Tourism Boom in Japan, Hot Trends & Opportunities for Travel Tech

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Tourism is growing worldwide, but what’s happening in Japan in the recent years is simply outstanding.

Inbound tourism in Japan is in a historic growth. In 2012, the number of foreign tourists who visited Japan was 8.4 million. The number rose to 28.7 million in 2017 – a stunning growth by nearly 250% in just over 5 years. It is probably the largest increase in tourist numbers a country has ever seen.

(Chart based on the research by Japan National Tourism Organization)

The Japanese government is targeting to boost the number of foreign visitors to 40 million in 2020, and to 60 million in 2030. With more than 10 million tourists visited Japan between January and April this year, Japan is well on the track to achieve these goals.

So who are those tourists and what’s behind Japan’s tourism boom?

The majority of the tourists to Japan come from Asian regions, accounting for 85% of foreign tourists in Japan, led by Mainland China, followed by South Korea, Taiwan and Hong Kong.

Japan’s tourism boom stems from a combination of various factors. The government is making great efforts to bring more foreign tourists, by relaxation of visa requirements especially for visitors from China, allowing more LCC flights into Japan, and high-budget promotions on international media.

Moreover, the fact that more and more East Asians are becoming wealthier, and lower Japanese Yen value since 2011 made it much affordable for middle-income Asians to travel to Japan, which was once known as the most expensive country in the world.

The latest trends – shifting from Shopping spree to cultural experiences

Japan’s Buzzword of The Year in 2015 was ‘Bakugai’ – literally means ‘explosive shopping’. It refers to the extravagant purchasing by Chinese tourists who racked up products such as electronics, home appliances, cosmetics, luxury items, etc. They typically traveled in large groups by bus convoys, visiting major sightseeing spots and shopping districts in a tight schedule, led by a flag-waving tour guide.

However, in the last 2 years, tourists have been moving away from Bakugai. Revenue from the sale of goods to Chinese tourists has declined while the number of tourists has increased dramatically.

More and more Chinese visitors are turning to free and independent travels, where they are able to travel with their own discretion based on their personal interests – which is already the standard for other East Asian tourists from South Korea, Hong Kong, and Taiwan.

Tourists to Japan including Chinese visitors are becoming more interested in the consumption of experiences rather than in purchasing products.

The number one thing tourists want is having special experiences that they couldn’t possibly get at home country. They want to interact with local people and get deeper insights of the culture, food, history, places, and activities.

Opportunities for travel tech companies

With the Japanese government’s policy and efforts to encourage tourism in Japan, the boom is believed to stay and continue to grow.

While this is a great news, Japan’s travel industry is still immature for catering to foreign tourists’ needs. The local businesses are struggling to adapt to the rapid increase of foreign tourists.

Communication – The number one problem is communication. Local businesses like restaurants, hotels, tourist attractions desperately seeking effective ways to communicate with tourists in foreign languages – especially in Chinese and Korean.

Payments – Despite the fact Japan is highly advanced in consumer technology, it is still very much a cash-based society. ATM machines that work with non-Japanese credit cards can be hard to find especially outside major cities. It is worthwhile to note that cryptocurrency awareness is quite high in Japan and more and more retail stores and restaurants are accepting Bitcoin payments. On the other hand, many tourists from East Asia are used to mobile payments using smartphone apps.

Information – Japan is encouraging visitors to travel beyond the most popular destinations to the regions less known among tourists, given the major cities like Tokyo, Osaka and Kyoto are overcrowded.

Innovative technology solution could help solve these issues and give tourists seamless travel experiences. In order to grab the opportunity of Japan’s growing tourism market, it is important to understand the characteristics of the tourists that are quite different from those of Western countries.

Post by Miho Beck – A Japanese entrepreneur in travel tech in Israel. Her new venture TripJunction, a travel marketplace for local experiences in Japan is set to launch soon.