As one of Japan’s largest private railway companies, Nishitetsu is intent on bringing tourists to hidden locales like Omuta and Yanagawa
2019 saw overseas arrivals to Japan reach record highs of 31.8 million people, however with the COVID-19 pandemic, this dropped to 250,000, but Japan was still ranked number one in the World Economic Forum’s index as the most suitable tourist destination in the world during that time. The government maintains a target to welcome 60 million visitors annually by the year 2030, and the first half of 2023 has already seen 10 million visitors. As one of the major private railway companies in the country, what makes Japan a prime tourist destination?
The surge in tourist influx can be attributed, in my view, to the depreciation of the Japanese yen (JPY). This has made it more economical for tourists to visit Japan, making the current timing particularly favorable. Situated as an island nation, Japan has cultivated a distinct culture. Historical accounts reveal that during the Edo period, our country isolated itself from external influences, which in turn nurtured a unique cultural identity spanning cuisine and natural landscapes. To outsiders, Japan appears as a land brimming with enigmatic allure. Furthermore, Japan boasts one of the world's highest levels of safety and maintains impeccable cleanliness standards. Over time, Japan has consistently enticed numerous tourists as a splendid holiday destination, with the current attraction magnified by the weakened JPY.
Even though 2019 was a record year, 47% of tourists went to Tokyo while half of the nation’s prefectures saw 1% or less visitors. Last year, the government considered tourism as key to regional development as well as revitalizing local economies that have been withered due to Japan’s demographic decline. What can be done to attract more visitors to regional locations, and how can railway companies like Nishitetsu contribute and promote regional tourism?
The Golden Route traces the Tokaido road from Osaka to Tokyo via Kyoto, drawing substantial foreign visitors due to its advanced and user-friendly transportation systems. Given that a significant number of flights arrive in Tokyo and Osaka from various countries, it is convenient for travellers to center their plans around these cities. This holds true for foreign travel agencies as well.
In 2019, group tours, particularly from China, were prominent, prioritizing cost efficiency. Consequently, many of their itineraries revolved around Tokyo and Osaka, capitalizing on chartered buses and the efficient highway network connecting these locales. Nevertheless, to attract a greater influx of tourists to regions like Kyushu, Hokuriku, or Tohoku, an enhancement of transportation infrastructure catering to foreign visitors is imperative.
Our objective in the Kyushu region is to establish foreigner-friendly transportation systems. This entails multi-language ticket counters and displays. Acknowledging the convenience tourists find in travel pass systems, we are bolstering such options, enabling access to more remote regional destinations. Additionally, we are exploring smartphone applications to facilitate the discovery of rural areas and enable ticket purchases for foreigners. Although a work in progress, this initiative is a focal point as we endeavor to continuously attract more international visitors.
Another facet pertains to Fukuoka Airport, a central hub for Kyushu. This airport receives numerous international flights, particularly from China and other East Asian nations. Our company plays a significant role in its operations. A new terminal is scheduled to open in two years, with the anticipation that heightened air traffic will attract even more international arrivals. It is worth emphasizing the crucial significance of substantial capacity at regional airports for international flights, serving as a pivotal avenue for enticing greater numbers of foreign tourists.
Before the pandemic, most tourists who came to Japan were from China, South Korea, Taiwan, and Hong Kong. They accounted for 70% of Japan’s visitors, and only two countries outside of Asia were placed in the top ten nations who visited Japan: Australia and the United States. Why do you believe this is the case and how important is it to attract visitors from other countries?
The prevalence of tourists from neighbouring East Asian countries, such as China, can be largely attributed to geographical proximity. These nations share a close geographic connection with Japan. From a Western standpoint, Japan is often considered the Far East, thus creating a perception of substantial distance from Western countries. Travellers from the West often discover more proximate and exotic destinations like Bangkok, which align better with their geographic perspective.
Japan has historically held an allure for Asians, owing to its reputation as a secure haven with a rich regional culture. The desire of many Asians to explore Japan has been a longstanding sentiment, contributing to the remarkable tourism success observed in 2019. However, as you noted, the current emphasis lies in diversifying the tourist demographics. The onset of the COVID-19 pandemic served as a pivotal lesson in the necessity of risk mitigation and management strategies beyond dependency on a single country's influx. Geopolitical events like the Ukraine conflict and the evolving Chinese political landscape have led to a decline in Chinese tourist arrivals to Japan. Consequently, the strategic diversification you indicated becomes imperative as a means to mitigate the inherent volatility of the tourism sector. A targeted focus for us revolves around attracting Western tourists. Their extended travel distances often translate into longer stays, amplifying overall expenditures compared to other tourist segments.
Pre-COVID Japan was largely left out of international logistics in favour of regional competitors, namely China. However, anxiety over COVID brought reliability and economic security to the forefront, and the Ukraine war has further highlighted this. Many EU and US entities over-relying on China has highlighred an increased risk, and last year when we interviewed your firm, you described an emerging trend of diversification in Asian trade routes among firms. You also described how Japan was in an interesting position to handle traffic previously handled by China. Can you update us and tell us if this comment still holds true now? What major changes have you witnessed since the beginning of 2022 when it comes to logistics?
Indeed, the perception of China as a logistical risk has become widespread, particularly in the aftermath of the COVID-19 pandemic. I hold the belief that Japan is poised to assume certain logistics roles that were previously occupied by China or South Korea. This assertion remains consistent with the statement I shared during your previous interview with us.
China's historical prominence in logistics can be attributed to its role as the world's largest manufacturing hub, serving as both a production epicenter and a final destination for goods. In contrast, in smaller countries like Singapore have achieved significant logistical significance. Within this framework, it is worth contemplating Japan's potential contributions. While we may not replicate China's model of extensive mass production and consumption, Japan can pivot to serve as a pivotal shipping hub to the global market, particularly through collaborations with Western nations. This prospect extends to air shipments as well, albeit contingent on infrastructural enhancements. I is worth noting that tangible outcomes may not materialize until at least 2030.
We have heard from other interviews that Busan Korea basically acts as one port for all of Korea. It is quite beneficial because everyone knows to go to that one port. If you look at Japan you have Tokyo, Yokohama, Kitakyushu, and Kobe ports. Do you believe that it should be more centralized in Japan, reducing the number of ports to one so that it is clearer and more defined, or do you believe there is an advantage to having these four large ports?
In my personal assessment, Tokyo and Yokohama hold the potential to serve as pivotal transfer points to North America or the southern regions of China. As a global hub, Japan has the opportunity to facilitate seamless connectivity across the entire world. However, for this vision to materialize, it is imperative that Tokyo and Yokohama substantially enhance their infrastructure. Realistically, such expansion is integral to our national strategy.
Nishitetsu is based in Fukuoka on Kyushu Island, and its railway network consists of two main lines. For anyone who comes and uses your network, what areas would you recommend them to visit and why?
In all honesty, I hold a recommendation for every destination within our network. However, if I were to highlight a few specific locales, Dazaifu in Fukuoka immediately comes to mind. Dazaifu Tenmangū is a renowned shrine celebrated throughout Japan, erected on the tomb of the esteemed scholar Sugawara no Michizane. The shrine itself is profoundly captivating, with culturally significant structures adorning its vicinity. The approach to the shrine presents a picturesque journey, lined with assorted tourist shops. This locale offers an immersive encounter with traditional Japanese culture.
Dazaifu Tenmangu shrine
Another exceptional spot I propose is Yanagawa, situated in Kyushu. This charming village offers a distinctive experience, allowing visitors to traverse its streets by small boat. Yanagawa is famous for its exquisite eel dishes, renowned for their exceptional quality. Furthermore, I recommend Ōmuta, particularly appealing to enthusiasts of World Heritage Sites, as it serves as the final stop on the Tenjin Ōmuta Line. Ōmuta has earned recognition as a World Heritage Site due to its historical connection with coal mining.
In our pursuit of eco-tourism, we have introduced a passenger-friendly policy allowing bicycles on our trains. This eco-conscious approach facilitates environmentally friendly travel to diverse destinations. For cycling enthusiasts, I encourage a visit to Kurume, another captivating city in Kyushu. The city boasts a lengthy river perfect for scenic cycling routes. Additionally, on the opposite end of town, a bustling market and local eateries offer a delightful array of regional fruits.
In 2019, Nishitetsu began operations of its sightseeing train ‘The Rail Kitchen Chikugo’, with passengers being supplied food by professional chefs from Fukuoka and ingredients being taken from local regions across your rail network. On top of that, local resources along the lines such as bamboo are used as interiors. Can you tell us a little more about the motivation for creating the Rail Kitchen Chikugo and what is your strategy for increasing its popularity post-COVID?
The inception of this train project stemmed from our desire to draw a heightened influx of tourists to this specific region. While establishing commendable facilities and engaging experiences at the destination is undoubtedly crucial in our sightseeing endeavor, we recognized a unique opportunity to infuse enjoyment into the travel experience itself. Our objective was to offer travellers an intriguing and pleasurable journey to their chosen locale, with the element of relishing delectable cuisine serving as a compelling avenue. By adopting this approach, we also anticipate an increase in expenditure by visitors during their travel.
As evident in your research, the interior of the train is adorned with an array of local materials, creating an environment that immerses passengers in the local culture. On the culinary front, the gastronomic offerings are supervised by acclaimed chefs hailing from Fukuoka alternately, ensuring passengers can relish diverse culinary creations upon each visit. Remarkably, this allure extends beyond tourists, captivating the interest of local residents as well. A noteworthy detail I unintentionally omitted earlier is the presence of a full-fledged oven onboard. This distinctive feature sets our train apart, potentially making it the sole train in Japan boasting such an amenity.
THE RAIL KITCHEN CHIKUGO
In addition to your transportation services, Nishitetsu also has hotels and leisure businesses as well. What are some of the synergies you are able to generate between your business lines?
As previously indicated, the augmentation of tourist numbers hinges on a twofold strategy: expanding destination choices and enhancing the attractions and activities available at these locales. This dual-pronged approach is connection in elevating our public transport utilization. The strategic enhancement of amenities and services, coupled with transportation provisions, forms a seamless synergy that propels overall business growth. Additionally, by elevating the quality of accommodations at these destinations, we not only encourage extended stays but also foster increased expenditures, enhancing the probability of return visits to Japan. Our unwavering focus on these facets holds the promise of comprehensive business advancement.
An system is also in place to market packaged holidays for tourists. Through strategic partnerships with travel agencies, we curate comprehensive packages that encompass a spectrum of our services. This collaborative effort not only retains customers within the Nishitetsu group but also ensures their sojourn in Japan is a memorable and streamlined experience.
A compelling aspect of our strategic vision pertains to international expansion. Successfully launching hotels in Seoul, Busan, Bangkok, and Taipei under the Solaria brand, our roadmap includes the introduction of a second Solaria hotels in Bangkok in summer in 2024. This branding initiative aims to establish Solaria as a recognized and trusted name beyond Japan's borders. This calculated marketing endeavor is poised to ignite broader interest, not solely within Fukuoka but across the entirety of Japan. I am optimistic that this strategic initiative will significantly enhance tourist footfall in Fukuoka, amplifying patronage of our railway and bus services.
Moreover, I underscore the paramount significance of attracting business travellers. Our efforts are intently focused on captivating a professionals operating in proximity to key transit nodes or logistics hubs. This strategic alignment is geared toward expanding our customer base to encompass stakeholders from the logistics industry, thereby contributing to the diversification of our clientele.
Imagine that we returned on the last day of your presidency and had this interview again: what goals or dreams do you hope to achieve?
Last year, when posed with a similar inquiry, my aspiration was to establish a sustainable transportation system. However, this year's interview has placed a significant emphasis on tourism and international logistics. Hence, I would like to align my goals more precisely with these domains. Undoubtedly, the pivotal objective remains to attract a greater number of foreign visitors to Japan, a notion I have reiterated throughout this interview. Our foremost aim is to enlighten these visitors about the inherent allure of Kyushu. This region boasts a plethora of hot springs, picturesque mountains, and awe-inspiring natural landscapes, including serene vistas and the majestic ocean. This narrative must be communicated on a global scale, necessitating heightened collaboration with local governments and other related organizations. Upon their arrival in Kyushu, I fervently hope that these tourists have the opportunity to experience the seamless transportation systems and top-notch lodging facilities we have thoughtfully orchestrated, ensuring an unforgettable sojourn in Kyushu. The attainment of this goal rests upon a robust integration of smart devices, with hopefully for such a future.
Shifting our focus to logistics, the unprecedented disruption posed by the COVID-19 pandemic was indeed extraordinary. As the pandemic recedes, a sense of normalcy has gradually returned. Paradoxically, this respite has ushered in a new form of risk for our company. With the pandemic no longer acting as a deterrent to logistic operations, we now confront heightened competition, both within our domestic market and on the international front. In light of this, our strategic imperative lies in bolstering our market share and enhancing our competitive edge.
Interview conducted by Karune Walker & Paul Mannion