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Unpredicted times for Japan’s tourism sector

Interview - October 7, 2015

Mr. Hideo Sawada, CEO of industry leader H.I.S., outlines why this is just the beginning of Japan’s tourism boom.

MR. HIDEO SAWADA, CHAIRMAN OF H.I.S.
MR. HIDEO SAWADA | CHAIRMAN OF H.I.S.

2014 was a milestone year for Japan’s tourism sector. A record 13.4 million tourists came to Japan, representing an almost 30% increase from the previous year. Tourism expenditures jumped even more, at 40%, to $17.2 billion. Is this just the beginning of Japan’s tourism revival? What are your expectations for 2015?

I believe there’re many reasons for the increase in the number of tourists. Firstly there’s the government actively trying to encourage tourists to come to Japan for example by loosening the regulations regarding visas that have been quite tight for Asian countries until now, including Thailand.

Secondly there are many low cost carriers that are now operating in Japan which has allowed cheap traveling into Japan. The third reason is that Asian economy headed by China has experienced an improvement with increasing incomes that allows people now to have the possibility to travel.

Finally, the forth and most important point in this issue is that although our country has many touristic spots for people to visit and enjoy, Japan hadn’t been very good at communicating that to the world.

Our country has an extremely rich history, culture and nature and each of its areas have unique features, for example Tokyo’s culture is very different from Hokkaidō’s or Kyūshū’s. Japan has always had plenty of tourism resources and it is a fairly safe country among the nations of the world.

Moreover, traditional Japanese food has been designated as World Heritage which has given the country an important international push. The amalgamation of all these elements has led to the dramatic increase in tourism particularly from China but also from Thailand, Taiwan and many other Asian countries that lead the about 30% increase in the number of tourists coming to Japan in 2014.

I believe that with some more effort the tourism sector will continue to grow. Some of the challenging issues include the fact that hotels in Tokyo, Osaka and Fukuoka have been raising their prices and there’s an increasing difficulty on making reservations there as the occupancy rates are always high and there are months in which it’s very difficult to make a reservation.

Furthermore, the world economic situation is unstable at the moment and considering China more particularly, if in the future there’s damage to their economy this may have a big effect on our tourism sector.

It is becoming more and more clear that tourism in Japan can not only contribute to Japan’s growth, but can be a key economic driver, such as in France or America. What do you believe is missing in order for Japan to achieve this? Do you think more communication and infrastructure improvement are needed?

Japan as a whole still hasn’t been able to completely adapt itself to some very necessary demands. For example, there are still not enough people in Japan that could to deal with Chinese visitors due to their language; so we need to improve this in order to be able to draw Chinese tours not only to Tokyo but to other areas of our country as well.

Regarding the difficulties with hotels, there should be a solution soon as a lot of construction is taking place at the moment so to increase hotel capacity. However, currently we’re going through a bottleneck period especially in summer holidays and popular seasons.

Even traditionally lower prices hotels like two-three stars hotels are becoming more expensive now. In order to combat this problem we developed the robot hotel in pursuit of the most efficient hotel in the world, keeping prices down while providing the best services.

Worldwide, but more particularly in New York and London, business and tourism are on the raise so it’s fine for five stars hotels to be increasing their prices but not for two-three stars hotels and even four stars hotels.

This’s not a good thing to be happening in my opinion as we want regular people to be able to enjoy staying in a good quality hotel for a good price. The hotel we’ve created is very efficient as there’s not a lot of people needed, therefore we can keep costs down and still offer a very comfortable stay to customers.

We have robots that pick up the luggage and transfer it, provide the keys and also working at the front desk, and although they’re operating 24 hours a day, we don’t have to pay those extra hours or high wages. I believe in the future three-four stars hotels will probably have a front desk all managed by robots.

Of course I have to ask about your pioneering new Robot Hotel, Henn na Hotel. I hope we have the chance to visit it. What was your inspiration for this hotel and could you give our audience an idea of what kind of unique experience is it like?

As I actually reside at a five star hotel called Hotel Europe in Nagasaki, I look at the hotel’s services. Their services are very good but I see they have a lot of high wages to pay and high utilities prices that lead to the high costs of the rooms.

So I started thinking about how I could provide good services while keeping costs down, and three years ago I came up with this idea. I have traveled internationally at least once every month for about the last 40 years so I have stayed in many hotels around the world.

This begun when I was a student in Germany and spent the spring and summer breaks traveling the world, at that time as a backpacker. Nevertheless, now I stay in high quality hotels which gave me the inspiration to think about making my own hotel.

Two years and some months ago I created a project team whose members are researchers from the University of Tokyo, robotics researchers and researchers in the construction industry. And finally, on July 17, 2015 the hotel has started to operate, it’s running smoothly and the customers are very satisfied. 

At Henn na Hotel we employ various types of robots, first of all we have industrial armed robots that operate the collection of luggage and the security box, we have robots to carry the luggage to the rooms and within the rooms we have small information and control robots that operate electrical switches, etc., the front desk of course is also using robots so we employ various companies’ robots of various technologies.

Plus, we also employ various technologies, for example, for the air-conditioning we use a special kind of AC that doesn’t involve dry direct air, which is very good for the guest’s health. This room can maintain a comfortable temperature.

I thought of this because when I stay in hotels I sometimes have bad experiences with the air blowing to my face during nighttime and especially since a hotel room is a small space having hot areas and cold areas within the room is very uncomfortable.

Did you invent this system?

No, this technology has been developed with the collaboration of various companies. Moreover on the roof we’ve utilized this unique paint that prevents about 30% of the heat from getting through, this way we’re saving an equal percentage in electricity.

There’re no electrical switches inside the rooms, what I find extremely convenient. As soon as you open the door the reception area lights up, then when you go into the room this area lights up and if you go to wash your face then the bathroom and the washbasin areas light up.

As long as you’re moving lights will stay on and 3 or 5 minutes after you leave the area they will turn off which is very comfortable and convenient. The only electrical switch the room has is the bedside reading lamp.

The reason why I came up with this idea of no switches is, once again, that when I stayed myself in a hotel I found it very unpleasant to turn lights on and off all the time; in addition as the business owner I like to keep electric utilities costs down and this is a good solution to it.

Furthermore, there’s no television in the rooms. Instead there’s a mirror so if guests really want a TV they can operate it so that the mirror turns into a TV. And we have a small robot called Chu-ri-chan which you can speak to and ask it what’s tomorrow weather or what’s the temperature of the room at the moment and Chu-ri-chan will answer you.

As I also find it annoying to set the alarm to wake up or asking for a wakeup call, at our hotel it’s possible to tell the robot to wake you.

H.I.S started with just two desks and a single phone, but today is the only travel agency that is involved in the hotel business, air travel and theme park management. With a 30 year history, H.I.S. is now Japan’s first travel agency that targets the foreign community. Now Japan has the ambitious goal of attracting 20 million visitors by 2020. How are you capitalizing on these ambitious plans? How are you working to attract more foreign tourists to Japan?

There’re three main categories in the tourism industry in Japan. First is the outbound which is Japanese people going overseas, second is inbound that is overseas people coming to Japan and third is domestic which is Japanese people traveling within Japan.

In the 35 years of history of H.I.S. for the first 20 to 30 years we saw a steady increase in the number of tourists in Japan from 4 million to 18 million, during this time we were mainly focused on outbound travel.

Today the number of outbound tourists has reached the 18 million but in about 30 years it’s expected to fall due to the population decease from 120 million to 80 million. On the other hand, inbound tourism has gradually increased from 10 million to 13 million last year.

I expect that even before 2020 we’ll reach the 20 million mark for inbound tourism. Moreover there’s still more room for inbound tourism that is constantly growing. Within our company’s operations also, this is the area we’re putting most of our strengths on, in order to provide more and better services to visitors in Japan.

More than 10 years ago we had begun expanding abroad, creating brunches that now reach 190 locations, and this was a strategy for inbound travel to Japan to increase. Plus, as Japan has been printing new bills that have contributed to the weakening Yen, this has been a further encouragement to the inbound traffic.

So we have acquired a Chinese subsidiary for inbound travel and we’re currently the number one providers for Chinese travelers to Japan. Similarly, domestic tourism is expected to increase as well. So, although our future looks very promising, since the world is entering a very difficult era we’d like to make sure that we protect ourselves from its effects.

The business that we’re in is a business to create peace; we believe that by assisting the general public in traveling to discover both this country and the rest of the world we’re fastening communication between people, and therefore contributing to world peace. We believe it’s our mission to provide enjoyable cheap traveling not just to the wealthy but to everyone.

One of the main reasons we wanted to sit down with you and profile H.I.S for our campaign is because we know that for you it’s not all about profits. One of your primary goals is to shape the future by contributing to humanity and world peace through the tourism business. This way you embody the Japanese virtue of giving back to the community. How is this concept so important to H.I.S’s success and growth?

We have a strong policy of helping people to see the world so that they don’t only have a good time but they’re also able to learn about the world and thereby contributing to peace. Looking at the conflicts in the world I believe that as long as humans have satisfactory food and they’re able to enjoy their lives and to develop an understanding of the world around them, then there’ll be fewer conflicts.

At H.I.S. we think that it’s essential for people to develop an understanding of the beauty of other cultures.

About 18 years ago I created a low cost airline and today low cost carriers are all the rage around the world. I created the low cost airline out of the wish to enable more of the normal public and not just the rich to travel.

Today the problem is that cheap hotels are still uncomfortable while good hotels are very expensive, so I believe the next thing in the agenda is to create an era of comfortable low cost hotels within the next 10 years.

We want as many people as possible to travel more comfortable and that’s why I created the hotel, it was also for good business, of course.

In this globalized world, the importance of countries branding themselves and communicating their strengths to the international community cannot be overstated. Taking this opportunity to reach out to America’s leading newsweekly outlet, Newsweek, how would you like our American audience to perceive Japan?

Japan has a very rich culture and history so I believe it’s important to increase the awareness of the strength of Japan and the very strong Japanese brand which is embodied by its tradition, history, culture and cuisine as well.

Furthermore, Japan has many great large corporations but also high quality small and medium companies such the ones we’ve employed in our hotel that offer cutting-edge technology. Therefore there are still a great number of companies that could benefit from support and that could provide new industries, not just robot.

I think it’s very important to make people abroad aware of the presence of these companies and to communicate their strength to the world. Small and medium companies have various technologies that have not been yet tapped into by the world, being the robot technology that we use in our hotel an example of these.

Probably by changing their software or adapting their services these kinds of technologies can be really useful to people over the world. However, because these companies do not have a very big budget and they’re not very good at self-promotion they haven’t been able to communicate their strength internationally yet.

COMPANY DATABASESee all Database >

FUJISASH CO.,LTD.

Manufacturing, Japan

ABLIC Inc.

Manufacturing, Japan

LEADER DATABASESee all Database >

Katsumi Ishizaka

CEO & President
Fuji Silysia Chemical L.T.D.

TSUTOMU YOSHIDA

Representative Director and President
FUJISASH CO.,LTD.

Nobumasa Ishiai

President and CEO, ABLIC Inc. Senior Managing Executive Officer, MinebeaMitsumi Inc. (Parent Company of ABLIC)
ABLIC Inc.

HIROSHI KOYAMA

MANAGING DIRECTOR
JUJO CHEMICAL CO., LTD.

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