Working in Market - Japan

Distribution system

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.

Wholesalers/large agents

Commission level: 15% - 20%

• Major wholesalers for Australia in Japan are JTB, HIS, NTA, JALPAK and KNT. All of these companies used to produce Australian brochures, however given increasing digitisation, HIS is the only agent continuing to produce a brochure, while others have moved to selling online dynamic packages. Media agents such as Hankyu Travel International, Club Tourism (KNT group) and JTB Tour Escort Department produce and sell products, including escorted tours. Media agents have a website but primarily attract customers through newspaper ads and direct mail.
• 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 packages through their own retail outlets or franchised agencies.

Retail agents

Commission level: 5% - 10%

• 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.
  • The Media Sales Division produces packaged tours for direct sale to consumers and promotes them 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 sells travel directly to consumers online. They sell packages produced by the in-house wholesale division. There have been significant developments in Dynamic Packages (pricing is dynamic) based on supply and demand using web-based platforms.

• Second Level Agencies: These agencies sell international and domestic products which have been produced by wholesalers. They do not package or wholesale international products.
• Third Level Agencies: These retail travel agencies sell international and domestic packages produced by wholesalers and domestic products packaged by second-level agencies. They do not have wholesale or packaging departments.

Online

• Travel agencies with a retail presence sell the same retail package products online. In addition to that, some travel agents are selling special online packages to improve price competitiveness.
• In recent years, Online Travel Agencies (OTAs) that have no retail store presence have been growing sales by focusing on flexible airfare and hotel booking systems, especially for domestic travel. Examples are Rakuten, Expedia, Hotels.com, Ikkyu.com, Agoda, Jalan (domestic only).
• Another style of online agent is those who only handle land content. Examples of these are VELTRA, Australian Tour Specialists and HOT HOLIDAY.

Aussie Specialists

• The Aussie Specialist Program (ASP) is the primary platform for Tourism Australia to train and develop front line travel sellers to best sell Australia.
• There are over 2700 qualified Aussie Specialists in Japan. This includes 44 ‘Premier Aussie Specialists’, recognised with Premier status for their extensive knowledge of the destination, commitment to selling Australia and ongoing learning via the Aussie Specialist Program.

Inbound Tour Operators

Commission level: 5 - 10%

• Companies such as JTB, HIS, KNT, NTA, Southern Travelnet, Japan Australia Travel Service (JATS), Kuoni Tumlare and JTA 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.

Trends

Distribution

• The Japanese travel industry is one of the most vertically integrated in the world. Major Japanese companies control all levels of the distribution system. This integration remains a key feature of the Japanese travel trade.
• There is a gradual increase in the FIT market, as Japanese outbound travellers become more confident about travelling independently and are less reliant on packaged tours.
• As demand for FIT travel grows, the Japanese travel industry will continue to become more customised and consumer-oriented. However, language may continue to be a barrier for most Japanese travellers, so reliance on the industry will remain high relative to other countries.
• Large wholesalers are increasing their focus on retail consultants to deliver better services to win customers. In particular, since the pandemic, the number of retail shops has been significantly reduced. In order to differentiate from competitors,, they have assigned destination specialists who can respond to individual customer requests to enhance their consulting ability. A majority of consumers search for destination information and package tours online but visit retail shops for further consultation and bookings. Consumers purchase package tours due to multiple factors, including language, price competitiveness and the strong protection provided by travel agency laws.
• In addition to the two major brochure seasons of Kamiki (April to September) and Shimoki (October to March), some wholesalers have begun to produce and sell package tours more frequently for customers to make earlier bookings to secure flights and accommodation. In addition to online, paper-based (brochures) are still a popular tool for the customer decision-making process (noting HIS is currently the main agent offering paper brochures).
• The number of online-only businesses in Japan is increasing, and major wholesalers are expanding online services and advertising.
• To take advantage of consumers who book their flights online, some online travel agents are capturing growth by focusing on selling accommodation and tours.
  

Planning and purchasing travel

• The total trip spend on leisure travel to Australia by Japanese travellers was AUD$898 million in 2023, growing by 395% compared to 2022, while the average trip spend was AUD$2,543, growing by 11% compared to 2022 (Source: IVS 2023).
  
• 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, NTO websites, and brochures.
• Repeat travellers tend to use the internet more for research and bookings, in addition to the traditional distribution channels.
  

Special interest

• Australia is the most popular destination for overseas school excursion programs from Japan. Major travel agents handling this market include JTB, KNT, NTA, TOBU TOP TOURs and ATI (Asahi Travel International), all with dedicated sales teams in this segment.

Planning a visit to market

Top tips for sales calls

• Communication with the retail industry is handled by Tourism Australia, the airlines and the State and Territory Tourism Organisations (STOs) based in Japan. Generally, Australian product suppliers liaise with their Inbound Tour Operator (ITO) and then the wholesaler. It is not advisable for Australian product suppliers to visit retail agencies directly unless for specific activities and only after the relevant ITO and wholesaler have been consulted.
• The best time of year for sales calls is August, September, February and March.
• It is preferable to avoid Golden Week (end of April to early May), Obon (mid-August) and New Year (late December to early January).
• The key market centres to visit are Tokyo and Osaka, followed by Nagoya, Fukuoka and Sapporo. The approximate market size is as follows. Tokyo is the largest with 40%, followed by Osaka 20%, Nagoya and Fukuoka 10% each and Sapporo about 5%, with the rest of Japan making up the remaining share.
  
• For more general information on sales calls and planning a visit to market, please see Tourism Australia’s Tourism Export Toolkit.