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Business

Tourism reality check

Thai tourists pose on Japan's Tateyama Kurobe Alpine Route during a tour organized by Freeplus. (Photo by Kenichi Eda)

OSAKA -- This is how the Japanese imagine the foreign tourist experience: Visitors come here for authentic sushi, tempura and other washoku favorites. They work to get their chopstick technique just right and kneel in a seiza position on tatami flooring before heading out to see temples and shrines.

     This perception of the foreign tourist is -- at least when it comes to people from the rest of Asia -- delusional.

     Recognizing that traditional culture is not Japan's only selling point, an Osaka-based travel agency, Freeplus, is catering to visitors from other parts of Asia. This strategy has helped the company expand rapidly.

     Freeplus specializes in tourism packages that include itinerary planning, accommodation, meals and transport. The company went into business in 2010 and currently serves approximately 60,000 tourists annually from 18 countries. Many come from Asia. Its sales reached 1.86 billion yen ($15.1 million) in the fiscal year through March, a fifteenfold increase over its fiscal 2010 results.

     The company aims for sales of 100 billion yen annually within 10 years.  

Paying attention

One major factor that separates Freeplus from its rivals is its ability to adapt. Most package tour operators aimed at international visitors to Japan "are small companies operated by foreign residents in Japan or naturalized Japanese citizens," said Freeplus CEO Kentaro Suda. "Their business styles have changed little in the last 30 years."

     Major domestic travel companies, meanwhile, have failed to emulate their success with Japanese customers when they have pushed into overseas markets. Japanese people still make up most of their total sales.

     Suda believes there are massive opportunities in tourism. He expects tourists from the rest of Asia will increasingly seek new, more satisfying adventures outside their home markets. 

     Inflexible competitors also offer Freeplus room to grow. The company once organized a tour for a group of Indian followers of Jainism, an ancient religion in India, the tenets of which include strict vegetarianism. A large travel agency had refused to organize a package for them. Freeplus was happy to snap up the business.

     This episode illustrates how Freeplus focuses on the unique needs of niche customer segments, finding revenue sources its bigger rivals miss. The company is now looking to tap into growing demand for travel to Japan from Dubai, Abu Dhabi and other parts of the Middle East.

     As the company evolves and gains experience, it is building knowledge about tourists. Much of what it is learning would seem counterintuitive to most Japanese people. It launched a new service in April to survey foreign visitors on behalf of corporate customers; it aims to get Japan's tourism industry in touch with reality.

     Not all foreigners have the same interests. Not everyone wants sushi. And some travelers could not care less about Japan's history. The notion that foreign visitors have a penchant for Japanese culture and traditions is largely groundless, Freeplus has found.

     Freeplus asked Thai tourists visiting Japan what food they found most delicious. Sushi? Sashimi? It turns out that Thais like yakiniku, the Japanese take on Korean barbecued meat.

     But surely Japan's soba buckwheat noodles go down well with Thais? Nope. "Thai noodles taste a lot better," said one to-the-point tourist. Asked about sushi, the man was unenthusiastic: "I usually eat a lot of rice in Thailand." As for sightseeing, he mentioned a surprising highlight: the snow walls that line the Tateyama Kurobe Alpine Route in Toyama and Nagano prefectures.

     Other Freeplus findings also fly in the face of Japanese conventional wisdom about what foreigners want. A young Thai man said he had most enjoyed playing video games in a Tokyo arcade. Indian tourists hardly eat Japanese food; they tend to prefer their own cuisine. About 40% of Thai visitors dislike hot springs. Visitors from Vietnam shun tempura and dislike sleeping on tatami.

     "If caterpillars, which are popular in Africa, were always served to [Japanese visitors], they would not enjoy it," Suda said. "It's the same in Japan. Many here think foreigners want to eat Japanese food all the time, but that is not the case. There is no need to always serve sushi and tempura to foreign tourists in Japan."

Responsive

Freeplus makes a point of hiring non-Japanese workers. It has staff from 11 nations among its 90 employees. This helps the company empathize with tourists better: An employee from, say, Myanmar can help tourists from his home country, while an Indian staffer deals with Indians.

     The agency says its packages are similar in quality to those offered by bigger competitors. But beyond better understanding of foreigners, Freeplus has other advantages. Big companies ask for one or two weeks to draw up cost estimates for itineraries. Freeplus gets back to customers within a day.

Freeplus founder and CEO Kentaro Suda   © Photo by Akiko Samejima

Gaps in the market

Freeplus generally receives estimate requests about two weeks before tourists arrive in Japan from other Asian countries. U.S. and European travelers typically submit their requests a few months in advance. "We will never attract tourists from Asia if we do business in much the same way as with Western tourists," Suda said.

     To keep things running efficiently, the company uses nontraditional communication tools. Employees stay in touch with other travel agencies through Line, the Internet-based messaging service, for instance.

     Since tours for Asians tend to be smaller and offer less revenue than those for Westerners, Japan's big travel agencies tend to see them as low-margin pursuits that are not worth bothering with. Freeplus has capitalized on this oversight.

     In April, the company saw its sales rise 263% from a year earlier in China. It achieved a sales jump of 491% in the Philippines and 331% growth in India. In the same month, the number of Chinese tourists to Japan climbed 113%, and visitor numbers from the Philippines and India both rose 23%, according to the Japan National Tourism Organization.

     The company is quickly gaining influence in the Japanese tourism industry. And with the government seeking to attract 20 million foreign visitors in 2020, its future looks bright.

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