The company’s flagship train since 1957, the illustrious Romancecar is connecting central Tokyo to prime tourist destinations like Hakone and Enoshima.
In 2019, Japan's tourism industry witnessed a record high of 31.8 million overseas arrivals. However, due to the disruptions caused by COVID-19, this number plummeted to only 250,000. Despite these challenges, Japan still holds the top position in the World Economic Forum's Travel and Tourism Competitiveness Index. The government also maintains an ambitious target of welcoming 60 million visitors annually by 2030, with the first half of this year already seeing 10 million visitors entering the country. As one of the major 16 railway firms in Japan, what do you believe makes Japan such a prime tourism destination?
Our government has set an ambitious target of welcoming 60 million inbound tourists by the year 2030, with an ultimate aspiration to reach the impressive figure of 80 million, akin to what France has achieved. This is a significant policy goal that the government is actively pursuing. To facilitate this, the Japanese government is implementing measures to streamline visa processes, and these efforts are gradually yielding positive results.
Japan possesses a unique appeal that makes it an enticing travel destination. As an island nation surrounded by vast oceans, approximately 70% of our land comprises forests and mountains, making us abundantly rich in natural beauty. What sets Japan apart is its diverse natural environment, with each region offering unique natural resources and attractions to tourists. Furthermore, Japan experiences all four seasons, and this combination of different seasons and diverse natural landscapes enhances our appeal as a year-round tourist destination, ensuring something is captivating to experience throughout the year.
Japan also boasts a wealth of ancient shrines and temples that have endured the test of time, serving as enduring symbols of our unique culture and rich history. These sacred sites provide a glimpse into Japan's heritage. Additionally, our country is renowned for its incredibly diverse food culture, which varies significantly from one region to another. Japanese cuisine is a true reflection of our people's resourcefulness, as we have harnessed ingredients from both the mountains and the oceans to craft culinary traditions based on the unique offerings of each region. Japan's culture places significant importance on security and safety, making the country's safety and cleanliness an added attraction for tourists.
Foreign visitors to Japan mainly use railways and buses as their means of transportation, and the well-maintained railway network and punctual operation in Japan are highly appreciated. The Shinkansen forms a high-speed railway network from Hokkaido to Kyushu, and with the JR conventional lines, private railway lines, and further developed bus routes, it is easy to travel around cities and tourist spots.
Prior to COVID-19, a significant portion of tourists came from countries such as China, South Korea, Taiwan, and Hong Kong, collectively accounting for approximately 70% of Japan's total visitors. In a previous interview with Mr. Hayashida, the President of Nishitetsu, he emphasized the significance of diversifying Japan's tourism base by attracting more tourists from countries like Australia and the United States, as they tend to spend more time and money in Japan. Do you share the view that diversifying the tourism base is crucial in the post-COVID era? Could you also elaborate on the strategies and initiatives that Odakyu is implementing to attract a more diverse range of tourists to your company?
I agree that diversification is a crucial element in achieving our target of welcoming 60 million inbound tourists. Our aim is not only to attract more visitors but also to encourage repeat visits, offering them a diverse range of experiences that Japan has to offer. To achieve this, diversification is essential. I firmly believe that Japan possesses the capacity to cater to various tourist interests and preferences, making it possible to create numerous tourism avenues and opportunities.
Efforts to revitalize rural areas are a shared concern, not only in Japan but also in many other countries worldwide, where population concentration in urban municipalities is prevalent. Tourism and diversification of tourist attractions represent a viable solution to address this challenge. By broadening the base of tourist destinations, we aim to mitigate the issues associated with over-tourism while simultaneously rejuvenating rural areas. This approach aligns with our commitment to achieving a balanced and sustainable tourism industry.
Odakyu's approach to attracting more Western visitors differs from that of Asian tourists. While Asian visitors often gravitate toward Japan's cutting-edge elements like animation, games, and shopping, Europeans tend to be more intrigued by the country's rich culture and history, emphasizing experiences over shopping. To cater to these preferences, we have developed two key initiatives.
Traditionally, our tourism offerings focused on scenic beauty, but we are transitioning toward creating immersive experiences and products for visitors. For instance, in the Hakone area, renowned for its hot springs and views of Mount Fuji, we are collaborating with local guides to encourage trekking and mountaineering experiences, allowing visitors to engage with the natural environment. This shift in focus aims to provide unique and memorable experiences to our guests. As part of this effort, we have established a base known as the "Hakonature Base" in the Hakone area.
Secondly, we recognize that Western visitors often possess a deeper appreciation for the intricate details and attractions of Japan. Therefore, it's crucial to communicate messages and information directly in their native languages. To achieve this, we are actively utilizing platforms like social media (SNS) and YouTube to disseminate messages and promotional content in languages understood by Western visitors. This initiative operates akin to a marketing campaign.
While we have temporarily paused this initiative, we established a Paris office some time ago. Through this office, we initiated direct communication with local media and tourism companies in Paris, thereby strengthening our relationships within the French market. We observed positive results and an enhanced impact as a result of these efforts.
Regional revitalization is indeed a significant focus, especially considering that in 2019, approximately 47% of tourists visited Tokyo, while less than 1% explored more than half of the prefectures throughout the country. In your perspective, what are a few key attractions or activities that you would recommend to tourists in the Hakone area to encourage them to explore and appreciate the diverse offerings this region has to offer?
We recommend exploring Hakone as a company. We offer a special train called the "Romancecar" for a romantic journey from Shinjuku to Hakone. Within the mountains of Hakone, we provide various modes of transportation such as mountain railways, cable cars, ropeways, and pirate ships. These have been utilized as convenient methods to explore the region, being part of the Hakone Golden Course, which we established 60 years ago. Recently, we have implemented a ticketless system, so as long as you have your smartphone, you can navigate Hakone effortlessly. Travelling around Hakone is remarkably convenient, and the main attraction there is undoubtedly Mount Fuji.
There are buses available providing scenic views of Mount Fuji and Lake Ashinoko. Another highlight is the pirate ship cruise, which offers stunning vistas of Mount Fuji. The "Hakone Free Pass" round-trip ticket covers all these modes of transportation, allowing you to enjoy the rides as many times as you want.
This comprehensive ticket is ideal for first-time visitors to Hakone, allowing them to explore the area in one to three days. For Western tourists, we encourage not only using these transportation options but also stepping out to walk around and immerse themselves in the local experience. One of Odakyu's strengths is the Romancecar on the right side, starting from Shinjuku and continuing to Hakone, creating an exciting atmosphere throughout the journey.
The Romancecar has been your flagship train since 1957, serving not only the Hakone region but also other areas and even commuter routes. You have also recently inaugurated the Romancecar Museum. Looking ahead, what do you envision as the future for the Romancecar, and what strategies do you have in place to boost ridership among tourists, particularly in the post-COVID landscape?
The Romancecar serves not only as a tourist attraction but also as a means of comfortable commuting, aligning with the increasing interest in convenient commuting options. By providing this service, we contribute to the overall value of the region and aim to enhance people's quality of life. The Romancecar is beloved by a wide range of passengers, from adults to children, making it a popular choice.
To continually emphasize this advantage, we regularly introduce new train cars, as seen in the presentation. Given the post-COVID shift towards valuing healthy and enjoyable living, we have decided to open the Romancecar Museum, with a particular focus on children and the next generation. Our goal is to provide a source of enjoyment for children and to contribute to the town's development.
When we consider sustainability, we firmly believe that it is essential for the well-being of children and the next generation to lead healthy and happy lives. This perspective is not only vital for our company but also for the nation. To support the sustainability of our communities, we hope to encourage more families with children to reside along the Odakyu line. We see our flagship Romancecar as playing a significant role in achieving this goal. Going forward, we aim to evolve towards providing even more enjoyable travel experiences by conducting demonstration experiments of new in-car entertainment incorporating VR and AR imaging.
The Romancecar is the flagship brand that leads our company, and we are committed to its enduring success. To continuously refresh its appeal and maintain its prominence, we are planning to introduce new Romancecar models in the future.
In addition to your transportation business, Odakyu has ventured into the leisure and hotel industry, featuring resorts like Hotel de Yama (Lake Ashinoko side), Hakone Highland Hotel, and Hotel Hatsuhana. Could you share some insights into the synergies that have been created between your travel and hotel businesses? Additionally, are there any specific packages or offerings that have emerged as a result of this synergy, that cater to the needs and preferences of tourists?
Initially, our primary focus was on the transportation business. However, as our transportation services expanded, we recognized the potential to offer accommodations and hotel services to our customers. We saw this as a valuable opportunity to diversify our business portfolio and cater to a wider range of needs. To achieve diversification, we decided to target younger and more casual demographics. Additionally, we recently revamped Hatsuhana to cater to our high-end guests.
Having both transportation and accommodation businesses enables us to provide bundled packages, offering a seamless and convenient experience for our customers. While our product lineup for overseas tourists is still limited, our domestic visitors can easily access and book everything they need through their smartphones. With a smartphone, they can reserve the Romancecar, round-trip tickets, and accommodations as a comprehensive package. This streamlined booking process is user-friendly and highly accessible. We have multiple bases where customers can purchase accommodation tickets, and we can also accommodate requests and coordinate accommodation reservations at our transportation bases.
We take great pride in the high level of omotenashi hospitality offered in our hotels. We leverage this expertise in educating and training our staff in the transportation segment. Notably, our Yutowa Hotel in Hakone is situated along the route of our mountain railway. As the trains pass by, Yutowa employees make a practice of waving at the trains, creating a memorable experience for travellers. Moreover, one of our Yutowa hotel rooms are uniquely furnished with actual train seats, adding a distinctive touch to the guest experience.
Your recently formulated mid-term plan for this year sets forth various targets for Odakyu, including increasing visitor numbers, creating new businesses, and harnessing DX. Could you provide insights into some of the specific businesses you have identified as part of this plan? Additionally, what strategies and approaches are you implementing to ensure the success of your mid-term plan and the achievement of these targets?
Traditionally, railway companies, including ours, have predominantly focused on transportation services, real estate ventures, and related services within these sectors. However, in light of the post-COVID landscape and the demographic changes, we recognize that the number of customers may eventually decline. To address this, we have devised a mid-term plan with a primary emphasis on the real estate business, specifically centered around community development.
We aim to leverage our Odakyu railway lines as a catalyst for fostering and enhancing the communities situated along these lines. Simultaneously, we are exploring opportunities to expand our business internationally, diversifying our operations beyond our domestic borders.
Our management vision is centered around becoming a community-based value-creation company, leveraging digital resources and the Odakyu infrastructure to address the challenges faced by our communities. One concrete example is the current waste collection and management processes carried out by individual municipal administrations, which often remain analog in nature. We see an opportunity to enhance the efficiency of these processes by integrating Odakyu's digital systems, particularly in light of the impending labor shortages we anticipate in the future.
Our goal is to establish a system that allocates time effectively for waste collection, separation, and recycling, ultimately contributing to the reduction of waste and the preservation of our environment. These initiatives represent the new business avenues we aim to pursue, and we believe they will play a significant role in our business growth, particularly in a post-COVID era.
To pursue these objectives, we recognize the need for three key components: digitalization, strategic partnerships, and localization. Each community along the Odakyu lines possesses its own distinct characteristics and challenges, requiring a localized approach to address their specific needs. Recognizing that we cannot tackle these issues in isolation, we intend to collaborate with partners and harness the power of digital technology to drive these initiatives forward.
Furthermore, our Odakyu employees must embody a spirit of innovation and creativity, as they will play a crucial role in implementing and evolving these strategies.
Following the celebration of your 100th anniversary, what are your forward-looking aspirations and goals for Odakyu in the next century?
My aspiration for Odakyu is to maintain our standing as a trusted and dependable company, one that is cherished and respected by the communities we serve.
Interview conducted by Karune Walker & Sasha Lauture