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Japan Market Report Japan Market Report Visit Finland Country Representatives Shigeyoshi Noto and Koichi Numata November 2018 Semiannual Report – JAPAN Summer season 2018 and outlook for winter 2018-19 CONTENTS • Factors affecting the results of the summer season 2018 • Outlook for the winter season 2018-19 • Prospects for the spring/summer season 2019 • Trends and other relevant travel related topics • Facts and figures - Market review data Factors affecting the results of the summer season 2018 Economic outlook continues to be positive. Strong corporate earnings have been leading to fixed investment. Unemployment continues to remain at a low rate of 2.3%. Economic growth is projected to remain stable next year although slowing global growth and a scheduled tax hike in October in 2019 are the main downside risks. Japan has suffered severe damages from natural disasters this year. In July, Western Japan region around Hiroshima lost over 200 lives due to flooding from the heavy rain fall. Over 33,000 households were damaged. In September, large scale typhoon struck greater Kansai region such as Osaka and Kyoto. Kansai International Airport was forced to close operation from September 4th until 20th. Magnitude 6.7 earthquake in Hokkaido caused blackout for the entire 2,950,000 households also in September. Natural disasters affected consumer decision making for leisure. Japanese overseas travelers are growing steadily at 4.4% between January to September. The number of overnight stays by Japanese travelers has declined compared to 2017 during June to August period by -9%. September 2018 went down by -17%. The air capacity between Finland and Japan has increased 15.5% during the summer. The capacity out of Narita International Airport has increased by 30%. Japanese outbound to central Europe especially France is selling very well due to the pent-up demands from the concern over security and possible terrorism attacks. Outbound from Europe to Japan continues to grow at a substantial pace putting pressure on higher yield management by airlines. Factors affecting the results of the summer season 2018 Changes in demand While nature destinations such as Switzerland, Canada and New Zealand are struggling this year, leisure travel demands to city holidays in Central and Eastern Europe are surging. France is finally recovering with pent-up demands from the multiple terrorism incidents. Consumers are now feeling safer to select city break holidays unlike in the past few years. Extensive coverage of this year’s frequent natural disasters by the Japanese media has had significant impact on consumer sentiment. The regional market like Nagoya has limited direct access to Europe compared to NRT and KIX with only Finnair and Lufthansa operating to Centrair Airport. Their load factors have been driven by strong outbound demands to central Europe and surging inbound traffic putting pressure on the tour products to Finland. The booking lead time for Finland tends to be much shorter. Visit Finland needs to develop the action plan reflecting on this regional uniqueness. Finland’s image as a travel destination Perceived as a safe and beautiful country. Helsinki city break continues to be dominating the market and trade distribution. Late summer aurora in Lapland and Moomin tour products to Tampere and Naantali continue to be favored by Special Interest (SIT) and family segment. Changes in distribution Series group bookings to Nordic regions continue to struggle compared to other European destinations. While the volume is decreasing, the size of groups is also diminishing leading to lowered profitability for travel agents. The share of FIT market continues to grow. Business to Finland is growing for specialized travel agent such as Finn Corporation and Tabikobo which have recorded consistent growth over the summer period. Factors affecting the results of the summer season 2018 Changes in accessibility Finnair has increased frequency and upgraded aircraft from A330-300 to A350. While Japanese outbound traffic to Europe has been growing this year, inbound from Europe has also increased substantially, adding pressure to Japanese outbound markets. Jan. to Sep.2018 UK+7.7% France+14.4% Germany 9.2% Jan. to Jul. 2018 Nordic countries +7.9% (Finland Norway Sweden Denmark) Products that have been attractive Helsinki City Break, Moomin Museum, Moomin World, Double aurora viewing, Regions that have been attractive Helsinki is the primary choice of destination. Tampere in Western Lakeland, and Naantali in Archipelago have drawn Moomin enthusiasts. Product development of double aurora products in Lapland region Campaigns, joint promotions results FinRelax, Stopover and City breaks continue to be the main themes for this summer. Aurora and nature experiences in late August is appealing to the Japanese market. While it is important to communicate these core messages, it is imperative to expand the target audience to attract different segments to sustain the growth level. Visit Finland Sauna Campaign was launched in September. The campaign landing page was developed to introduce 100 sauna selection and invitation for participation in the stamp rally. Win a trip to Finland lucky draw was run during JATA Tourism Expo to raise awareness and generate interests. It generated over 15,000 entries. Outlook for the winter season 2018-19 Increase and reasons for the increase As reported in the VF Japan May Report, the performance of the Japanese market during the winter season was sluggish last year. We have identified several challenges and issues. Visit Finland has developed the Market plan based on this analysis to counteract the situation. We have launched the consumer campaign, joint promotions and co-branding activities for both b2b and b2bc channels to stimulate both the travel industry and the consumer market . We have been working closely with local Finnair Sales teams and Marketing in Tokyo, Nagoya and Osaka to raise Finland profile among competing European destinations. These activities will stimulate the travel industry to increase product developments and distribution of Finnish tour products. The Japanese new year holiday will be 9 days for most of people in 2019. It will be one of the longest holidays in recent years. The travel industry expects good demands for long haul destinations which will give an opportunity to generate higher yield and revenue for travel agents . Finnair will increase its capacity to Kansai International Airport this winter by 140% with both more freQuency and aircraft upgrade to A350XWB. New winter products We have been undertaking some key initiatives to develop educational markets from Japan. We are expecting to see some outcomes as a result of these activities this winter. In addition, Visit Finland Sauna Campaign was launched in late September. We aim to expand our reach to a new segment and generation through this promotion. Outlook for the winter season 2018-19 New sales channels As FIT markets continues to expand for Finland, consumer direct bookings to Finnair are growing especially for early bird sales and special events such as World Figure Skating Grand Prix in November. The direct distribution channel is very important in addition to joint promotions with traditional trade partners and OTA, What are the trends for the winter 2018-19? The summer market trend is most likely to continue in winter. Demands for city break holidays and circle tours in central Europe are projected to be strong. Finland would be able to expect positive influence from the movie Snow Flower for Helsinki and aurora viewing tours to Lapland thanks to its PR activities leading up to the official release on 1st February. Which are the traveler segments? - Female 30’s to 40’s - Millennials - University students - Corporate travelers Outlook for the winter season 2018-19 Ad hoc marketing opportunities Visit Finland Sauna campaign will continue to implement cross industry promotions with Finnish food companies such as Kyrös and Lifestyle such as Kauniste, which is the cover page design for VF’s Sauna stamp rally promotion. Kauniste recently opened its flagship shop in Jiyugaoka. This area is one of Tokyo’s most stylish and trend setting fashion district. We are currently planning joint promotion opportunities with Lifestyle industry colleague at Business Finland Japan. Warner Brother’s Japan is aggressively promotion the upcoming release of the movie Snow Flower in February. VF has been working closely to look for co-branding marketing and PR opportunities along with Finnair marketing team. A special preview event in Helsinki and Levi will take place in January. Select Japanese entertainment media will be invited to join us for celebration of the release. VF is also working with Destination Levi and Helsinki Marketing to organize B2B events. Daikanyama T-site This is the flagship shop for Tsutaya Corporation, which runs over 1,400 entertainment retail shops across Japan. Tsutaya is a leading retailer specializing in books, DVD, movie rentals, music and lifestyle goods. Daikanyama T-site is located in the fashion district. Daikanyama attracts high-end customers from the Tokyo market as well as Japanese domestic tourists from other cities. Its location is very close to Jiyugaoka district. Prospects for the spring/summer season 2019 What trends should be considered in product development to increase the demand in the spring/summer time? Finland and Japan will celebrate 100th anniversary of diplomatic relations next year. There will be a lot of events and promotions to commemorate good friendship and cultural exchange between the two countries. For example, a Japanese love romance film called ”Snow Flower” featuring popular actress and actor will be released at over 300 movie theaters across the country in February. The highlight of the film features scenes of Helsinki city break in summer where the main characters enjoy sightseeing at various attractions. Levi also plays a significant role where the couples goes to aurora viewing. Official promotion site http://wwws.warnerbros.co.jp/yukinohana-movie/ In March, “Moomin Valley Park” will open in Hanno City.
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