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(January 21, 2005)

11th JATA Survey on Travel Market Trends: Overseas (December 2004)

Overseas travel DI remains on the plus side despite downward trend. Possibility of gradual decline in three months.

In order to better assess prevailing business conditions, JATA (Japan Association of Travel Agents) keeps abreast of changes in the travel market by carrying out a quarterly survey of market trends among member companies, indexed by types of travel, destination and customer segment. (A digest of the survey appears below.) According to the "11th JATA Survey on Travel Market Trends" conducted from the middle to the end of November 2004, compared to the last survey, the DI declined in both the overseas and domestic travel markets. In particular the Niigata Chuetsu Earthquake had a powerful impact on the domestic market. Over the next three months overseas travel is expected to move to the minus side accompanied by a gradual decline in domestic travel.

Business activity for the overseas travel market as a whole

Despite the DI falling nine points lower than forecast, the overseas travel market remained positive. It is likely that there will be a gradual downward trend over the next three months resulting in the DI moving into the minus column.

Current situation: Despite "Korea Fever", November and December fell below expectations.

  • "Despite the fact that October was good, November and December were not." (Opinion of Second-tier retail agencies)
  • "Thanks to "Korea Fever" and the popularity of China, the number of travelers was favorable although they went on low-price trips." (Opinion of full-service travel agencies)
  • Business was not as good as the previous quarter; however, there were no major negative factors. The DI was much better than one year ago and two year ago.

Three-Month Forecast (January to March, 2005): A gradual drop is forecast, and the DI is expected to move into minus territory.

  • "The sequence of days off at the end of 2004 and the beginning of 2005 is not favorable." (Opinion of Second-tier retail agencies)
  • "We cannot expect any substantial growth in demand in the European region until the problems in Iraq are solved." (Opinion of overseas travel wholesalers)
  • Although the female office worker segment and destinations in the US, Canada and Oceania are expected to recover over the next three months (from January to March, 2005), overall a gradual downward tendency is anticipated.

Summary

  • A fall of more than ten points was reported; compared to the previous three month period, from July to September, 2004, Neverhteless, the situation remained stabilizle, in the absence of any untoward factors on the global front, as well as the continuation of the South Korea boom and the popularity of China.
  • Looking to the next three months, from January to March, 2005, the unfavorable sequence of days off at the end of 2004 and the beginning of 2005 will in all likelihood adversely affect travel to Europe and other long-distance destinations.

Change in Combined Demand for All Destinations
2002
2003
2004
2005
Oct.-Dec.
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar.
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar.
-25
-93
-70
-33
-46
9
15
2
-3
*11
*figure anticipated in September 2004

Trends in overseas travel demand (by customer segment)

Sharp fall in the family and female office worker segments. 8-point rise in incentive travel.

  • Compared with three months ago (from July to September, 2004), the customer segment DI fell sharply on the whole, with family travel diving 25 points; Silver segment travel leveled-off, while incentive travel rose eight points. Furthermore, when compared to the same period last year, all customer segments improved, with incentive travel jumping 46 points.
  • Over the next three months, from January to March, 2005, aside from a rise of 5 and 2 points for the female office worker and family segments, respectively, a gradual single digit decline is anticipated overall.
2003
2004
2005
Oct.-Dec.
Jan.-Mar.
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar.

Honeymoon

-34
-39
-18
-23
-27
-33

Family

-49
-53
-22
3
-22
-20

Female office worker

-49
-57
-32
-14
-31
-26

Middle-aged (45-59)

-28
-37
-9
4
-1
-5

Senior (60 and over)

-26
-33
-2
5
5
2

Incentive

-63
-60
-24
-25
-17
-25

Business / technical visit

-27
-29
-3
1
-1
-3


Trends in overseas travel demand (by destination)

Apart from a slight rise in Asia and China, all other destinations fell, with Europe, Hawaii and Micronesia down markedly. While China is expected to fall off, the US and Canada should rise over the next three months.

  • Compared with three months ago (from July to September, 2004), aside from a 2 to 3 point rise for China and Asia, the DIs for all other destinations were down sharply. Europe, Hawaii and Micronesia all moved into minus territory, with Europe in particular plummeting 21 points. On the other hand, when compared to the same period last year, from October to December, 2004, with the exception of Oceania, the DIs for all destinations recovered overall, with China and Asia improving by 60 and 48 points, respectively.
  • Over the next three months, from January to March, 2005, the US and Canada are expected to rise 6 points, whereas China will likely fall 10 points.

* Due to the Niigata Chuetsu Earthquake, travel agencies headquartered in Niigata Prefecture were not included in this survey.

2003
2004
2005
Oct.-Dec.
Jan.-Mar
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar

Hawaii

-28
-27
0
8
-10
-9

USA (other)/ Canada

-51
-54
-16
-20
-32
-26

Europe

-16
-22
3
10
-11
-13

Oceania

-24
-28
-19
-21
-26
-22

Micronesia

-38
-19
-2
10
-5
-10

China

-38
-49
-4
20
22
12

Asia (other)

-36
-55
-12
9
12
10


About the Survey on Travel Market Trends
In January 2004 JATA (Japan Association of Travel Agents) sent a request via e-mail to member companies to register as survey monitors, and a total of 546 monitors registered.
The quarterly Survey on Travel Market Trends seeks to grasp trends in the travel market based on responses to a questionnaire on conditions now and those anticipated over the next three months.
The survey asks participating companies to rate their sales results for each destination and customer segment by choosing from three categories: "good," "average" and "poor", Respondents indicate "do not handle" for items outside their business scope. Each share of "good," "average" and "poor" is then divided respectively by the denominator, which is equal to the total number of responses minus the "do not handle" and "no reply" responses. Finally each share is processed into the Diffusion Index (DI). The highest possible index figure is +100, and the lowest is -100
Survey Overview
Survey area: Japan nationwide
Survey target: JATA member company management
Survey method: Internet survey
Survey period: From Monday, November 15 to Monday, November 29, 2004
Registered companies: 546
Responding companies: 291
Response rate: 53.3%
* Due to the Niigata Chuetsu Earthquake, travel agencies headquartered in Niigata Prefecture were not included in this survey.
Business Classification
The JATA Survey on Travel Market Trends analyzes business conditions based on business content. A definition of each business classification and the number of respondents to the survey is shown below.

Designation
Definition
Respondents
Full service travel agency A large-scale travel agency with a national network that provides a full range of travel products 30
Overseas travel wholesaler A dedicated overseas travel wholesaler 30
Overseas travel specialist agency A travel agency with a business volume of more than 5 billion yen, 80% of which is related to overseas travel 12
Domestic travel wholesaler A dedicated domestic travel wholesaler 10
First-tier retail agency Other than the above, a travel agency with a business volume of 3 billion yen or higher 27
Second-tier retail agency Other than the above, a travel agency with a business volume of less than 3 billion yen 130
In-house travel agency A travel agency which mainly handles travel arrangements for its parent company 52

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