Working in market

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%

The top five wholesalers for Australia in Japan are JTB, HIS, NTA, JALPAK and KNT. All of these companies produce Australian brochures except KNT. These wholesalers except JALPAK and ANA Sales 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: 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.
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. There has been Some significant revolution in Dynamic Package over the web-based platform.
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.

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.
As at November 2021, there were 1,670 qualified Aussie Specialists in Japan.
As part of this program, Tourism Australia with State, Territory and Regional Tourism Organisations provide educational opportunities, such as seminars and family tours.

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) 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). Other high value traveler focused web sites include Ikkyu which is the prominent player in this segment.
Another style of online agent is those who only handle land content. Examples of these are VELTRA, Australian Tour Specialists and HOT HOLIDAY.

Inbound Tour Operators

Commission Level: 5 - 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.

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 to travel independently and are less reliant on packaged tours.
As demand for FIT travel grows, the Japanese travel industry will continue to become more customized and consumer-oriented. However, language will always 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 COVID-19, the number of retail shops has been significantly reduced. In order to clarify the difference from competitors, they have assigned destination specialists who can respond to individual customer requests to enhance the consulting ability. A majority of consumers search destination information and package tours through 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 of wholesalers have begun developing secondary package tours more frequently for customer to make booking earlier time to secure flights and accommodation. This means, in addition to online, paper based (brochures) are still the prime instrument for customer decision making process.
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 optional tours only.

Planning and purchasing travel

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 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 Asahi Travel International, who all have 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 products liaise with their Inbound Tour Operator (ITO) then the wholesaler. It is not advisable for Australian product 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 in August, September, February and March.
It is preferable to avoid Golden Week (end 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. High level proportionate market distribution being Tokyo the largest with 40%, followed by Osaka 20%, Nagoya and Fukuoka 10% each and Sapporo about 5% and rest of Japan for remaining share.
For more general information on sales calls and planning a visit to market, please see Tourism Australia’s 'Tourism Export Toolkit'.

Key Distribution Partners

Tourism Australia is a partnership marketing organisation and works closely with airlines and travel companies on cooperative marketing to drive conversion in all priority markets.

These targeted travel companies, including wholesalers, retail and online travel agencies, form Tourism Australia’s Key Distribution Partner (KDP) program with the intention to increase total booking value of visitors to Australia.

Each KDP is selected based on the fit with Tourism Australia’s market strategy, a shared target customer profile, shared funding of marketing activity, a commitment to training their frontline sales team through the Aussie Specialist Program and a commitment to selling quality Australian product and experiences.

Below are a selection of Key Distribution Partners that Tourism Australia is partnering with from Japan.

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:

An overview on the travel distribution system
A quick reference on key booking and travel periods for markets
Japan Country Brief published by the Department of Foreign Affairs and Trade at: www.dfat.gov.au/geo
For additional statistical reports refer to the ABS and TRA websites, www.abs.gov.au and www.tra.gov.au

Working in Market - Japan