Opinion

Last updated: 20th Dec 2010

The travel industry in Japan is dominated by JTB Corp. which recorded about US$ 15 billion in gross bookings last year and has a 25 % share of the Japanese travel industry market. JTB is still 30% owned by the quasi-government organization, Japan Travel Bureau Foundation. The next three ranking travel companies are controlled by private railway companies and focus mainly on domestic travel. The 5th largest travel company, H.I.S. Co., Ltd. (US$ 4 billion in bookings) is a listed independent company that competes with JTB Corp. for Japanese travelers in the overseas markets. In the past it has made acquisitions of resorts and has opened hotels outside of Japan, mainly in Asia and Oceania. In 1996, it launched a new regional airline called Skymark Airlines.

Influx of Asian Tourists to Japan
With the strengthening of the yen against the US$, the number of Japanese travelers overseas have increased about 8% in the period from January to October 2010 over the same period last year. However, recently Japan is seeing an influx of travelers from Asia, especially China and South Korea. Even on weekdays, buses full of Chinese and Korean tourists can be seen lined up in the luxury shopping district of the Ginza in downtown Tokyo. In the January to October 2010 period, Chinese visitors to Japan increased by 49% over the same period last year and visitors from South Korea increased by almost 60% in the same period. This increase of Asian visitors to Japan has led travel companies like H.I.S. to acquire a transportation company on the southern island of Kyushu which is only a short hop by air from Shanghai or Seoul. In April 2010, H.I.S. also took over the theme park and destination resort Huis Ten Bosch Co., Ltd., a recreation of a Dutch town in Kyushu which had been in receivership. H.I.S. is hoping to attract regional visitors from China and Korea to its destination resort.

The Tokyo Disney Resort, owned by the local company Oriental Land, had about US$ 4.6 billion in recent annual revenues and is the largest theme park in Japan. The next largest is the Universal Studios Japan theme park in Osaka, which was a listed company in Japan but was taken private in 2009 by buyout funds led by a Goldman Sachs fund. With the diversification of leisure activities along with the aging and declining Japanese population, expectations appear to be low for future expansion of the theme park business in Japan.

Thriving Online Travel Sites
Recently internet travel sites operated by Recruit Co., Ltd. or Yahoo Travel (Japan) have have grown along with the expansion of the Japanese broadband networks and the 3G mobile phone market. Rakuten Travel, a core company in the Japanese internet service group Rakuten (Sales: US$3.6 billion) acquired a domestic travel company in 2003 and has made selective investments in internet travel companies in Asian countries. Rakuten is likely to make investments globally in the internet travel sector in the future to complement its overseas acquisitions in the e-commerce industry such as Buy.com and PriceMinister.com in the USA and Europe.

Owen Hultman
General Manager
IBS Yamaichi Securities Co. Ltd