Asian travel startups see potential for growth in Japan and are helping drive the nation’s tourism industry into the digital age via online sales to replace paper tickets and reservations recorded in notebooks.
The Japanese tourism industry has rebounded in recent months following the relaxation of pandemic restrictions, with over 1 million arrivals for the third straight month in February. On Wednesday, the country eased measures for entrants from China. It plans to scrap COVID-related border control measures for all visitors from May 8.
Japan hopes that increased tourist spending will bolster consumer demand as the nation’s population declines, particularly in rural areas, and has been encouraging companies in the sector to digitalize to accommodate more visitors.
Officials of Klook of Hong Kong and KKday of Taiwan — startups founded in 2014 that sell tickets online for tourist attractions — told Nikkei Asia in recent interviews that they already earn the biggest portion of revenue from tourists in Japan.
Klook CEO Ethan Lin said the company’s Japanese revenues have surpassed 2019 levels and reached “high double-digit growth.” Victor Tseng, KKday’s chief financial officer, said that “in the last couple of months, Japan has about 50% of our overall business,” up from the 40% before the pandemic.
Klook and KKday officials said they are seeking to expand in Japan by focusing on older or smaller businesses that are less computerized than major hotels and airlines.
The lodging industry in particular is dominated by smaller businesses — 78% have fewer than 10 employees. Such operators tend to rely on “long years of experience and intuition” and “old-fashioned analog” methods like tracking reservations on paper rather than “businesslike” management practices, according to a March report by the Japan Tourism Agency (JTA).
Klook’s Lin said in the post-COVID era, tourists “are looking to venture out” beyond well-known tourist destinations in Tokyo and Osaka. But merchants in other areas “are not yet ready for reform,” and are “hesitant” to serve visitors, he said.
Collecting data to help operators devise more profitable pricing strategies is a particular opportunity, said Lin. He said Japanese merchants today face “a dilemma” — they want to raise prices but fear a backlash from domestic consumers.
“In reality, the Japanese can afford a bit more,” he said. “Japan has been more focused on optimizing operation costs [and] not looking at how to manage revenue.”
Tseng of KKday said his company’s work in Japan is more labor-intensive than those in other markets. He said orders from Japanese businesses — ranging from kimono photography services to surfing instructors — sometimes have to be processed manually.
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KKday is trying “to educate more local suppliers about why they need to digitalize,” said Tseng. “If you want to be able to sell more products, … the first step is to create a database of all the travel-related services and products available.”
Eventually, he said, digital platforms would help attract “a lot of international travelers from across many different countries with different holiday seasons” and generate “consistent demand,” including on weekdays when domestic tourists are few.
The Japanese government hopes tourist spending will “promptly” reach JPY 5 billion (USD 38 billion), a little over the 2019 level. As Japan’s population falls, tourism is “the trump card for regional development,” according to the JTA.
The agency’s report said improving operating efficiency would also help optimize the allocation of staff in tourism businesses at a time when many of them are struggling to find workers, particularly during busy weekends and holidays.