JAPAN MARKET PROFILE

Market overview In 2016, Japan was Australia’s sixth largest inbound market for visitor arrivals, fifth $2.7-3.3bn largest market for total visitor spend and ninth for visitor nights. Potential to be worth by 2020 Key importance factors for holiday destination choice1

Safety and security 65% Good food and wine 54% 413,800 Visitor arrivals3 Rich history and heritage 39% (á 23 per cent) World class nature 37% Value for money 37%

2 Visiting friends Aviation routes from Japan to Australia פ Holiday & relatives פ 67% 11% Various ports in Japan

Osaka Tokyo

◊§ ◊§ ‡ Cairns (13 fpw) Business Other Hong Kong 10% 12% Brisbane (7 fpw) Gold Coast (6 fpw) Sydney (21 fpw) Melbourne Singapore (9 fpw) $1.7bn Total spend4 (á 29 per cent) fpw: flights per week

*4 **4 Which airlines3 do visitors from Japan use to travel to Australia? 28 5 nights nights Airline 2012 2013 2014 2015 2016 Jetstar (Australia) 47% 43% 42% 39% 35% Average nights Median nights stayed◊ stayed◊ Qantas Airways 14% 16% 16% 22% 23% All Nippon Airways (Japan) 0% 0% 0% 1% 11% JAL 14% 14% 14% 12% 8% One month prior to travel Singapore Airlines 6% 8% 9% 8% 6% Booking peak period Cathay Pacific Airways (HK) 6% 6% 6% 5% 5% Thai Airways 1% 1% 1% 2% 2% Air Asia X 1% 1% 2% 1% 1% Jan-Mar, Jul-Sep and Dec Travel peak period Others 10% 11% 11% 10% 8%

Notes: *Average nights: the sum of all nights divided by the sum of all visitors. **Median nights: the midpoint length of stay for which 50% of visitors stay less and 50% stay longer.◊ Data refers to an average of 2012-2016. § Refers to share of arrivals of respective purpose. ‡ Other includes education, employment and others. Sources: 1. Tourism Australia, Consumer Demand Project, 2016. 2. Department of Infrastructure and Regional Development, December 2016. 3. Department of Immigration and Border Protection, December 2016. 4. Tourism Research Australia, International Visitor Survey, December 2016.

1 JAPAN Market Profile 2017 JAPAN MARKET PERFORMANCE

»» The charts on this page provide a trend overview of visitor arrivals and spend over the last 10 years by main purpose of visit,Ja bypan first Jaandpan repeat leisure∆ visitors and also a snapshot of age demographic split of leisure visitors and spend.

Visitor arrivValsisi1tor arrivals1 Visitor arrivals1 VisitorVisit orspend spenVdisi2 2tor spend2

700 700 2.5 2.5 ) ) s s

0 600 0 600 0 0 0 0 ( (

n) n) 2.0 2.0 $1.7 bn $1.7 bn s s b b l 500 l 500

a a 413,800 413,800 ( $ ( $ v v i i r r r r nd 400 400 nd 1.5 1.5 a a e e

r r p p o o s s

t t i 300 i 300 s s i p i p i i r r 1.0 1.0 V V l t l t a 200 200 a t t T o T o 0.5 0.5 100 100

0 0 0.0 0.0 11 11 11 11 15 16 15 16 12 13 12 13 10 10 14 14 15 16 15 16 12 13 12 13 10 10 14 14 c - c - c - c - c - c - c - c - c - c - c - c - c - c - c - c - c - c - c -0 7 c -0 7 c -0 8 c -0 9 c -0 6 c -0 8 c -0 9 c -0 6 c -0 7 c -0 7 c -0 8 c -0 9 c -0 8 c -0 9 c -0 6 c -0 6 D e D e D e D e Dec - Dec - Dec - Dec - Dec - Dec - Dec - Dec - Dec - Dec - D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e D e Year ending Year ending Year ending Year ending

Japan Visitor arrivals by main purpose of visit1 Japan Visitor arrivals by main purpose of visit1 VisitorVisitor spend b yspend main purpose of visbyit2 main purpose of visit2

600 1,800 Holiday Holiday 1,600 500 ) s

0 1,400 Education ) 0 s

VFR 0 0 $ 0 400 A 1,200 ( 0

(

d s l n Business a

Business e v

i 1,000 p r s

r 300 a p i

r r t

o 800 l t

i Education VFR a s t i o V 200 T 600 Other Other 400 100 Employment 200 Employment 0

1 0 6 5 3 2 0 4 8 1 1 3 6 0 2 5 4 1 1 1 1 1 1 07 - 0 09 06 - - - - - 1 - - 1 1 1 1 1 - - - 1 07 - 06 08 09 ------De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c Year ending Year ending Japan First and repeat leisure visitor spend2 Japan FirstFirst and repe andat leisure vrepeatisitor arrivals2 leisure visitor arrivals2 First and repeat leisure visitor spend2

400 1,200

350 First visit First visit 1,000 ) s 0

) 300 0 s 0 0 Return visit 0 Return visit $ 0 800 A ( (

250 s l d a n v i e r r p

a 200 s 600

r p o i t i r s t i

l

V 150 a t 400 o T 100 200 Japan 50 2† Japan Leisure arrivals by age 0 0 1 5 6 3 2 0 4

8 2† 1 1 0 2 3 5 6 1 4 1 1 1 1 1 07 - 0 06 09 ------1 - - - - Leisure spend by age 1 1 1 1 1 1 07 - 06 08 09 ------De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c De c Year ending Year ending

Leisure arrivals by age2† Leisure spend by age2†

15 –29 yrs 41% 60 yrs & over 15 –29 yrs 60 yrs & over 15% 46% 16%

45 –59 yrs 45 –59 yrs 17% 20% 30 –44 yrs 23% 30 –44 yrs 22%

Notes: Δ Leisure refers to main purpose of visit of holiday and visiting friends and relatives. † Age profile data refers to an average of 2012-2016. Sources: 1. Department of Immigration and Border Protection, December 2016. 2. Tourism Research Australia, International Visitor Survey, December 2016.

2 JAPAN Market Profile 2017 JAPAN MARKET PERFORMANCE

»» The following◊ table provides a summary of arrivals, spend and the proportion of repeat visitors to Australia by main purpose of visit: holiday, visiting friends and relatives and business.

VISITING FRIENDS HOLIDAY AND RELATIVES BUSINESS Arrivals1 236,300 (67%§) 36,800 (11%§) 34,900 (10%§) Spend per trip2 $4,000 $2,500 $4,100 Spend per night2 $200 $181 $304 Repeat visitors2 37% 69% 64% Average nights stayed2 20 14 14 Median nights stayed2 5 7 5

»» The following provides an overview of top 10 regions visited by leisure visitors and the number of stopovers made in Australia by leisure visitors. Top 10 regions visited by leisure visitors◊*^2

Sydney 42% 1 Stop 61% Tropical North Queensland 36% 2 Stops 22% Gold Coast 20% 3-5 Stops 14% Melbourne 12% 6-8 Stops 2% Lasseter (Uluru) 7% 9+2 Stops 1%11% Brisbane 6% Perth 6% Whitsundays 3% Adelaide 2% Hobart 1%

Overnight stopovers made in Australia by leisure visitors ◊*^2

Sydney 42% 1 Stop 61% Tropical North Queensland 36% 2 Stops 22% Gold Coast 20% 3-5 Stops 14% Melbourne 12% 6-8 Stops 2% Lasseter (Uluru) 7% 9+2 Stops 1%11% Brisbane 6% Perth 6% Read as: 22% of leisure travellers from Japan visited two regions (and made at least one overnight stay). Whitsundays 3% Adelaide 2% Hobart 1%

Notes: ◊ Data refers to an average of 2012-2016. § Refers to share of arrivals of respective purpose of visit. * Leisure refers to main purpose of visit of holiday and visiting friends and relatives. ^Percentages will not add to 100% as one person can visit multiple regions. The data refers to visitors that made at least one overnight stay. Sources: 1. Department of Immigration and Border Protection, December 2016. 2. Tourism Research Australia, International Visitor Survey, December 2016

3 JAPAN Market Profile 2017 JAPAN AVIATION LANDSCAPE

766,000 Flights 20% per week Inbound seats year on year 49

»» After a decade of capacity decline from full major capacity injection was with Qantas’ »» At the back of strong Japanese arrivals service carriers on the Japan to Australia Narita-Melbourne service in December growth to Australia, average inbound load routes, 2016 marked the turnaround year, 2016, previously axed in 2008. For most of factors improved three percentage points with a strong 20 per cent lift in capacity, 2016 and 2017 so far, Jetstar has adjusted to reach 83 per cent in 2016. Capacity which had stimulated a 23 per cent operations as more capacity shifted remained tight during peaks of January – growth in Japanese arrivals. towards Qantas. February (Australians holiday season) and »» In August 2015, Qantas commenced a »» The Qantas group (Qantas and Jetstar) July, with average load factors above 90 Narita-Brisbane service, while it shifted carried 58 per cent of Japanese visitors per cent. Capacity for other months held Narita-Sydney service to operate from to Australia. The group lost some share steady with strong growth in Australians Haneda. Further competition was in 2016, while ANA gained with its travel to Japan, which grew 26 per cent introduced when All Nippon Airways relaunched Haneda-Sydney service. Japan in 2015 and 16 per cent in 2016, making (ANA) relaunched Haneda-Sydney service Airlines has lost some share in 2016 with Japan the largest growth destination for from December 2015, after exiting the increased competition from full service outbound travel for both years. market over ten years ago. The next carriers. See table on page 1.

DirectJapan aviation capacity from Japan to Australia

600

500 ) s 0

0 400 0 (

r

a Jetstar e y

r 300 e p

s t Qantas Airways a e

S 200

JAL 100

All Nippon Airways 0 1 6 5 3 2 0 4 9 8 9 8 9 8 11 11 1 11 16 15 13 12 10 14 16 15 13 12 10 14 1 1 1 1 1 16 15 13 12 10 1 14 - 0 0 0 0 - 0 0 ------r - - r r r r r r c - r r c - c - c - c - c - c - a c -0 7 c -0 9 c -0 8 a a a a a a a a Jun - Jun - Jun - Jun - Jun - Jun - Se p Jun - D e M Jun - Jun - Se p Se p Se p Se p Se p Se p D e D e D e D e D e D e M M M M M M Se p Se p D e D e D e M M

Year ending

Sources: Department of Infrastructure and Regional Development, Aviation Statistics., December 2016

4 JAPAN Market Profile 2017 JAPAN AVIATION LANDSCAPE

Weekly services to Australia Flights Operating Airlines per week Route Alliance/ code share partner (on route) All Nippon Airways 7 Tokyo(HND)-Sydney Air New Zealand Japan Airlines 7 Tokyo(NRT)-Sydney Qantas Jetstar 5-7 Osaka-Cairns 5-7 Tokyo(NRT)-Cairns Qantas, JAL 4-7 Tokyo(NRT)-Gold Coast Qantas 6-7 Tokyo(NRT)-Brisbane 7 Tokyo(NRT)-Melbourne Jetstar, JAL 7 Tokyo(HND)-Sydney Jetstar, JAL

Sources: Department of Infrastructure and Regional Development, International Airlines Timetable Summary (Northern Summer), 2017

5 JAPAN Market Profile 2017 JAPAN PLANNING AND BOOKING INFORMATION SOURCES

The following charts highlight the information sources that Japanese consumers use to plan and book their holidays. Preferred sources for early planning and inspiration

Travel or guide books 25% Brochures 24% Travel agent (telephone or in person) 17% Advertised deal or package 17% General internet searching 15% Been there before 14% TV travel programs 13% Friends or relatives that have been before or live there 12% Online travel agent 11% Online flights booking site 10%

Read as: 25% of respondents indicate ‘travel or guide books’ as a preferred source during the early stages of planning a holiday.

Preferred sources for seeking information 0 5 10 15 20 25 30 35 Travel or guide books 31% Brochures 24% General internet searching 16% Travel agent (telephone or in person) 15% Advertised deal or package 13% Been there before 12% Friends or relatives who have been before or live there 11% Online travel agent 9% Online hotel booking site 9% Traveller review sites 9% Online travel agent 12% Read as: 31% of respondents indicate ‘travel or guide books’ as a preferred source for seeking information about a holiday destination.

Preferred sources used to book a holiday

Travel agent (telephone or in person) 48% Travel agent (online) 32% Directly through airline (online) 16% Accommodation provider (online) 10% Directly through airline (telephone or person) 4% Other travel booking website 3% Tour operator (telephone or in person) 2% Accommodation provider (telephone or in person) 2% Tour operator (online) 1% Other source via telephone or in person 1%

Read as: 48% of respondents indicate ‘travel agent (telephone or in person)’ as a preferred source when booking a holiday.

Source: Tourism Australia, Consumer Demand Project, 2016

6 JAPAN Market Profile 2017 JAPAN DISTRIBUTION

Japan has a highly regulated travel distribution system, with three levels of travel agencies. The major operators in the Japan travel market are involved in all levels of the distribution system. Traditionally, the key focus for Australia has been wholesale package tour divisions of the General Travel Agents (GTAs). However, increasing focus is being placed on the Free and Independent Travel (FIT) segment, as Japanese outbound travellers mature. The evolution of the Japanese travel industry into a more themed, consumer-oriented sector is expected to continue.

Distribution system

WHOLESALERS/ LARGE AGENCIES

Commission level: 15% to 20% »» The top five wholesalers for Australia in Japan are JTB, HIS, KNT, NTA and JALPAK. All of these companies produce Australian brochures. These wholesalers except JALPAK have overseas departments to develop specifically Australian product. »» There are also strong regional brand wholesalers such as Meitetsu in Nagoya and Nishitetsu in Fukuoka. »» Wholesalers compete for retail business as most have a retail chain under the same brand. Major wholesalers provide national coverage by distributing packages through their own retail outlets as well as franchised external agencies.

RETAIL AGENTS

Commission level: 15% to 25% »» Japan has a highly regulated travel industry structure with three levels of travel agencies. The industry applies strict and complex licensing laws, with high levels of consumer protection. »» First Level Agencies: General Travel Agencies (GTAs) provide package, wholesale and retail services for international and domestic tours. They generally have the following: »» Wholesale Division, which designs and produces wholesale packages. The tour products are then on-sold to retailers, either via their own retail shops or to other agencies. »» Media Sales Division, which produces packaged tours for direct sale to consumers and promoted through advertising, members magazines and online. »» Group Tour Sales Division, which arranges and sells special order and one-off tours for clients (including schools/corporate) and niche tour organisers. »» Retail Division and Retail Shops, which sell travel directly to consumers via retail shops. These shops sell packages produced by the in-house wholesale division as well as packages produced by other agencies. »» Online Sales Division, which sell travel directly to consumers via online. They sell packages produced by the in-house wholesale division. »» Second Level Agencies: These agencies sell international and domestic products which have been produced by wholesaler. They do not package or wholesale international products. »» Third Level Agencies: These retail travel agencies sell international and domestic packages produced by wholesaler and second level agencies. They do not have wholesale or packaging departments.

ONLINE

»» Up until recently, travel agencies with a retail presence sold the same retail package products online. However, some travel agents are selling special online packages to improve price competitiveness. »» In recent years, Online Travel Agencies (OTAs) who have no retail presence have been growing sales by focusing on flexible airfare and hotel booking systems, especially for domestic travel. Examples of this are Rakuten, Expedia Japan, Hotels.com, Jalan (domestic only). »» Another style of online agent is those who only handle land content. Examples of these are Australian Tour Specialists and VELTRA. »» The number of consumers who book air tickets only through airline websites is increasing, especially for domestic travel. However, the proportion of online bookings for international flights remains low by global standards. At the end of 2016 estimated online air booking for domestic is 70% where international on average will remain as 15%.

7 JAPAN Market Profile 2017 JAPAN DISTRIBUTION

AUSSIE SPECIALISTS

1,282 qualified Aussie Specialists »» The Aussie Specialist Program (ASP) is the primary platform for Tourism Australia to train and in Japan as at Mar-17 develop front line travel sellers to best sell Australia. »» As at March 2017, there were 1,282 qualified Aussie Specialists in Japan. »» Tourism Australia has a two-tier trade engagement program in Japan. Tier one is called Club Oz and targets general manager level staff of travel agencies. Tier two is called Oznet and targets product planning staff and qualified ASP agents who focus on general product and experience development. As part of this program, Tourism Australia with State, Territory and Regional Tourism Organisations provide educational opportunities, such as seminars and famil tours.

INBOUND TOUR OPERATORS

Commission Level: 5% to 10% »» Companies such as JTB, HIS, KNT and NTA maintain their own Inbound Tour Operators (ITOs) in Australia. These inbound companies buy products, operate tours and provide product information to their respective head offices in Japan. »» Medium and small travel agencies and some sections of large GTAs use Australian ITOs and land operators. These ITOs have a sales office in Japan and in many cases sell other international destinations.

8 JAPAN Market Profile 2017 JAPAN DISTRIBUTION

Trends Trends

Distribution Special Interest

»» The Japanese travel industry is one of the »» Australia is the most popular destination for most vertically integrated in the world. Major overseas school excursion programs from Japan. Japanese companies control all levels of the Major travel agents handling this market include distribution system. This integration remains a JTB, KNT, NTA, TOBU TOP TOURs and Asahi Travel key feature of the Japanese travel trade. International, who all have dedicated sales teams »» There is a gradual increase in the FIT market, as Japanese in this segment. outbound travellers become more confident to travel independently and are less reliant on packaged tours. »» As demand for FIT travel grows, the Japanese travel industry will Planning a visit to market continue to become more customised and consumer-oriented. However, language will always be a barrier for most Japanese Top tips for sales calls travellers, so reliance on the industry will remain high relative to other countries. »» Large wholesalers are increasing their focus on retail »» Communication with the retail industry is consultants to deliver better services to win customers. A handled by Tourism Australia, the airlines and majority of consumers search destination information and the State and Territory Tourism Organisations package tours through online but visit retail shops for further (STOs) based in Japan. Generally, Australian consultation and bookings. Consumers purchase package products liaise with their Inbound Tour Operator tours due to multiple factors including: language, price (ITO) then the wholesaler. It is not advisable competitiveness and the strong protection provided by travel for Australian product to visit retail agencies agency laws. directly, unless for specific activities and only after the relevant ITO and wholesaler have »» In addition to the two major brochure seasons of Kamiki been consulted. (April to September) and Shimoki (October to March), some of wholesalers have begun developing secondary package tours »» The best time of year for sales calls is in August, September, more frequently for customer to make booking earlier time to February and March. secure flights and accommodation. This means paper based »» It is preferable to avoid Golden Week (end April to early May), (brochures) are still the prime instrument for customer decision Obon (midAugust) and New Year (late December to early making process. January). »» The number of online-only businesses in Japan is increasing, »» The key market centres to visit are Tokyo and Osaka, followed by and major wholesalers are expanding online services and Nagoya, Fukuoka and Sapporo. advertising. »» For more general information on sales calls and planning a visit »» To take advantage of consumers who book their flights online, to market, please see Tourism Australia’s Planning for Inbound some online travel agents are capturing growth by focusing on Success ebook at: www.tourism.australia.com/ inboundsuccess selling accommodation and optional tours only.

Planning and destination Study

»» When buying travel products consumers tend to refer to a mix of information sources, this includes general internet search, reference to guidebooks, visiting travel agents or National tourism organisation websites and brochures. »» Repeat travellers tend to use the internet more for research and bookings, in addition to the traditional distribution channels.

9 JAPAN Market Profile 2017 JAPAN FURTHER INFORMATION

Key trade and consumer events

Event Location Date JATA Tourism EXPO Japan 2016 Tokyo 22 – 24 Sep 2017 Dreamtime 2017 Brisbane, Australia 3 – 9 Dec 2017 Walkabout Japan 2018 TBC Jan or Feb 2018

Where to find more information

Tourism Australia’s activities in Japan are managed from its Tokyo office. For more information visit Tourism Australia’s corporate website at www.tourism.australia.com.

»» Australian State and Territory Tourism Organisations with a presence in Japan are: Destination NSW, Tourism and Events Queensland, Tourism NT, Tourism Victoria and Tourism Western Australia. Also see: »» Japan Country Brief published by the Department of Foreign Affairs and Trade at: www.dfat.gov.au/geo »» For the latest arrivals statistics, visit: http://www.tourism.australia.com/statistics/arrivals.aspx »» For additional statistical reports refer to the ABS and TRA websites, www.abs.gov.au and www.tra.gov.au »» For additional information on consumer research, visit: http://www.tourism.australia.com/statistics/consumer-demand-research.aspx

Contact

Level 29, 420 George Street Sydney, NSW, 2000 Telephone: +61 2 9360 1111 Email: [email protected] Corporate: tourism.australia.com | twitter.com/TourismAus Consumer: australia.com | twitter.com/Australia | facebook.com/SeeAustralia

10 JAPAN Market Profile 2017