JAPAN. The roller-coaster ride seen in the financial markets has shown a strengthening of the Japanese Yen against many global currencies, namely the US Dollar and the Euro, writes Adrian (Edo) Mangiboyat, Editor of Travel Journal International (TJI) Online*.
Recently the Yen strengthened against the Dollar, going as far as ¥91 to the Dollar, the strongest in 13 years [today it is trading at just over 99 -Ed]. Last week it moved to ¥97 to the Dollar, still a great exchange rate for Japanese travellers seeking a chance to do some shopping. The strengthening value of the Yen against the Dollar and the Euro could help re-ignite travel by Japanese consumers.
Many hotels in the US are reducing rates in response to the shrinking number of guests following the bankruptcy of Lehman Brothers in early September. Data from Smith Travel Research showed that occupancy in the US fell 11.1 percentage points to 59.4% for the week ending 4 October while revenue per available room was off -13.2% to US$61.70.
Smith Travel Research said a significant pull-back in business travel, a collapse in discretionary leisure travel and continued group attrition rates will be ongoing concerns until the credit market crisis eases.
Hawaii, one of the mainstays of tourism to the US market, reported overall occupancy in September fell to 63.2%, down 11 percentage points. It was also the lowest since the months following the 9/11 terrorists attacks in 2001.
Destinations that depend heavily on a strong tourism market, such as Hawaii, Guam, Bali island and Thailand are likely to compete more aggressively for travellers by introducing special deals and promotions – giving more incentive to visit, especially with the stronger Yen. The Taiwanese, for example, are offering T$3,000 (Â¥10,000) subsidies for participants in group tours to Taiwan.
According to Interbank rates, the Yen has increased its strength by some +14% from a year ago, while the Euro lost ground on the Yen by some -40.68% for the past 12 months. The biggest gains for the Yen were against the Australian Dollar, up 7+6.29% to A$1.71 (Â¥100).
Several wholesalers have lowered the prices of tours in response to the weakening Euro. Hankyu Express International and Jalpak are two major wholesalers that have slashed tour prices, some by as much as -20% (excluding fuel surcharges) – mainly the result of the depreciation of the Euro against the Japanese currency.
The Christmas travel period will see a drop in package tours by Jalpak by an average of ¥20,000. Hankyu Express has included the cost of fuel surcharges, making its packages cheaper by between ¥40,000 and ¥60,000, depending on the packages.
Wholesalers passing on benefits of Yen strength
Amid the weakening of the U.S. dollar against the yen, discount products dubbed “˜passing the benefits of a strong Yen’ tours (reflecting lower purchasing costs) are attracting Japanese consumers.
Kinki Nippon Tourists (KNT) created its tour products for Hong Kong and Bali departing from Kansai Airport, of which tour prices range from as low as ¥23,900 for the 3-day Hong Kong tours and from ¥35,800 for the 4-day Bali tours.
KNT said it plans to attract 500 participants in the tours for the two destinations for the season between November 2008 and January 2009. KNT’s West Japan Holiday purchasing department said it has already attracted consumers filling a half of the target number.
Meanwhile Jalpak, which first introduced its strong-Yen-benefits tours in April 2008 (earlier than any other travel agencies in Japan) released its third instalment products on October 24, setting prices ranging from ¥76,800 for the 5-day Hawaii tours departing from Fukuoka in November. Since Jalpak put prices at a maximum ¥36,000 lower than conventional tours, promotions have steadily attracted consumers.
For the third instalment tours departing from Narita Airport for the first three months in 2009, Jalpak said it will create tours for four destinations, including Hawaii, Guam, the US and Bali.
With the series of the strong-Yen-benefits tours, Jalpak has attracted 600 participants in its first instalment tours departing from Narita airport (May-July) and also attracted another 600 departing from Narita and 300 departing from Nagoya in its second instalment tours. Jalpak said it wants to take good advantage of this opportunity to boost demand. H.I.S. Co and TOPTOUR Corp have also produced similar tours earlier in spring this year.
Can all this reduction in prices, compounded by the stronger Yen, help stimulate travel from Japan? The Japanese government says that it remains to be seen whether the continual rise in strength of the Yen will help offset the high fuel surcharges and softening consumer demand for overseas travel through the end of 2008.
Bookings for November and December travel show increases for tours to Europe and Asia, signalling mixed demand for short-haul and long-haul travel.
*Editor’s note: The Moodie Report works closely with TJI Online, the largest English-language travel trade news source in Japan. Week in, week out, it provides timely and sharp analysis of the all-important Japanese travel market – international and domestic. To subscribe please visit https://tji.tjnet.co.jp. It comes with our highest recommendation.
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