitional Measure
H.I.S. Co. posted record-high revenue in the fiscal year ended in
October 2007 and yet operating profit, pretax profit, and net profit
fell from the previous year. It booked declined profits for the first
time since 2003 when SARS outbreak threw the travel market into
turmoil.
Revenue grew 10.1 percent to 362,084 million yen but cost of
sales went up 10.9 percent to 310,647 million yen with defrayment of
oil surcharge. Selling, general and administrative expenses (SGA)
also went up 8.6 percent to 45,074 million yen. Consequently,
operating profit slipped 12.1 percent to 6,362 million yen, pretax
profit sank 7.1 percent to 7,510 million yen, and net profit declined
7.1 percent to 4,521 million yen. Personnel cost, rent, and
advertisement constitutes about 80 percent of SGA, and an increase of
advertising expenses was most remarkable with 15 percent growth at
5,800 million yen.
Yoshio Suzuki, president of H.I.S., takes the results seriously.
He said, "Irrespective of uncertainties of the market, we continued
to make efforts in our own way sticking to our established policy
but, at the end of the day, we were embroiled in a stiff competition
under the influence of fuel surcharge problem. We will strive to
attain a two-digit growth for the new fiscal year, both in revenue
and profit."
His goal for the midterm ending in April 2008 is 3,300 million
yen in operating profit, up 12.2 percent, 3,800 million yen in pretax
profit, up 13.5 percent, and 2,300 million yen in net profit, up 13.3
percent, on revenue of 187,000 million yen, up 10.9 percent, and for
the full year ending in October 2008, 8,100 million yen in operating
profit, up 27.3 percent, 9,100 million yen in pretax profit, up 21.2
percent, and 5,400 million yen in net profit, up 19.4 percent, on
revenue of 410,000 million yen, up 13.2 percent.
Asked about the means of achieving these goals, Mr. Suzuki said,
"Old practices do not work any more. Since a sustainable growth is no
longer a matter of course, we reexamine performance of our stores and
must scrap some of them if their profitability is questioned. Online
sales and store sales are definitely the platform of our business.
While our package tour sales have grown significantly, I suspect our
arrangement capability for FIT customers, a source of our strength,
is failing. We must shore up face-to- face sales more than ever." He
also suggested the company was going to gear up corporate and group
business.
With regard to the swollen advertising expenses, the company
intensified advertising ahead of the summer season in fear of slow
sales, but Mr. Suzuki concedes it was unsuccessful because
anticipated profit did not follow. He said in the meantime, "Our
basic advertising policy remains unshaken and is carried over to the
new fiscal year. What is really needed is we have to devise an
effective way to gain profit out of the publicity."
In the number of customers handled during the year by
destination, North America lost 7.4 percent and Europe did 1.4
percent, so these are the areas the company wants to promote
specially in this term. China and Asia were in good performance on
the contrary. Business to China was mostly related with air ticket
sales for business travelers, so it was little affected by harmful
rumors. Details of sales and the number of customers are listed
below.
* Sales Achieved by H.I.S. in FY 2007 by Destination (in million yen)
(Destination: revenue in FY 2007 | revenue in FY 2006 | % change)
North America: 40,244 | 38,914 | +3.4%
Europe: 55,907 | 53,603 | +4.3%
Asia: 121,238 | 106,151 | +14.2%
Oceania: 15,759 | 14,170 | +11.2%
Hawaii+Guam+Saipan: 53,918 | 48,547 | +11.1%
Others: 12,203 | 10,844 | +12.5%
Total: 299,272 | 272,231 | +9.9%
* Number of Customers Handled by H.I.S. in FY 2007 by Destination
(Destination: customers in FY 2007 | customers in FY 2006 | % change)
North America: 235,611 | 254,486 | -7.4%
Europe: 257,532 | 261,548 | -1.5%
Asia: 1,397,357 | 1,292,037 | +8.2%
Oceania: 93,136 | 92,332 | +0.9%
Hawaii+Guam+Saipan: 418,042 | 413,975 / +1.0%
Others: 53,042 | 46,875 | +13.2%
Total: 2,454,720 | 2,361,253 | +4.0%
NTA's Midterm Business Plan ('08 - '10) Envisions Strong Operation in Core Business and Focus on Growing Markets before Going Public
Nippon Travel Agency (NTA) has drawn up the group's medium-term
business plan for the fiscal year 2008 through 2010. The point to
note in this new scenario is that, despite the time schedule declared
in the current business plan from FY 2003 to FY 2007, initial public
offering of the company's shares is going to be put off until
sometime in FY 2008 or later when the group's revenue and earnings
are expected to be increased.
Akira Kanai, president of NTA, said, "We must grow, capitalizing
on full-line travel business," and cited the following agenda as the
essence of the business plan over the next three years: (1) to focus
on online transactions, strengthen inbound business, promote tie-up
business with other enterprises for specific markets, and shore up
operation for Business Travel Management (BTM), all in a bid to
ensure group's future growth, (2) to achieve sustainable growth in
face-to-face store sales, and joint sales with other companies, both
for domestic and overseas travel, (3) to make the best use of human
resources, especially female workforce, increase awareness of
compliance, and heighten group's power by working closely with member
companies including West Japan Railway Company, and (4) to make
preparation for going public.
In the ongoing five-year business plan from FY 2003 to FY 2007,
the target figures were once revised downward due to the outbreak of
SARS in 2003, but unconsolidated earnings hit the record high in 2005
and 2006 nevertheless and consolidated earnings did the same for
three consecutive years from 2004 to 2006.
In this business plan, makeover of business structure, expansion
of business domain, healthy growth of group companies, and
enhancement of management vitality were the themes to be
accomplished. Mr. Kanai said by way of overall assessment, "We could
make some advances in each task."
However, he expressed dismay at unfulfilled obligation in that
pretax profit for FY 2007 is expected to be equal to the FY 2005
level but fall short of the goal, and that the company incurred an
administrative sanction on improper accounting in handling prepaid
coupons, which is detrimental to the public listing of the shares in
the light of compliance.
NTA desires to go to the Second Section of Tokyo Stock Exchange
(TSE) but the problem is that the company is supposed to book a loss
in the net profit for FY 2007. Mr. Kanai has this to say: "Deficit
itself does not meet formally the TSE's initial listing requirements,
but the negative earnings arise from the change of an accounting rule
in making a special allowance for the coupons. So we are not
necessarily closed out of the possibility of going public now." He
hopes to get his company listed as soon as it is prepared and
fulfills the requirements.
With regard to online travel business, one of the fast-growing
business fields, NTA was among antecessor in the operation but failed
somehow to enjoy the forerunner's benefit. It is eager to attain at
least the same growth as the growth of web market, possibly by making
close coordination with real store operation. It intends to tap into
the Dynamic Package in overseas travel and to sell online a wider
array of free-time domestic package plans; in addition, it will post
as many low-price near-departure tours as possible to solicit
last-minute customers.
In the area of business travel, NTA will step up coordination
with the BTM-oriented group companies including American Express
Nippon Travel Agency, El Orto, and M-Heart Tourist. In promoting BTM
business, a problem remains with these companies because they have to
bear the cost to interface their system with that of client companies
individually.
Mr. Kanai is committed, however, to develop a cutting-edge
solution for business travel in an effort to catch up with the sales
level of 100 billion yen already achieved jointly by JTB Business
Travel Solutions and other JTB group companies.
In consolidating the core business, revitalization of the
existing own stores is a crucial matter. NTA is going to pursue
coordination between online business and store sales as stated above.
In the meantime, it will scrap, during FY 2008, 13 general stores
which belong to either of NTA, Nichiryo Service, Nichiryo OMC, and
Nippon Travel Agency Hokkaido, but will open four new shops-in-shop
instead.
From organizational point of view, Sales & Planning Headquarters
has supervised each regional sales division so far at NTA. As of
February 1, however, Regional Development Office and Specific Market
Promotion Office are to be created inside the Sales & Planning
Headquarters in order to support core business. Meanwhile, BTM Team
and Internet Sales Team will be established as part of Information &
Communication Technology Headquarters to support business in growing
markets.
MLIT to Abolish International PEX Fare Lowest Price Limit; Amendment
to Follow by Mid- or End-January
Ministry of Land, Infrastructure and Transport said in a
statement regarding the current international carrier PEX fares that
it is going to abolish the present restriction ruling that its lowest
price limit be a maximum reduction of 70% of the IATA PEX fares and,
in principle, any carrier PEX fares take effect without any prior
approval.
As early as this coming April, MLIT will make necessary ruling
adjustments in time for revisions of the international airfares
slated for by IATA. MLIT must carry out a procedure to revise the
related rules and regulations, but most probably may do so between
mid- and end-January, during which time airlines are expected to file
fares for approval.
However, the IATA Tariff Conference is still partly going on, and
since a revision of the restriction must reflect the results of the
Conference, the abolishment of the lowest price limit might be
realized only after April.
Establishment of Japan Tourism Board (provisional) Officially
Approved. "Public and private sectors must join forces on the
project," Urges MLIT Minister Fuyushiba.
Tetsuzo Fuyushiba, Minister of Land, Infrastructure and
Transport, held talks preliminarily with Hiroya Masuda, Minister of
International Affairs and Communications to include expenses for an
establishment of a tourism board in the budget framework for FY2008.
Consequently, the establishment was officially approved with an
inaugural date planned October 1, 2008. Details including its staff
complement and organizational structure will be further adjusted,
aiming to introduce the bill at the next ordinary Diet session.
The organization will be staffed with some 100 people in line
with the budget request for 110 positions for FY2008. While the whole
government has been progressively working to reduce the budget,
improve the efficiency and consolidate the organizations, it is
indeed extraordinary that the approval has been granted to an
extra-ministerial bureau like this. It just shows that Japanese
government is determined to represent its intention to recognize the
importance of tourism to our country.
MLIT Minister Fuyushiba said, "MLIT has asked for an
establishment of a tourism board with an aim to set up tourism as a
pillar of Japan's policies, which is indispensable for the growth of
our country in the 21st century." Now that the approval was obtained
thanks to the talks held in advance, he commented, "We can go forward
to systemize cooperation between the government and privates sectors
to realize this goal."
While the whole Cabinet continues to work together to formulate a
basic plan to promote tourism to Japan, Minister Fuyushiba urged, "We
must build an organization that can clearly represent our country as
we see it in other countries." MLIT has meanwhile decided to change
its present English name, by adding "Tourism", to (Ministry of Land,
Infrastructure, Transport and Tourism).
Mamiya, JNTO President, representing the travel industry, voiced
consent with the MLIT decision that "When a tourist board is
established and becomes fully ready to implement Japan as a nation of
tourism both in a comprehensive and systematic manner, it will
further enhance awareness of tourism among our people.
Internationally as well, the cooperation will be our major subject in
future and to this effect, the establishment of a tourism board is
indeed a well-timed move. With the new organization established as a
tourism board, it should become easier for MLIT to coordinate with
ministries and agencies concerned. Tourism is a fast growing
industry, however Japan has a mounting task ahead in attracting
foreign visitors. Capitalizing on this occasion, we anticipate to
boost tourism in Japan."
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