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Asahi on luxury hotel price wars

This article from yesterday’s Asahi comes straight out of the Told You So Department: Ritzy hotels caught up in cutthroat competition.

The Asahi article opens with this:

Luxury hotels are slashing rates amid the economic slump and appreciation of the yen, a strategy that could fill vacant rooms in the short term, but could have devastating longer-term effects.

Many of these hotels opened recently in hopes of attracting an influx of foreign travelers. But when demand failed to reach expectations, the hotels started cutting prices. Now, some hotels are offering rooms at half the normal rates.

Such a situation is bad for brand image. BizCast Japan has pointed out a few times that overcapacity in Tokyo’s luxury hotel market was bound to have negative consequences. Back in February 2008 some time was devoted to wondering what the motivations behind building such hotels could be when Japan fails to draw as many tourists as Singapore, and that Japanese government attempts to draw in more tourists have seen tepid results at best. Even earlier, in May 2007, curency exchange risks and other factors were discussed in a segment looking at Japan’s attempt to draw more tourists. At that time, a plan to build a foreign financial district was being discussed (and the Yomiuri said it was real). A little over two years on, and nothing more has been heard about that.

The fact that the media is already reporting price cuts and damage to brand images is worrying. The big question now is whether downward pressure on hotel bookings will continue long enough to see a major player exit the market. Most of them have deep pockets, and deeper pride, so even a single exit from the Japanese luxury hotel market would represent a huge blow to the industry’s image.

What can the average consumer take from this? Knowledge that the full rates were way overpriced to begin with.

Government to encourage workers to take more paid leave?

Over 50% of paid vacation allocated to Japanese workers goes unused each year, and the government is currently looking at way to encourage more workers to take paid leave as part of an effort to increase domestic travel and tourism. According to today’s Nikkei, the government is examining a host of measures that could reduce overcrowding at peak travel times and create new three day weekends.

Fixing holidays so that workers have more three day weekends makes good sense, and could certainly make it easier - though not necessarily more affordable - for workers to travel domestically. The government is also considering staggering summer breaks at schools in order to reduce overcrowding.

However, the campaign to encourage workers to take more paid leave is the most interesting. Apparently, the government has discussed changing accounting regulations to require firms to book reserve provisions for unused holidays as debt.

Would this work? The government estimates that if workers took their full allotment of paid days off that about 1.5 million jobs would be created and about 12 trillion yen in revenue could be generated. Of course, these figures assume that workers will actually travel - and not to Korea - on their extra paid days off and newly found three day weekends. The Nikkei article gives no detail behind the numbers, but they would be good to see.

Overseas visitors to Japan down 18.4% in January, for sixth straight month of decline

Although they didn’t publish the figures on their English-language website, the Japan National Tourism Organization announced on Wednesday that the number of overseas travelers visiting Japan in January fell 18.4% against a year ago to 581,000. This is the third consecutive month of double-digit decline, and the sixth consecutive month of overall decline.

At the same time, the number of Japanese heading overseas fell 12.9% against a year ago to 1,179,000. This is the 21st consecutive month in which the number of Japanese traveling overseas has fallen.

In terms of foreign visitors to Japan, South Korea remains the leader, with 129,600 visitors in January. Due to the rise in the value of the yen, however, this figure was down 52.3% from a year ago. Other nations with strong percentage drops in the number of visitors to Japan were Germany (6,500 visitors, down 21.6%), France (8,200 visitors, down 12.7%), the US (47,300 visitors, down 12.7%) and the UK (13,600 visitors, down 10.5%). Read more

A missed opportunity: The new Tourism Agency, NPB and the Asia Series

The Japan Tourism Agency was formally established on October 1 of this year. Under the “Inbound Initiative” section of the new agency’s website, the goals of having 10 million foreign visitors come to Japan in 2010 and attracting more international conferences are listed.

This post is not meant to get too deep into the problems facing the Tourism Agency - the fact that the yen was strengthening just as it was established is sure to be a thorn in the side of anyone trying to attract international travelers to Japan. Rather, we’re simply going to quickly look at one event from this past week - the Asia Series. Read more

BusinessWeek on the low numbers of Japanese headed to Beijing Olympics

BusinessWeek correspondent Hiroko Tashiro has a new piece on why Japanese tourists are not heading to the Beijing Olympics in droves. Tashiro makes the point that negative media coverage of China has been the norm over the past year, especially following the poisoned gyoza scandal. Of course, the manner in which the protests in Tibet and the Olympic flame relay were dealt with also weigh in as factors.

But, we have to expect there to be some mismanagement on the business end as well. Tashiro gives an interesting, though brief, look into how the ticket situation has been bungled by the combination of the IOC, JOC and Japanese travel agencies. Here’s one illustration:

In the case of judo, for instance, [ANA Sales] has 50 tickets for the preliminary rounds but 10 for the finals. “You can’t tell a customer to watch only the early rounds and then go back to the hotel to see the finals,” says Sawaki. “It’s a hard sell.”

One factor not mentioned in the article, however, is that overseas travel in general (not just to China) is down this year. This points to economic troubles amongst those who would usually be saving up to make such a special trip. Higher travel prices and stagnant wages are taking their toll as overseas trips are being put off. Domestic travel destinations may benefit as a result, but electronics firms had probably counted on selling a lot more digital cameras to people heading off to the Olympics.

Most likely there is a balance of factors. China’s image has taken a battering in the Japanese media and people have less disposable income. Perhaps other residents figure they just might be able to wait until 2016 to see the games in Tokyo, as the city is now offering what Reuters calls a “blueprint” for large cities planning to host the Olympics in the 21st century.

Record number of foreign tourists visit Japan in January-June 2008 period

In 2007, 8.35 million foreign tourists visited Japan. According to data released today by the Japan National Tourist Organization, the first half of 2008 saw about 4.33 million foreign tourists enter the country, which was a 10% gain on 2007 figures.

The Japanese government has very clearly stated its goal to continue seeing an increase in the number of tourists coming to Japan from foreign shores. As we covered previously, the government has set targets of 10 million visitors by 2010 and 20 million by 2020.

In terms of numbers, visitors from South Korea made up the largest group, with 1.32 million visiting Japan from January to June That figure was up 8.1% on the year. The largest percentage rise was seen from Hong Kong, which sent an increase of 36.7% more travelers, to hit 267,000. Read more

Japan looking for 20 million foreign tourists annually by 2020

A very short piece in Friday’s Nikkei tells us that the Japanese government’s tourism promotion panel has set a goal of having 20 million foreign tourists visit Japan each year by 2020. In order to explore potential methods for meeting this goal, the panel will set up a working group by the end of July.

The panel’s previously stated goal of having 10 million tourists visit Japan each year by 2010 is still posted on their website. In 2007, 8.35 million tourists visit Japan. The jump to 20 million would be a 140% increase. There are also supposed to be 60,000 new landing slots opening up for international flights at Narita and Haneda airports over the coming few years. Might more new landing slots, and perhaps runways, be on the way?

The Nikkei’s piece ends with this short paragraph:

One idea likely to be considered is making traffic signs and displays at tourist sites available in several languages, as well as employing more multilingual tour guides.

Not exactly revolutionary. Hopefully the panel itself will have some ideas better than the low bar being set here.

Japan’s most popular spot for foreign tourists is…

Quick - what is Japan’s most popular spot for foreign tourists? I have to admit being slightly surprised by the results of this survey by the Japan National Tourist Agency. The first ideas that came into my head were the Imperial Palace or Asakusa, but neither one of those appeared in the top five. Akihabara? Nope.

Apparently, the most popular spot for foreign tourists in Japan is Shinjuku, which held the top spot for the third year running. It was followed by Osaka, Kyoto, Ginza and Shibuya. It’s a bit odd that three of the top five are neighborhoods in Tokyo, while two are whole cities, but this could reflect the answers given more than anything else.

Perhaps Shinjuku wins by default, with so many international hotels. The JNTO also cited Kabukicho as a popular tourist spot, though that’s always on the list of places that natives often tell people to avoid. According to the agency, Kyushu was popular with tourists from South Korea, which makes geographic sense. At the same time, tourists from China mentioned Mt Fuji, Osaka and Kyoto as places they visited or planned to visit. American and British tourists noted Nara, Kamakura and Hiroshima as places they intended to check out.

On a side note, for those planning a visit to Japan next month, it looks like the end of the month will be high time for hanami, or cherry blossom viewing. The JNTO has a page devoted to forecasting the blossoming of the trees, and hopefully this year’s prediction will be more accurate than the debacle we saw last year.

Nikkei: Japan at less than 10% of Global GDP for first time since 1982

That headline is only the beginning of the bad news in Thursday’s edition of the Nikkei, though it may be indicative of what 2008 has in store for the economy. Essentially, the Nikkei is reporting that in 2006, Japan’s share of global GDP stood at 9.1 percent, which is the first time in 26 years that Japan as accounted for less than 10 percent of global GDP. According to revised figures published Wednesday by the Cabinet Office, Japan’s GDP grew 2.4% in real terms, but fell 4% in nominal terms in 2006. The global economy grew at about an 8% pace in that year.

In another story, we learn that Japan’s IPO market is shrinking, and the blame is placed on…you guessed it: A lack of auditors and stricter regulations. As the Nikkei put it:

Before listing on the Mothers market [for startups] of the Tokyo Stock Exchange earlier this year, a manufacturer asked about 200 business partners to submit reports confirming that it has “no relations whatsoever with crime syndicates and other antisocial forces.”

The Nikkei also points out that the Tokyo Stock Exchange currently has no way to verify the veracity of a given firm’s claim to have no ties to “antisocial forces.”

Then, we see that according to a Nikkei survey, the percentage of CEOs who feel that Japan’s economy is expanding has fallen from 79% in October to 64% in December. 96% of the 134 CEOs surveyed said that the fall in housing starts is hurting the economy.

Finally, two stories we haven’t seen in English yet:

1) In fiscal 2006, Japan’s personal savings rate fell to 3.2 percent of income, and now stands at an historical low. The Cabinet Office asserts that wages increased 1.8% that year. Japan’s savings level peaked at 11.4% of income back in fiscal 1997.

2) The Japan Travel Board announced that in 2007, the number of Japanese traveling overseas decreased by 1.1 percent, showing the first fall in 4 years. This is something we will probably have to get back to, but what stands out to us in the report is JTB saying that fears over food safety in China have put negative pressure on the number of people willing to travel there.

However, there was no word on how fears over food safety have affected tourism to Hokkaido…

The Last Resort Travel Cafe?

According to their website, a firm named “Last Resort”, which offers study and work abroad programs, has teamed up with another company named Travel Cafe to open a “Last Resort Travel Cafe” in Tokyo’s Kamedo Station.

They look like they know what they’re doing, but the name “Last Resort” strikes me as odd for a firm that helps people seek work and study opportunities abroad. Is the Bank of Japan their shareholder of last resort?

The best part of Travel Cafe’s site is the picture of Juan Valdez. He sure is getting younger. Has he been rebranded?

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