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Inbound tourism leader eyes global growth

Interview - April 23, 2016

One of the world’s largest travel companies, JTB Corp. was ahead of the competition in targeting Japan’s inbound tourism sector a decade ago and encouraging tourists to go beyond its main cities and discover its regional diversity, thereby gaining a wider view of Japan and boosting its local economies and communities. President and CEO of JTB Corp. Hiroyuki Takahashi discusses the new, globally focused business model the company is now looking at and where Japan’s tourism sector is heading.


What do you see as the key elements to sustaining the rapid growth in tourism Japan is experiencing and maintaining it as a tourism center?

Along with the increase in the number of visitors come a number of new challenges that Japan must confront. First of all, I believe strengthening the environment as well as infrastructure is rising as a key issue that needs to be addressed. Although we are already seeing many signs of improvement, things like Wi-Fi availability, multilingual signage around the city, and basic infrastructure need be sorted out. In addition, I believe that it is important to ensure that the appeal of Japan, or the so-called ‘Cool Japan’, is also strengthening too.

We are also facing capacities issues, for example the golden route – between Tokyo through Mt. Fuji, Kyoto and Osaka – is sometimes very saturated, with not enough hotels for the large number of visitors. That is a challenge for us, to ensure that these visitors can be directed properly towards the more local areas from outside Tokyo.

On top of that, I believe that it's also important to promote Japan during the off-season, to ensure that foreign visitors come to Japan around the winter times also, as this is a time when we have more capacity to welcome them.

JTB is taking lots of initiatives in this regard. For example, we are diverting visitors towards the Hokuriku area, where Kanazawa city is located, utilizing the Shinkansen bullet train. We decided to use this area as a key part of our product offering and proposed a different model for visitors. I believe it is possible to divert Tokyo visitors to other parts of Japan, taking advantage of such scheme.

JTB, as a member of the Cool Japan committee, is part of the government tourism initiative. I think one thing we need to be careful about is that we don't impose and don’t force what we believe to be attractive in the country. We need to accept that each foreign visitor expects something different from Japan, and we need to ensure we differentiate our offering towards each of the different markets we work with.


Japan is to hold a number of prestigious events over the coming years including the G7 in a couple of months, and the RWC in 2019 and of course the Olympics & Paralympics in 2020. How do you see such events as opportunities to showcase what Japan has to offer the world?

I believe that with all those large events coming up, there will be a lot of attention and awareness towards Japan in the near future. I'd like to highlight the case of the Hokkaido Toyako Summit. There's a hotel called the Windsor Hotel which became very popular with this event; now it is still extremely popular and difficult to get reservations. Such events as the G7 summit, the Rugby World Cup and the Olympics will lead to an eventual success. They are key factors.

One of JTB’s key goals is to contribute to the growth of inbound tourism to Japan and to tourism as a whole, as well as to ensure that foreign visitors will not just visit Japan for the purpose of gaming or shopping, but also to encourage them to go for touristic tours throughout the country. Promoting this diversity contributes to further increasing inbound tourism and further revitalizing our local economies across the country.

Sports tourism is also a new form of tourism that needs to be introduced in the country – not just viewing, but also engaging as players in sports. It is important to establish an environment that allows you to do this. I also believe that we need to develop and promote a universal form of tourism, to allow all people, old and young, able and disabled, to enjoy visiting Japan. I believe it is important to lay the ground for such an environment to be established.


JTB was founded in 1912; and for over 100 years has been the leader in a very congested industry. Over the years the company has developed a great deal of trust and expertise. It has served both the now burgeoning incoming and outbound tourism markets to become Asia’s no. 1 travel agent, with offices in more than 30 countries and regions worldwide. How is JTB aiming to further consolidate its position as the leading travel agency in Asia and further establish its global ambitions?

The Japanese population is aging; this is true in the Asian society as a whole. The domestic market is on its way to shrinking, and this forecast has prompted us to look at the overseas market for our growth – and this is a central part of JTB’s global strategy. Japanese companies in general are massively globalizing now and moving towards the foreign market, and so is JTB. JTB is switching its operating business model and looking into multi-way business models, where we will assist for example American customers to travel to Europe, or people from China to visit Australia – and not only assist Japanese customers traveling outside Japan and outside visitors to travel to and inside Japan. We call this a 'departing globally and arriving globally' model. This is the kind of business model that we are looking into now.

The main battlefield for us for the time being is Asia. We have been striving to establish a network all across Asia – which is coming close to completion already – and we are now considering how to connect better our network operations to consolidate our business. M&A (mergers and acquisitions) is something we are also very much focused on at the moment, as we think this will help JTB’s global growth and establishment, and help meet our specific objectives in our core markets. Instead of starting from zero, M&A allow you to buy time and take on constant activities. We also have been opening direct storefronts across markets. For example, in Cambodia we have two locations, in the Philippines we opened another one last year, and we have direct storefronts in Thailand and in Indonesia. We have also opened a location in Beijing to cater to Chinese visitors planning to visit Japan. We have a unique initiative, which we call the Samurai project, where we try to hire local talents that conduct sales activities alongside Japanese salesman.


What steps would you take to contribute to the internationalization of the Japanese tourism industry?

One important thing is to continue communicating the unique appeal and experience that Japan is capable of offering as a destination. This is precisely what the Cool Japan initiative aims to communicate: the originality of Japan, which is incredible and ranges from the ”WA” culture, which is a Japanese word for peace, the Japanese style, and the authentic Japanese culture, to the Japanese hospitality, arts, anime culture and manga cartoon culture for instance. Japan has a variety of unique charms that could be further communicated and shared with the outside world. The same can be said for Japan’s regions as well: Japan’s regions boast stunning cultural and touristic attractions that should be better promoted. This is an important point if we want to attract and divert visitors from the central locations to the regional economies and local areas.

The main issue that the Japanese tourism industry faces today is that inbound business hasn’t been established properly in Japan. There is a huge surge in the inbound business in Japan right now, but there is no environment and no sufficient businesses established that can accommodate these growing numbers of tourists. That is because until now the local tourism industry has been mainly focused on outbound tourism. In this regard, JTB is a big exception as, in our over 100-year existence, we have had an inbound business model. Our competitors are not as advanced and have rather weak operations in regards to their inbound business as of now.

Another issue I would like to mention is that Japan welcomed almost 5 million Chinese tourists last year. However most of these Chinese visitors were directed to Japan through Chinese tourism agencies, as very few Japanese tourist agencies were affiliated with the attraction of Chinese tourists. This unfortunately led to minor cases of illegal activities, and therefore I believe this is important to further strengthen our efforts towards establishing a Japanese quality inbound business model.


What focus does JTB place on the further development of its staff?

As far as human resource development is concerned, one of the main problems we are faced with is how to globalize our staff to align with our global growth strategies. There are two ways in which JTB can continue to capture and nurture talent. The first is to hire new employees that we can train; and the second one is to go headhunting. What we have also been doing recently, in the past three years, is to send employees overseas. We have sent already over 200 employees on one-year spans, as an attempt to internationalize our staff and prepare them to work with an increasing number of global tourists. This is something that we are taking very seriously. I believe that it is not possible to nurture global human resources, unless we provide our employees with significant exposure to overseas markets, as well a global workplace and global working environment.


What are some of the initiatives that JTB is directly involved with in regards to social responsibility (CSR), in addition to your efforts to promote some of the devastated areas from the 3/11 disasters?

Our entire business model aims to improve local development and enhance regional economic activities – we are not looking at it from a CSR point of view, but this is really a core part of our business model. In 2006 specifically we transformed our business structure in order to operate closer to our local customer and local operations, and conduct sales activities directly in these areas.

Something that we are working on right now is our Destination Management Company (DMC), to ensure continuous increase of our outbound and inbound customers. Throughout our operations we strive to take care both of outbound as well as inbound tourists in equal importance. I believe that such a focus on inbound tourist and on local communities and local areas is very unique, and is a specificity of JTB. Our competitors are slowly copying this model, but we were definitely the first mover to take on such initiative back in 2006. This is something that the DMC and the government are promoting right now, and we believe that it is definitely a way we are contributing towards the local communities.

On a more CSR perspective, we have been working on a project called "Inspiring Communities and Putting Smiles on People's Faces – Bright Earth Project". It's a project that we have been conducting for the past 30 years already – not just in domestic areas, but throughout our international locations. Under this project we have been conducting a broad number of activities, ranging from garbage cleaning to reforestation and cultural exchanges, for example.


You stated that JTB is aiming at creating a truly global, multi-cultural communication business. What are the key strategies in place when it comes to further developing JTB’s global operations?

Our goal for 2020 is to establish a number one position in the Asian market, and ensure JTB a long-term stable growth foundation within this market. In order to achieve this goal we need to establish a stronger network in Asia, which will allow us to expand our operations much further. In addition to that we need to ensure that our inbound and outbound operations consistently achieve growth. We will also conduct M&A operations if deemed necessary. Our ultimate aspiration as I mentioned is to establish our global DMC or ‘Departing Globally, Arriving Globally’ model worldwide.


What message would you like to highlight to our very broad audience in the US?

With exciting events such as the 2019 Rugby World Cup and the 2020 Tokyo Olympics and Paralympics Games coming up there is a strong motivation for Japan to strengthen and establish itself as a better tourist-centric nation. Unfortunately, one huge obstacle that is hindering us achieving this is the deterioration of the Tohoku region’s reputation due to the March 2011 disaster. In spite of this huge influx of inbound tourist towards Japan, there is still no sign of improvement for this region. I would like not only American tourists but tourists worldwide to take a look at this region by themselves to see that it is not as destroyed as they may perceive, and it still has a lot to offer. I believe we are all able to contribute to the Tohoku area’s redevelopment through tourism, and I hope this is something that we can communicate to the American audience.