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Why Japan’s Travel Companies Trail Foreign Competitors:
the Battle of Digital Superiority in Travel to Japan
By Terrie John Lloyd

AuthorTerrie John Lloyd

Selling Travel Is a Battle for the Mind
What images spring to mind when you think of a week off in
Hawaii or Bali? Warm, balmy nights? Pristine waters with tropicalfish, and little wavelets lapping upon a beautiful white-sand beach?
Maybe a sparkling swimming pool with cocktails and something
delicious for lunch? Or, colorful designs, chaotic but interesting
marketplaces, sweet-smelling tropical flowers, comfortable clothes,and exotic snacks you never tasted at home? Whatever images you
have, they are probably the same as hundreds of people around you,and more importantly they were probably expertly manufactured bysomeone’s marketing team. Yes, sorry but your relaxing, inspiring,feel-good images are borrowed: that’s how pervasive and persuasive
digital travel marketing has become these days.
And in visualizing these images, you are touching just the tip ofthe digital technology iceberg in the modern travel sector. Beyond
mere marketing there is a veritable mountain of technology,
connectivity, and processes you never see, but which all contributeto making a traveler’s holiday safe, memorable, and repeatable. In
fact, without technology, much of the reliable, exciting, cost-effective
experiences being delivered by the travel sector these days simply
would not be possible. Instead, we’d be stuck in the chaos of“uninformed” tourism reminiscent of the 1970s.
Travel in 2018 is the primary “big ticket” way people reward
themselves and their loved ones, and as a result it has become thelargest industry in the world. According to the UK-based World
Travel & Tourism Council, the global market was worth US$2.57
trillion (3.2% of global GDP) in 2017, and employed 313 million
people, or about 9.9% of global employment. Here in Japan, there
are three travel sectors: Domestic, Outbound, and Inbound. Of thethree, only Inbound (non-Japanese traveling to Japan) is growing. In
fact, it’s growing so much that in the last five years, Japan has
zoomed up the charts of favorite international destinations — fromaround No. 30 to the Top 15 this year (2018), and probably into theTop 10 by 2020 (Chart 1).
The numbers really do speak for themselves. Japan as a Top 15
market has grown about 277% since 2014, while the next fastestgrowing market, Mexico, only achieved a growth rate of 153% overthe same period (Chart 2).
Now, why did I ask you for your mind’s eye images of Hawaii or
Bali? Precisely because these tropical resorts are considered to be
the benchmarks for holiday paradises by most people. So it’s easy to
see that such destinations blessed with picturesque local assets areeasy to market. Once people experience such paradise, they often

CHART 1

CHART 2Top Inbound destinations 2013-17

Top 12 tourism destinations % growth
2014-1790

millions of people

80

300%

70

US$50 billion
spending
by 2020

60
50
40

200%
150%
100%

30

50%

20
10

2013

0

France
Spain

250%

2014
US

China

Italy

2015
MexicoUK

2016
Germany
Thailand Turkey
Austria Japan

France Spain

US

China

Italy

MexicoUK

Germany

Thailand Turkey

Austria

Japan

2017

Source: Statistics from the World Travel & Tourism Council. Actual diagram, data organization
by author.

46 Japan SPOTLIGHT • January / February 20190%

Source: Statistics from the World Travel & Tourism Council. Actual diagram, data organization
by author.

https://www.jef.or.jp/journal/

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become repeat visitors — and such travelers are considered the holygrail in the tourism sector, because they are loyal, like curated highgrade experiences, and of course tell their friends. Conversely,
because the paradise stereotype is so well entrenched, any travel
provider who doesn’t deliver customers their quintessential tropicalparadise holiday is quickly going to be criticized or down-rated on
the Internet and eventually go out of business. So being popular has
its stringent trade-offs.
Japan, on the other hand, is much more difficult to market
because it doesn’t have “holiday-perfect” assets. Instead, people are
initially drawn here by the nation’s cultural assets, such as manga
and anime weirdness, food, high-tech lifestyle, and countryside
traditions. But once here, those same visitors are quickly confronted
by the real challenges of the crowds, language, high prices (unless
you know where to go), lack of reservations, and other big negatives.
For a visitor to navigate these challenges, they need the same level ofknowledge and support that locals take for granted, and that is ahuge opportunity for travel operators with digital technology skills.
Once a customer knows the ropes, Japan is reliable, fun, mentally
stimulating, convenient, and good value — all positive values thatwill generate repeat visitors, even despite the lack of white-sandbeaches, cheap massages, and tropical cocktails.
Why has travel become such a major sector globally? The primarycontributing factors are: i) improved accessibility of remote places,
thanks to the low cost of mass air transport, ii) increased disposable
incomes thanks to a growing global middle class, iii) realization by
governments worldwide that travel is just as efficient a means toearn foreign exchange as any export trading business, iv) rapid
increase of investment in hotels and other tourism infrastructure,and v) advances in technology. It is really only this last factor that
ordinary companies can influence, and therefore for anyone in thetravel sector it’s one of the most important things to invest in and get
right. Unfortunately, here in Japan, technology is the weakest part of
the tourism delivery chain, and this article suggests how to fix thatproblem.

Digital Technology Core Expertise Needed
There are four fundamental digital touch points for recreational
travelers coming to Japan, and these are all some mix of either
media, content, or functionality.
The four touch points are: i) Inspiration — any message orfunction which causes people to decide to travel to Japan instead of,say, South Korea or Thailand; ii) Pre-visit Purchase — any message
or function which allows people to pre-buy their trip hotels,

CHART 3Customer journey — touch points
Inspiration• Websites• Content
creation• Content
management• Marketing• Search• Social

Pre-visit
Purchase• Websites• Mobile apps
• Shoppingcarts• Payment
gateways• APIs• Cloud control
apps• Search• Social

Pre-visit

Post-visit• Websites• Mobile apps
• Shopping carts• Payment
gateways• APIs• Cloud control
apps• Search• Logistics• Websites• User content
creation• Content
management• Search• Social

Source: Diagram, original concept by author.

transport, meals, guides, activities, etc., and by pre-buying to maketheir trip experience less stressful and more organized; iii) Pre-visit— any message or function which allows travelers actually travelingto do, see, or buy things on the spur of the moment, such as when it
is raining; and iv) Post-visit self-esteem — any function that allows
returning travelers to message their friends and let them know what
they discovered or recommend.
Understanding these four digital touch points is extremely
important in terms of planning what digital technology to put in place
to intersect the traveler at the right moment, and in doing so, to winthem over as a loyal, repeat customer. The actual technologies we
use as travel operators to achieve customer intersection fall roughly
into the following touch point categories shown in Chart 3.
As you can see, there is a lot of overlap in the common areas ofcontent, while functionality varies and tends to be specific to themarket niche being served. For example, the functionality forbooking activities online while you’re in Japan will be rather different
to booking hotels online before arriving. In addition, people at the
pre-visit stage are almost 100% using mobile phones and needlightweight applications, while those still booking from the comfortof their own homes are more likely to be using PCs and can handleheavier applications.

Baseline Requirements of Digital Solutions
There are some baseline measures for digital travel technologythat recognize and support the fact that users are shopping for a
non-essential item (travel) and therefore are acting on dreams andstimulation, not on an essential need. This means that the user
experience has to be smooth and responsive enough to facilitate theJapan SPOTLIGHT • January / February 201947

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Article 2user acting on impulse, and not giving them time to rethink animpulse action, or worse still, being driven away from the website
because of frustration with it. These four factors are:- Speed- Ease of Access- Utility- Appropriate Language
We find that Japanese companies often fail in all four categories,
mostly because they forget to put themselves in the customer’s
shoes and don’t think enough about the “Customer Journey”.

1. Speed
The point of technology is to make a process faster and hopefully
easier, both for the user making trip decisions, and for the reseller/
supplier, conducting all the behind-the-scenes connectivity,
confirmations, and general logistics. Ideally, as a visitor sees
something they like on your website, they should be able toimpulsively and swiftly to buy that product/service — thus earning
you a committed sale. We often see companies in Japan accept
halfway measures as a means of faking speed. As a result, clients get
disappointed, disillusioned, or just plain stressed, because they can’t
conveniently “book and forget”. For example, if you buy a two-hourwashi paper-making activity from a Japanese website, although you
can search, book, and pay for it in just a few minutes, you won’t
actually get a confirmation from the aggregator for up to 24 hours,
as he/she confirms with the final supplier whether or not the activity
is really possible/available.
Why is this happening? Because most of the nation’s activity
operators are still telephone-driven. From the aggregator/reseller’s
point of view, the 24-hour turnaround is just commonsense andbecause they have to fit in with the primitive computing ability ofmany original merchants. Those extra hours allow them to properly
confirm the availability and logistics. On the other hand, from thecustomer’s point of view, having to wait the 24 hours means that theactivity may not be available which would clearly be an unwanted
point of uncertainty and stress. This kind of frustration with thewebsite is just the type of thing that prevents users from trying tobook the next activity, just in case the first one doesn’t getscheduled. Or to abandon the site altogether. This is why on
Japanese activity sites there are a few high-volume activities that get
all the business, and the hundreds (or even thousands) of others getnone.

48 Japan SPOTLIGHT • January / February 2019

2. Ease of AccessTraveling to Japan is becoming a popular thing to do. And sincepeople are located literally anywhere the Internet is, if a Japanese
travel operator wants to target this market, there are some minimum
things they need to do to ensure easy access to their information andfunctionality. For example, we often see Japanese operators runninga local dot.jp domain something like “japantravelconcierge.jp” (not areal site). From their point of view, this type of domain is convenient
to register from within Japan, and once activated, if you use a PC
anywhere in the country (of Japan), you will find that it is plenty fastenough, and well indexed on local search engines (Yahoo! Japan andthe like).
But in fact, a dot.jp address is not a Top-level Domain (TLD), andso while its content may be well indexed within Goo, Google, Yahoo!
Japan, or Bing, in fact for people overseas the international searchengines will assume that Japanese domain content is of low interest
to non-Japanese (even if the site itself is in English) andsubsequently downgrade the search results returned to the overseas
user’s browser. The level of impact of not choosing a TLD can meana degradation of 10 times on successful search results in the
Inbound travel space. In other words, 500,000 page views for a
website whose otherwise high-grade content might bring 5,000,000
pages views, if only it had a dot.com or similar TLD domain.
Another ease of access consideration is being able to use a
website on any device and for it to be usable under all user
situations. Too often we see Japanese travel operators trying to makeusers download heavy apps to their smartphones, then wondering
why they hardly get any long-term users. The reason is because auser will generally only download an app if they think they will use it
regularly; otherwise they may download it out of curiosity, thendump it soon after. The classic example of this is in “Free WiFi” apps,
which according to Google Play statistics have good download
numbers, but which we know from talking to industry players arequickly dumped. Why? Because most so-called Free WiFi apps show
a limited and not particularly useful selection of free access nodes in
the major cities, where most users are located, then try to push theusers to a paid service to fill the gaps. Users resent this, and will
punish the maker’s switch-and-bait approach by getting rid of theapp entirely.
Then there is the app size issue itself. Travelers to Japan mostfrequently come from East Asia, and such travelers often alreadyhave 50-100 discretionary apps on their phones. They are very
conscious of the idea of running out of memory entirely, andcertainly don’t have room for a 50 megabyte bloat monster, which isthe size of a typical low-end app from Japanese developers. In fact,

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the general rule of thumb is that if you want your app to stay on avisitor’s phone, it had better be less than 15 MB in size.

3. Utility
The word “utility” means here both a wide selection ofcompetitively-priced product/service choices and also strong,
relevant functions for what the user is trying to do at the time. This is
one of the biggest points of failure by Japanese travel operators, who
don’t realize that users are already well serviced by best-of-classcompetitors such as Booking.com, Expedia, Viator, and others.
In fact, Booking.com is a great example of focus and excellent
execution. This Dutch company early on made a bee-line for one of
the richest parts of the travel experience, outside of owning some
airplanes, which is accommodation. The firm decided that rather
than try to be all things to all people, they would simply focus on
being the best hotel bookings site possible. They have certainly
succeeded in doing this and they now have around 50% of the online
market for foreign traveler bookings of Japanese hotels — aremarkable achievement!
How they managed to do this was through: i) owning their own
hotel content acquisition teams, including photographers andwriters, ii) investing millions of dollars in refining their userresponsive interface and functionality (e.g., excellent search filters
and wish lists), iii) offering outstanding payment and cancellation
functionality to end users that the rest of the Japanese hotel
bookings industry is still trying to catch up with, and iv) being
ubiquitous. Booking.com is not the biggest hotels booking site inJapan; that honor goes to Rakuten Travel followed by Jalan (Recruit).
But in terms of sheer traffic and successful user conversion, they are
far head of any of their competitors. In fact, our guesstimate is thatJapanese hotel booking sites servicing foreign tourists probably doless than 10% of all online pre-trip bookings. The other 40% ispicked up by Booking.com’s foreign competitors. Hotels are truly avery competitive market.

4. Appropriate Language
It is a well-established rule in modern marketing and sales thateven if a customer prospect is multilingual, you want to appeal totheir emotional selves (to buy a non-essential service or product). In
other words, you need to communicate in their native language: theone they dream in. Therefore, while translating a website from justJapanese to at least English and Chinese is better than nothing, thereality is that even though the prospective customer from Thailand or
Saudi Arabia can probably read the English, they will not be
particularly influenced by it. Instead, to out-do the competition, you

CHART 4

Website evolution of language
capability
Site Just
Starting

EN

S-CN

Min. Service

EN

S-CN

BI

KR

TH

TCN

KR

TH

SCN

EN

Full Service

T-CN

SP

PT

FR

VN

GE
IT

AR
RU

HI

Note: E N=English, S-CN=Simplified Chinese, T-CN=Traditional Chinese, KR=Korean,
TH=Thai GE=Ger man, AR=Arabic, BI=Bahasa Indonesian, SP=Spanish,
PT=Portuguese, FR=French, VN=Vietnamese, IT=Italian, RU=Russian, HI=Hindi

Source: Diagram, original concept by author.

need to serve up compelling content in their native language. Of
course, with around 7,093 languages in the world, and over 50% of
the global population speaking at least 23 of them, it is not possible
to translate your materials into every language. Therefore, we advise
clients to start small, and as their sites evolve and become
successful, to implement more languages of their target markets.
Something like this (Chart 4):“Appropriate Language” also means something else. Instead ofjust a translation, if you really want to influence the visitor, you need
to be able to persuade them in naturally flowing, naturally phrased
language. Therefore, we insist on our websites (and for client
website projects) that the native creative writer of the target language
first read the Japanese (or English derivative), then rewrite thecontent into their own voice and viewpoint. This of course meansthat the translation is no longer 100% faithful, but that’s not the
point. The point is to persuade the visitor to take an action.
Remember: marketing is the emphasis here.

Core Applications & the API problem
Well implemented digital technology in a competitive Japanese
Inbound travel company should cover all four layers of corporate
activity and interconnect them — kind of like an Enterprise Resource
Planning (ERP) system tries to do (Chart 5).
1. Marketing- Content Interest and Quality- Delivery Platforms
Japan SPOTLIGHT • January / February 201949

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CHART 5

Key factors in a modern travelbusiness system
Marketing

Sales

SupportOperations• Content(interest,
quality control)• Delivery
platforms• Languages• Social
reputation• Price• Choice(breadth of
selection),
via APIs• Payment
options• Completeness• Convenience• Speed andavailability• Accessibility
and ease of use• Appropriate
language• Price• Accuracy andutility• Business
model(community,
search,comparison,
e-commerce,etc.)• Internal
efficiency• Systems
integration

Source: Diagram, original concept by author.

- Languages- Social Standing
2. Sales- Price- Choice (breadth of selection) via APIs
- Payment Options- Completeness, Convenience
3. Support- Availability- Accessibility- Appropriate Language- Price- Accuracy and Utility
4. Operations- Business Model (community, search, comparison, etc.)- Internal Efficiency, Systems Integration
Most of these sub-systems are self-evident, and are frequently
found in Japanese travel operations firms. However, they are often
not connected because these firms lack solid internal software
knowhow and are staffed by senior managers who don’t understandthe electronic processes being used. For example, we know of one
major Japanese travel company which has five sub-systems (webstore, shopping cart, CRM, accounting, and ministry reporting) thatare not connected together. This not only means that their sales
process is slow and inefficient, and they cannot tell if a previous
50 Japan SPOTLIGHT • January / February 2019

customer is calling them again (repeat customers being the mostvaluable), it also means that the data has to be rekeyed andrechecked up to five times each! This is a huge waste of resources,
and would never be acceptable in a Western firm.
But there is one other backend process that particularly stands out
as a difficult challenge for Japanese travel firms, and that isApplication Programming Interfaces (APIs). These are standardized
end-point commands set up to safely manage and transfer data
coming in and out of the sub-system they guard or service. APIs areuseful because they let other programs and even other companies
connect with the data they are set up to service. For example, in the
hotels sector, there are a number of local Japanese giant travel
agencies who have aggregated tens of thousands of hotels for theirown Japanese customers, but who because of poor English skills
and weak website marketing skills pass on their databases via API toforeign operators to resell.
The problem is that getting the APIs set up is painful, and can takemany weeks on both sides to implement and stabilize. This is an
expensive process, and as a result many Japanese online firms thinkit’s just easier to either use a local manual data entry system, or to
restrict the number of APIs that they will prepare and support. Worsestill, because of the costs involved, some data owners are recently
trying to charge for access to the API, even though the purpose of
the API is generally to increase sales. You would logically think that aJapanese data aggregator would welcome the opportunity toleverage via APIs any reseller they can find, rather than trying tocharge millions of yen for the “privilege” of reselling their services.
This allergy to APIs goes back to the culture of the companies
involved. Many of them are decades old, if not 100 years or more,
and the staff at these firms have been taught the whole time to fightoff all competitors and trust no one. This means that one of the
primary purposes of APIs, which is to share data and share sales
opportunities, is the antithesis of the Japanese corporate culture. We
suspect the sharing economy will eventually hit Japan’s shores, but it
could take quite some time for it to take root properly. In themeantime, foreign companies, which don’t have these culturally
limiting factors, are romping away with all the business. We thinkthat in the end, the government itself may have to get involved in the
API business, helping to create a public-private travel data utility that
small Japanese firms can easily connect to and cheaply (or freely)
upload data and download orders from.

Terrie John Lloyd is serial entrepreneur from Australia/ New Zealand who has
been living in Japan for 35 years.