From sake tourism to temple stays, ESG to metaverse, North Asia waits patiently for rebound

From sake tourism to temple stays, ESG to metaverse, North Asia waits patiently for rebound
18/01/2022,
by Yeoh Siew Hoon,
in Destination Marketing,
Distribution,
Events,
Featured,
Marketing,
Regions,
Startups

“KIKO No Ikioi” – Japanese saying for “no choice but to carry on” – and travel companies in North Asia have certainly carried on even though cross-border travel remains at a standstill, two years into the pandemic. Global to local OTAs have carried on investing in tech, team and product; startups have emerged, addressing Covid-induced opportunities; and new players have risen, promising to shake things up in what will be an exciting 2022. Here are the key takeaways from WiT Japan & North Asia 2022.

The night before WiT Japan & North Asia, I had recurring nightmares
and wondered if we had reached a bridge too far – to run a hybrid, bilingual
event in an untested venue with an untested production team, us in Singapore
and them in Tokyo, and a language barrier between our teams as wide as the
Japan Sea.

My nightmare did come true the first 10-15 minutes (although it felt longer) when nothing worked as planned – we should do a Bloopers video – but the Samurai performance by Katsumi Sakakura (featured image), conceptualised during Covid as an act to “dispel the plague”, inspired us to dispel all fears and power on and after a bumpy start, we managed to power through our two-day ninth edition which marked our “Homecoming” to Tokyo.

When travel comes home, it will be massive but for now …

In Japan, 32m inbound travellers (recorded in 2019) are waiting with
bated breath to return. Ask anyone which is the first destination they want to
get to when they can, and I guarantee, Japan is up there. Then there are the
20m outbound Japanese who haven’t been able to travel out the past two years.  

In South Korea, an outbound powerhouse that produced more than 28m
outbound trips in 2019, 2.3 times the number of outbound trips in 2009 and 1.5
times the number of trips in 2015, residents are panting at the starting gate.

In Taiwan, one of the most closed countries in North Asia, travel
agencies suffered the biggest loss in revenue (96.8%) between 2019 and 2021
given most are heavily reliant on outbound travel while hotels, which had
quarantine and staycation business, fared better, sustaining a 29.5% drop,
according to figures shared by Daniel Cheng of Redefine Tourism Mixer, Taiwan.

North Asia cross-border travel remains stuck  – Akiko Yoshida, senior executive vice president, Japan National Tourism Organisation, admitted she had no answer to when Japan’s borders will open. And when you consider that East Asia was responsible for 70% of Japan’s inbound visitors, and that governments in the region have been most conservative in opening borders, (and let’s not even talk about China), well, full inbound recovery is still a long way away for the region.

• Sake tourism, temple stays, volunteer activities – domestic just got a whole lot richer

For now, the priority is to get domestic travel back on track, and a stronger home industry has certainly emerged out of this period. From Japan to South Korea to Taiwan, speakers shared stories of regional revitalisation of remote places, that had been largely forgotten when the world looked outwards.

In Japan, Otera Stay is turning abandoned temples into wellness retreats. Mai Sato, founder, said of the total 77,000 temples in Japan, 30% (20,000) are set to disappear in the next 30 years. “What a waste,” she said and so she started her quest to convert temples and shrines into “the place you discover yourself, the experience you change your life”.

Rina Nagaoka sharing Otetsutabi’s story about the platform that matches volunteers with local businesses and activities. For now, the demand is local but she said there is growing interest from overseas travellers.

Rina Nagaoka set up Otetsutabi to connect volunteers with local businesses and communities in which volunteers get paid. This has created a whole plethora of local activities – from helping at elementary schools to cleaning up plastic to chopping wood – as well as forging closer ties between traveller and local community. Pitching as part of the Startup Showcase, she won the People’s Choice Award.

Kou Sundberg, founder of Kiraku, also runs Nazuna, which converts traditional Japanese homes into luxury lodging. A former investment analyst, he wants to start a new trend of sake tourism in Japan. His company has renovated a sake brewery in Narai-juku, and apparently, it’s exporting most of its sake to Singapore. If wine tourism works so well elsewhere, why not sake tourism in Japan, he said.

Gina Tsai: The placemaking alliance, set up to address tourism congestion, has resulted in an array of local experiences being created across Taiwan.

In Taiwan, a “placemaking” movement has taken off in local spots in which local communities are encouraged and empowered to “make” their own experiences and activities. The Placemaking Alliance, with about 100 members, is led by Gina Tsai, president, Creative Tourism and Community Design Association. She cited Taitung province as an example, in which government worked with local incubators for placemaking, and products and services were distributed through travel agencies and digital platforms.

Taiwan’s number one listed travel company, Lion Travel Group, with US$1b annual revenues pre-Covid, in its pivot to domestic, invested in destination experiences by cooperating with government entities such as Taiwan Railway to convert railway stations to tourism spaces. “Our goal is to serve FIT business in domestic travel, which is 95% of the addressable market, and that prepares us for the inbound future,” said Ryan Shen, head of investment, who added he cannot wait for the Taiwan-Japan corridor to open.

The panel discussing the blurring of lines between live, work and play: From left, Kenichi Shibata moderating; Takeshi Sabetto, ADDress; Isa Saito, PerkUP; and Mai Sato, Otera Stay.

New market emerges as lines between live, work, play blur

PerkUP, which runs co-workation.com, is turning abandoned schools, camping sites, cottages and unused hotel grounds, into places for corporate events, retreats and experiences. It is addressing the blurring of lines between live, work, and play which is playing out in full force in Japan. Isa Saito, co-founder and COO, estimates the Japanese workation market at 3.34 trillion yen.

Takeshi Sabetto, secretary of the Sharing Economy Association, and
workation advisor to Japan Tourism Agency, started ADDress, a multl-location
sharing service to enable Japanese to stay anywhere they choose. It currently
has 200 ADDress houses, with each property managed by a Yamori (concierge).

He said the pandemic had created new aspirations by Japanese – “want to
live anywhere, anytime”, “want to live in both urban/rural areas”, “while
having remote work, want to feel the air of nature” and “want to interact with
people who live in local area”. Currently, its users are 65% male and 35%
female, with singles forming about 60% of the community.

With vacant houses in Japan expected to reach 21.66m by 2033, he said there
was a huge opportunity to address four sectors – workation (remote work),
second hometown, weekend house and “seeking a place to migrate”.

This change in work culture is particularly profound in a place like Japan, with its “salaryman” image. JTB’s liquidation of fixed assets, selling its headquarters in Tokyo as well as an office in Osaka, while done out of financial consideration, gives the organisation impetus to introduce “flexibility, remote work, work from home”, said JTB’s CEO and president, Eijiro Yamakita

Kathy Matsui: ESG is exploding in Japan and her fund is targeting early to mid-stage startups to start their journey right with ESG principles embedded from the outset.

ESG, diversity firmly on top of agenda

ESG is exploding in Japan, said Kathy Matsui, general partner of the $150m MPower Fund, which is Japan’s first ESG-focused fund. The former Goldman Sachs executive, known for her championship of “womenomics”, decided to set up the fund, with two female founders, to help early and mid-stage startups start their journey right with ESG principles embedded from the outset.

It’s hard to change mindsets of large, traditional organisations while
younger minds are more “malleable”, she said.

In that regard, Takaya Shinozuka, founder of Reiwa Travel, is an example of an entrepreneur who, in his second startup, is placing HR and governance among its top priorities, along with product and finance. “We are taking this time to get HR and governance right from the start to build a more sustainable business,” he said.

Matsui said Japan has made good progress in terms of representation of
women in the workforce – moving from 50% in 2014 to 70% in 2019 – but “there is
a dearth of women in management and leadership”.

JTB’s Yamakita said the travel company, currently employing about 20,000
people, was also addressing this issue and had set a 30% target of diversity in
leadership “although it will take some time”, he said.

Matsui, whose fund is eyeing healthcare, fintech, next-generation
workplace and education, and environment, said the travel vertical was
interesting for her fund in the areas of sustainability, wellness and the
future of work.

Global OTAs sharing how they’ve localised and invested in tech and product: From clockwise, top right, Laura Houldsworth, Booking.com; Michael Dykes, Expedia Group; Timothy Hughes, Agoda.

Global becomes local, pushes loyalty, new products

Global OTAs such as Expedia, Agoda and Booking.com are not being left behind in this domestic world. With their global coverage, they have been able to recover well as a whole, have invested in tech and product – Booking.com, for instance, has introduced flights in five markets in APAC (Thailand, Philippines, Australia, Hong Kong and India) – and they will also emerge as stronger domestic players.

In fact, Timothy Hughes, vice president corporate development, Agoda said “we are as much domestic players as anyone in Taiwan, Korea and Japan” and the OTA has spent the past two years working on hotel supply for domestic markets. “Domestic supply is different from global supply,” he said.

The fact is, these OTAs have had time to work on their domestic content
and partnerships the past two years.

Michael Dykes, senior director, market management, Northeast Asia, Expedia Group, said 60% to 80% of current demand in Northeast Asia is from Expedia Group loyalty program members, and the group’s move to merge its loyalty scheme will strengthen its market position in the region.

Laura Houldsworth, managing director, Asia Pacific, Booking.com, said, “Though the Omicron variant may be causing a spike in cases across Asia Pacific, travel sentiment is still positive, especially with regards to domestic travel. According to our Travel Predictions research for 2022, 72% of global travelers surveyed agreed they would say “yes” to any vacation so long as their budget allowed. In fact, 74% of Japanese travellers agree that travel helps their mental and emotional wellbeing more than other forms of self-care.”

For these global OTAs, diversity and sustainability will also be dominating their agenda even as they look to prepare for the rebound in cross-border travel in Asia. Dykes does not believe Asia’s current laggard position in recovery will hold it back in innovation and aspiration when travel fully returns.

Trends that will disrupt corporate travel, from anti-clockwise, top left, Kei Shibata, Venture Republic Group; Johnny Thorsen, Spotnana; Bertrand Saillet, FCM Travel Asia

The biggest disruption to come is in corporate travel

With the pandemic creating an upheaval in business travel and meetings, this sector is ripe for an overhaul, and tech will play a big part in it.

Bertrand Saillet, managing
director, FCM Travel Asia, cited Duty of Care as a key trend to watch. “There
is a realisation from companies especially in Japan that they need to
do more in that space, and TMCs have a role to play,” he said. To prepare for
the rebound in Japan, FCM has taken a
stake in Japan’s NSF Engagement, formerly Sony’s inhouse corporate arm.

Kei Shibata, CEO, Venture Republic Group – TRAVEL jp & Trip101, sees personalisation as a key trend. Personalised service as opposed to self booking service can be the key to better address the uncertainty around travel rules and restrictions, said the executive, whose company launched a chat-based corporate booking tool with LINE. So far, 100 corporations had signed up for the service and he was seeing demand for dynamic packaging – clients wanting to book flights with hotel stays.

Johnny Thorsen, vice president, strategy & partnerships, Spotnana, tips transformation –global travel programmes will migrate from a country-by-country model to a single global instance with unlimited flexibility – and “platformitisation” – stand alone products and services will be replaced by an open microservice architecture with unlimited freedom of choice for the customer.

And the biggest
change to come – sustainability. “How can each company’s travel programmes
meet their sustainability goals – this is much more than just carbon footprint,”
said Saillet, while Thorsen added, “Companies will start making active new policies around green
travel management.”

Michael Goh, Dream Cruises, on changing customers and distribution trends.

All eyes on the premium segment, new customers emerge for cruises

There is expectation that the first wave of recovery will be in the premium segment as is already being seen in the cruising sector. Michael Goh, president of Dream Cruises and head of international sales for Genting International Lines, whose ships have carried 500,000 guests since it started cruises to nowhere in Asia a year ago, said it was seeing most demand for its premium suites. “People are hungry for luxury experiences, cabins with private balconies,” he said.

The pandemic has
also caused a huge shift in customer demographics – the 20-40s now form 70% of
Dream Cruises’ customers while over-40s form the rest – and this has resulted
in Dream Cruises integrating APIs with Klook and setting up shop on ecommerce
sites like Lazada.

JTB’s Yamakita said its JTB Boutique line of business would be a key focus with a new division created to look after premium products such as private charters and cruises.

JTB’s Eijiro Yamakita: “Yuki ni taete baika uruwashi”, translated, “Withstand the snow then plum blossom is beautiful”.

Metaverse, NFTs and all that buzz

In the Japanese OTA panel, the metaverse, possibly the biggest buzzword of 2022, was cited along with sustainability as trends to address, with leaders saying they would be curious to know about its applications to travel.

In Taiwan, a startup called MomentX is attempting to show just that by healing brands develop their business in metaverse. Founder James Lee said MomentX is a “cross-chain metaverse platform powered by Web3”, supporting multi blockchains – Ethereum, Flow, Tezos, Polygon – and integrating with mainstream wallets such as Metamask, Blocto, Temple.

When asked about how they see the metaverse play out in destination marketing or in experiences, Takaya Shinozuka of Reiwa Travel and Eric Gnock Fah of Klook said they didn’t know enough about it to make any indepth comment but they both felt that for the moment, given the inability to travel, travellers would be more interested in physical travel than being in a virtual world.

“We’ve been in
it for so long and people are missing the physical connections of travel,” said
Gnock Fah.

I end with a quote
shared by JTB’s Yamakita, “Yuki ni taete baika uruwashi”, translated, “Withstand
the snow then plum blossom is beautiful”.

Here’s to beautiful
plum blossoms in 2022.

Previous post Travel is good for mental well-being, “vaccinations are a part of life”
Next post Mike Ledbetter Announces His Candidacy for President of the United States for 2024 and His New Book, Nine Sovereign Kings: The Return of God