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During a recent discussion I had with the ETOA (European Tour Operators Association) about how Europe aims to retain its leading destination position, we talked about Europe’s continued interest in attracting Japanese visitors, alongside those from the likes of the BRICs. Many may ask why, considering Japan has been in the economic doldrums for the past 20 years, facing deflation, low consumer confidence and more recently recovering from the impact of both an earthquake and tsunami.

Given the hype surrounding the potential for Chinese visitors, Europe can be forgiven for being seduced by the promise of their growing number, which will indeed soon dwarf the number of Japanese tourists. However, it would be wise to ensure that traditional international source markets are well catered for, particularly when the average spend of Japanese visitors is expected to rise.

Japan vs China Arrivals ‘000 and their Average Spend US$ in Europe 2012-2017

Japan vs China Arrivals '000 and their Average Spend US$ in Europe 2012-2017

Source: Euromonitor International

Note: Europe includes 14 European countries

A certain je ne sais quoi

The Japan Travel Bureau Foundation (JTB) says that Europe has recovered its popularity as a destination for Japanese travellers, topping the destination popularity league and posting the strongest growth in ‘motivation to return’ scores. France, followed by the UK, is the most popular for future trips in terms of motivation.

During the EuroZone crisis, despite Europe’s economic woes the region succeeded in attracting increased numbers of Japanese visitors. Destinations such as the UK benefited from the Olympic effect in 2012, which helped boost the country’s Japanese arrivals by 10% that year. A slowdown was noted by the JTB in Q4 2013, with the weakening of the yen to blame. However, the outlook for Europe appears positive, with arrivals to key European countries set to rise by 10% and incoming tourist receipts by more than 26% over 2012-2017, according to Euromonitor International.

Flexing capacity

Increased capacity inter-regionally is a textbook way of boosting tourism flows quickly, so with Japan Airlines back on the straight and narrow, increased capacity from European carriers such as Finnair and IAG’s Iberia, combined with the expansion of the Middle Eastern giants, capacity is growing. Increased low-cost carrier activity in Japan and Asia will also contribute to the rise, increasing the short-haul traffic required to feed long-haul routes.

Age and experience win

Europe is particularly popular with experienced leisure visitors from Japan, accounting for 68% of visitors in 2012, with the strongest growth exhibited by the middle-age category (aged 35-49). Europe is clearly a destination that appeals to this age group, with its offer of history, culture, heritage, art and diverse countries to explore.

The over 50s is by far the largest group travelling to Europe, accounting for 47% of visitors. Hiroshi Kurosu, Chief Researcher at Japan Travel Bureau Foundation stated that Europe has done very well in attracting seniors from Japan thanks to the popularity of package tours to visit historic sites. Group travel to Europe accounts for over a third of total outbound travellers. The older age bracket also helps to explain the trend towards relatively high average spend, which is forecast to increase as baby-boomers have the wherewithal to enjoy higher quality services.

Much progress has been made in catering for Japanese tastes, especially those of seniors, with a choice of meals and baths rather than showers and greater flexibility for singles and non-couples all noted by JTB as important. Considering that Japan is the oldest country in the world, with a median age of 52.7 forecast in 2030, it is important that European destinations, hotels, airlines and travel retailers further improve their facilities for seniors, including the Japanese baby-boomer generation.

Japan Outbound Segmentation by Age and Travel Experiences % Volume Share 2012

Japan Outbound Segmentation by Age and Travel Experiences % Volume Share 2012

Source: Japan Travel Bureau Foundation, Euromonitor International

Note: Leisure travel only, may not sum due to rounding

More work to be done

However, Europe is falling short in attracting inexperienced young travellers, with their share of outbound travel shrinking to 13% in 2012, suggesting that new Japanese visitors are on the wane. More could be done to reassure first-time travellers to Europe about the quality of service they can expect to receive in destination with language help and customised services to accommodate Japanese tastes. For young travellers who are not concerned about the rough and tumble of international travel, destinations could try and better understand their tastes/preferences to encourage them to leave the security of Japan, through engaging with them on social media.

The FIT market (free independent travellers) has also been identified as an area in which more work is required from the Japanese outbound trade and European destinations. According to JTB, 80% of Japanese travellers who use Rail Europe fall into this category, so there is an opportunity to explore rail deals for this group.

Next generation Japanese travellers

According to Kuroso, the growth in those aged 35-49 is the most important change in the Japanese market to Europe and represents the next generation of Japanese travellers to Europe. This middle age group, Generation X, will choose FIT and prefer railway trips as well as rent-a-cars. Currently, Generation X group find it easier to travel to Asian destinations than Europe because of time constraints so Europe is not their number one choice. However, this group are more sophisticated travellers with 53% travelling overseas in their 20s, compared to baby boomers (18.1%), so Generation X is more familiar with European food and culture.

With one of the highest internet penetration rates in the world, almost 30% of sales through travel retailers are expected to be booked online by 2017, and with a higher share of 40% in air sales, the Japanese are becoming more confident in booking self-organised trips. Global online travel agencies such as Expedia, Booking.com and Agoda are slowly increasing their share in Japan’s travel retail market. The JTB’s partnership with AAE Travel Pte (a joint venture between Air Asia and Expedia) will also enable the JTB to access 150,000 hotels worldwide which are offered through Expedia.

There is plenty of scope for European destinations to work more closely with travel retailers to ensure Europe remains front of mind for long-haul Japanese tourists, not only seniors but also up-and-coming segments like Generations X and Y.

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