Japan Market Report November 2018 Visit Finland Country Representatives ShigeyoshiNoto and KoichiNumata
Semiannual Report JAPAN Summer season 2018 and outlook for winter 2018-19 CONTENTS Factors affecting the results of the summer season 2018 Outlook for the winter season 2018-19 Prospects for the spring/summer season 2019 Trends and other relevant travel related topics Facts and figures - Market review data
Factors affecting the results of the summer season 2018 Economic outlook continues to be positive. Strong corporate earnings have been leading to fixed investment. Unemployment continues to remain at a low rate of 2.3%. Economic growth is projected to remain stable next year although slowing global growth and a scheduled tax hike in October in 2019 are the main downside risks. Japan has suffered severe damages from natural disasters this year. In July, Western Japan region around Hiroshima lost over 200 lives due to flooding from the heavy rain fall. Over 33,000 households were damaged. In September, large scale typhoon struck greater Kansai region such as Osaka and Kyoto. Kansai International Airport was forced to close operation from September 4 th until 20 th. Magnitude 6.7 earthquake in Hokkaido caused blackout for the entire 2,950,000 households also in September. Natural disasters affected consumer decision making for leisure. Japanese overseas travelers are growing steadily at 4.4% between January to September. The number of overnight stays by Japanese travelers has declined compared to 2017 during June to August period by -9%. September 2018 went down by -17%. The air capacity between Finland and Japan has increased 15.5% during the summer. The capacity out of Narita International Airport has increased by 30%. Japanese outbound to central Europe especially France is selling very well due to the pent-up demands from the concern over security and possible terrorism attacks. Outbound from Europe to Japan continues to grow at a substantial pace putting pressure on higher yield management by airlines.
Factors affecting the results of the summer season 2018 Changes in demand While nature destinations such as Switzerland, Canada and New Zealand are struggling this year, leisure travel demands to city holidays in Central and Eastern Europe are surging. France is finally recovering with pent-up demands from the multiple terrorism incidents. Consumers are now feeling safer to select city break holidays unlike in the past few years. Extensive coverage of this year s frequent natural disasters by the Japanese media has had significant impact on consumer sentiment. The regional market like Nagoya has limited direct access to Europe compared to NRT and KIX with only Finnair and Lufthansa operating to Centrair Airport. Their load factors have been driven by strong outbound demands to central Europe and surging inbound traffic putting pressure on the tour products to Finland. The booking lead time for Finland tends to be much shorter. Visit Finland needs to develop the action plan reflecting on this regional uniqueness. Finland s image as a travel destination Perceived as a safe and beautiful country. Helsinki city break continues to be dominating the market and trade distribution. Late summer aurora in Lapland and Moomin tour products to Tampere and Naantali continue to be favored by Special Interest (SIT) and family segment. Changes in distribution Series group bookings to Nordic regions continue to struggle compared to other European destinations. While the volume is decreasing, the size of groups is also diminishing leading to lowered profitability for travel agents. The share of FIT market continues to grow. Business to Finland is growing for specialized travel agent such as Finn Corporation and Tabikobo which have recorded consistent growth over the summer period.
Factors affecting the results of the summer season 2018 Changes in accessibility Finnair has increased frequency and upgraded aircraft from A330-300 to A350. While Japanese outbound traffic to Europe has been growing this year, inbound from Europe has also increased substantially, adding pressure to Japanese outbound markets. Jan. to Sep.2018 UK+7.7% France+14.4% Germany 9.2% Jan. to Jul. 2018 Nordic countries +7.9% (Finland Norway Sweden Denmark) Products that have been attractive Helsinki City Break, Moomin Museum, Moomin World, Double aurora viewing, Regions that have been attractive Helsinki is the primary choice of destination. Tampere in Western Lakeland, and Naantali in Archipelago have drawn Moomin enthusiasts. Product development of double aurora products in Lapland region Campaigns, joint promotions results FinRelax, Stopover and City breaks continue to be the main themes for this summer. Aurora and nature experiences in late August is appealing to the Japanese market. While it is important to communicate these core messages, it is imperative to expand the target audience to attract different segments to sustain the growth level. Visit Finland Sauna Campaign was launched in September. The campaign landing page was developed to introduce 100 sauna selection and invitation for participation in the stamp rally. Win a trip to Finland lucky draw was run during JATA Tourism Expo to raise awareness and generate interests. It generated over 15,000 entries.
Outlook for the winter season 2018-19 Increase and reasons for the increase As reported in the VF Japan May Report, the performance of the Japanese market during the winter season was sluggish last year. We have identified several challenges and issues. Visit Finland has developed the Market plan based on this analysis to counteract the situation. We have launched the consumer campaign, joint promotions and co-branding activities for both b2b and b2bc channels to stimulate both the travel industry and the consumer market. We have been working closely with local Finnair Sales teams and Marketing in Tokyo, Nagoya and Osaka to raise Finland profile among competing European destinations. These activities will stimulate the travel industry to increase product developments and distribution of Finnish tour products. The Japanese new year holiday will be 9 days for most of people in 2019. It will be one of the longest holidays in recent years. The travel industry expects good demands for long haul destinations which will give an opportunity to generate higher yield and revenue for travel agents. Finnair will increase its capacity to Kansai International Airport this winter by 140% with both more frequency and aircraft upgrade to A350XWB. New winter products We have been undertaking some key initiatives to develop educational markets from Japan. We are expecting to see some outcomes as a result of these activities this winter. In addition, Visit Finland Sauna Campaign was launched in late September. We aim to expand our reach to a new segment and generation through this promotion.
Outlook for the winter season 2018-19 New sales channels As FIT markets continues to expand for Finland, consumer direct bookings to Finnair are growing especially for early bird sales and special events such as World Figure Skating Grand Prix in November. The direct distribution channel is very important in addition to joint promotions with traditional trade partners and OTA, What are the trends for the winter 2018-19? The summer market trend is most likely to continue in winter. Demands for city break holidays and circle tours in central Europe are projected to be strong. Finland would be able to expect positive influence from the movie Snow Flower for Helsinki and aurora viewing tours to Lapland thanks to its PR activities leading up to the official release on 1 st February. Which are the traveler segments? - Female 30 s to 40 s - Millennials - University students - Corporate travelers
Outlook for the winter season 2018-19 Ad hoc marketing opportunities Visit Finland Sauna campaign will continue to implement cross industry promotions with Finnish food companies such as Kyrös and Lifestyle such as Kauniste, which is the cover page design for VF s Sauna stamp rally promotion. Kauniste recently opened its flagship shop in Jiyugaoka. This area is one of Tokyo s most stylish and trend setting fashion district. We are currently planning joint promotion opportunities with Lifestyle industry colleague at Business Finland Japan. Warner Brother s Japan is aggressively promotion the upcoming release of the movie Snow Flower in February. VF has been working closely to look for co-branding marketing and PR opportunities along with Finnair marketing team. A special preview event in Helsinki and Levi will take place in January. Select Japanese entertainment media will be invited to join us for celebration of the release. VF is also working with Destination Levi and Helsinki Marketing to organize B2B events. Daikanyama T-site This is the flagship shop for Tsutaya Corporation, which runs over 1,400 entertainment retail shops across Japan. Tsutaya is a leading retailer specializing in books, DVD, movie rentals, music and lifestyle goods. Daikanyama T-site is located in the fashion district. Daikanyama attracts high-end customers from the Tokyo market as well as Japanese domestic tourists from other cities. Its location is very close to Jiyugaoka district.
Prospects for the spring/summer season 2019 What trends should be considered in product development to increase the demand in the spring/summer time? Finland and Japan will celebrate 100th anniversary of diplomatic relations next year. There will be a lot of events and promotions to commemorate good friendship and cultural exchange between the two countries. For example, a Japanese love romance film called Snow Flower featuring popular actress and actor will be released at over 300 movie theaters across the country in February. The highlight of the film features scenes of Helsinki city break in summer where the main characters enjoy sightseeing at various attractions. Levi also plays a significant role where the couples goes to aurora viewing. Official promotion site http://wwws.warnerbros.co.jp/yukinohana-movie/ In March, Moomin Valley Park will open in Hanno City. This highly anticipated theme park opening will generate extensive media coverage. The already popular Moomin character will become a strong country icon in Japan. Official promotion site https://metsa-hanno.com/en/ Aside from the traditional products, it will be timely to focus promotions around Finnish culture and lifestyle products in 2019 and onwards. Growing popularity of public saunas around the world is also happening in Japan especially among celebrities, professional athletes, entrepreneurs and the Japanese millennials who appreciate mindfulness and healthy experiences. More and more people are looking to saunas for peace of mind and meditation opportunity to get away from today s stressful society. Sauna s health and beauty care effect are appealing to active female consumers. Finland offers a wide variety of authentic sauna products both in a city and nature across the country.
Prospects for the spring/summer season 2019 Which present target groups should be considered to increase the demand? - Female in 30 s to 40 s repeat travelers to Finland - Corporate travelers for a stop-over program - Males - University students Which new target groups should be considered to increase the demand? - Both female and male millennials - Family
Trends and other relevant travel related topics Trends There has been a major shift for travel demands from nature holidays to city breaks for the long haul markets in Japan. While Switzerland, Canada and New Zealand struggle, city holidays in France, Italy, Germany and Austria have been very popular. The most significant change in the consumer mentality is less safety concern over possible terrorism in the past year. In terms of security, Japan has faced with severe casualties and damages from multiple natural disasters such as typhoon, earthquake and flooding this year most likely due to the climate change. The forced closure of Kansai International Airport had huge media coverage. Japanese millennials are travelling. The purpose is changing from traditional sightseeing trips to more experience oriented leisure like the western style vacation. Active travelers are now looking for stories and activities on top of visiting famous attractions. New distribution channels The share of FIT market and independent travelers continues to grow. This trend is giving both a challenge and an opportunity to Finnish suppliers. The traditional travel distribution is still heavily dependent on the Japanese DMC to handle centralized bookings for already popular destinations within Finland. Tour operators are usually slow to adopt new trends and demands. On the other hands, FIT market has a good potential to drive business beyond Helsinki given Finland s safe image and infrastructure accessibility across the country. Direct dealings between Finnish suppliers and Japanese FIT Travel agent buyers should be encouraged. In addition, Finnish suppliers should adopt to the market needs to handle Japanese tourists. Use of IT and apps could provide a solution especially for the language barrier.
Trends and other relevant travel related topics Online channels OTA bookings are very effective in driving already popular destinations such as Helsinki, Rovaniemi and Naantali. A room inventory and pricing availability could be a bottleneck during the peak summer season. The average lead time of bookings to Finland has been around 2 to 3 months prior to departure. It is much shorter compared to the booking pattern for other European destinations and inbound travelers from Europe who tend to plan holidays well in advance. OTA has not been effective in promoting new destinations and new products. Visit Finland must encourage OTA to increase destinations and product portfolio across Finland. It is critical to develop a distribution strategy to leverage on the scheduled big events in 2019 such as 1.Opening of Moomin Valley theme Park 2.The movie Snow Flower 3.Visit Finland Sauna Campaign. A concept of destination hopping in Finland could meet the emerging demands for active millennials who tend to prefer experience and soft adventure. Package tours and FIT products tend to limit choices of suppliers and flexibility of the itinerary. Visit Finland is shifting the communication strategy towards flexible travel plans to capitalize on Finland s core strength, safety and accessibility. The sauna stamp rally promotion is one example where the program invites potential participants to visit various sauna destinations and products across the country to collect stamps for prizes. Sauna region hopping in Western Lakeland is a perfect match with OTA as they have much less constraints compared to traditional travel agents.
Trends and other relevant travel related topics Competitors actions France and Japan are celebrating 160 th anniversary of their diplomatic relations. Over 300 cultural and commercial b2b and b2c events have taken place across Japan. Travelers to the Western Europe has been surging after the sluggish recovery in the past few years driven by the pent-up demands due to the concern over the security. Sweden has been active in holding cultural and promotional events to commemorate 150 th anniversary of its diplomatic relations with Japan. Estonia, Latvia and Lithuania have been celebrating their 100 th anniversary of independence. Japanese visitors to Estonia continue to grow. Austrian Airline resumed its five time weekly operation between Vienna and Narita since the suspension back in September 2016. It has drawn visitors to the central Europe.
Trends and other relevant travel related topics Visit Finland launched Sauna Campaign in September. A campaign website was developed to showcase select sauna facilities across Finland. Finland Sauna Ambassadors are being recruited to support our promotion throughout the next year. Goshuin-cho booklets are being produced to run stamp rally campaign. Our sauna campaign is a good example cross industry promotion with Food and Lifestyle to leverage Finland brand image to tourism promotion. We have been implementing joint promotions with our key travel agent partners for the first time over ten years. Finland and Japan will celebrate 100th anniversary of diplomatic relations in 2019. There will be a lot of promotional opportunities and cultural events to commemorate friendship between the two nations. A Japanese movie called Snow Flower will be released on 1st February 2019 at 300 theatres across Japan. This love romance movie was filmed in Tokyo, Helsinki and Levi. Highly anticipated Moomin Valley theme park will open on 16th March.
Japan Market Review 28/11/2018 First name Last name 15
Japanese overnights in Finland Seasonal overnights in 2016, 2017 & 2018 Year 2017 Whole Finland No. of Japanese overnights 2016 2017 2018 Actual /(expected) seasonal change 2017 vs. 2016 2018 vs. 2017 Winter (Dec-Feb) 53 400 53 800 51 100 +1% -5% Spring (Mar-May) 36 100 47 400 35 700 +32% -25% Summer (Jun-Aug) 68 700 76 300 69 400 +11% -9% Reasons behind the actual / expected change World Figure Skating Championships in Helsinki in Mar-Apr2017 Rovaniemi 41% Inari/Saariselkä 33% Kittilä/Levi 7% Kuusamo/Ruka 6% Lapland 2018 Winter 19 800-18% Spring 5 400-10% Summer 1 500-4% Autumn Autumn (Sep-Nov) 57 100 61 800 +8% (+xx%) Lakeland 2018 Winter 2 000 +4% Japanese overnights in Finland by season in 2017 Spring 2 000 +7% Summer 4 700-5% Coast & Archipelago 2018 Winter 2 400 +52% Spring 1 500-1% Summer 4 500-2% Autumn Turku 20% Oulu 14% Vaasa 8% Uusimaa (excl. greater Helsinki area) 11% Helsinki 90% Tampere 32% Jyväskylä 11% Sotkamo 11% Heinola 7% Lahti 5% Hämeenlinna 5% Autumn Helsinki area 2018 Winter 26 900 +3% Spring 26 700-30% Summer 58 700-10% Autumn Source: Visit Finland Statistics Service Rudolf, Statistics Finland
Trends for seasonal overnights in Finland Japanese visitors 90 000 High winter season (12-02) Spring season (03-05) High summer season (06-08) Autumn season (09-11) 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Visit Finland Statistics Service Rudolf, Statistics Finland