Japan’s major travel firms accelerating digitization of travel package sales

Courtesy of JTB Corp.
A JTB Corp. employee serves a customer online.

Many of Japan’s major travel agencies have been turning to technology as a way to cut costs and keep the lights on amid the novel coronavirus pandemic.

The bleak business climate has pushed companies to rethink their old approach that has centered on brick-and-mortar sales, such as by catering more to customers booking travel plans via smartphone and offering more perks for users who sign up on their membership sites.

On Oct. 1, Nippon Travel Agency Co. launched a joint venture with travel website operator Tabikobo Co. targeting people under 30 years old.

The company conducts its bookings exclusively online. It also focuses on providing information about its plans through video sharing applications and social media. The idea is to “stimulate demand from young people who are used to doing everything on their smartphones,” a company spokesperson said.

The company has set a goal of boosting the ratio of online sales of individual travel in Japan to 70% by the end of 2025, from nearly 40% at the end of 2019.

Club Tourism International Inc. also opened a membership site on Oct. 1, which subscribers can access for ¥550 per month. The site offers online courses on different themes such as the history of tourist attractions and railroads, and also accepts applications for members-only tours.

HIS Co. and JTB Corp., for their part, have begun serving customers over video calls on smartphones.

KNT Co. will soon launch a service in which a CG avatar will provide consultation services to customers on a dedicated website.

The travel industry has been in a tailspin, with JTB posting its worst ever consolidated final loss of ¥105.1 billion in the fiscal year ending March 2021.

“This business crisis is on a different level [from past predicaments],” JTB President Eijiro Yamakita said.

JTB plans to pare down the number of its outlets to 365 in fiscal 2021, from 480 in fiscal 2019, as a cost reduction measure. Nippon Travel Agency operated 194 outlets at the end of last year, but plans to halve that number by the end of next year.

The reduction in the number of outlets reflects customers’ aversion to in-store service during the pandemic, as well as a larger shift in how people choose to book travel packages, at a time when fully online travel agencies such as Rakuten Travel Inc. are quickly gaining favor.

According to Euromonitor International Ltd., a U.K. research firm, online travel sales in Japan overtook those of travel agencies’ outlets for the first time in 2020.

“Travel agencies need to create user-friendly systems online and raise awareness of the systems,” said Kazuo Takahashi, a professor at Kindai University who specializes in tourism marketing. “Bold and continuous investment in systems will be indispensable for this purpose.”

As travel companies navigate the harsh headwinds of the pandemic, they will have to find ways to cut fixed costs by reducing the number of outlets, while attracting new customers by enhancing their digital presence to boost sales.