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(March 29, 2006)

16th JATA Survey on Travel Market Trends: Overseas (March 2006)

Overseas travel DI continues to fall Cold wave puts a chill on domestic travel, disappointing expectations Overseas and domestic travel to pick up in 3 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 "16th JATA Survey on Travel Market Trends" conducted from the middle to the end of February 2006, the overseas and domestic travel market DI (Diffusion Index) deteriorated. While the overseas travel market performed as expected, the domestic market fell far more than anticipated. Over the next three months, both markets are expected to improve, and domestic travel should enter the plus column.

Business activity for the overseas travel market as a whole

Despite no new causes for anxiety, the fuel oil surcharge and other problems have compounded difficulties causing the DI for overseas travel as a whole to continue to fall. Over the next three months, starting with the silver segment, all market segments are expected to improve.

Current situation: Starting with China, overseas travel is expected to remain sluggish

  • "Demand for travel to China has dropped and is slow to recover." (Opinion of full-service travel agencies)
  • "The fuel surcharge has had a major impact, driving demand and profits down." (Opinion of full-service travel agencies)
  • The DI of -18 for overseas travel overall was largely as predicted, and it fell more than the previous three month period (October to December).
    The DI was 16 points lower than the same period last year (January to March).

Outlook for the next three months (April to June): Thanks to the favorable sequence of days off during the Golden Week holidays, all market segments are expected to improve, starting with the silver segment.

  • "Travel demand in the silver segment is rising." (Opinion of Second-tier retail agencies)
  • "Thanks to the favorable sequence of days off during the Golden Week holidays, reservations are brisk." (Opinion of full-service travel agencies)
  • The outlook is good for improvement and business is likely to climb out of this slump over the next three months (April to June).

Summary

  • Viewed from the perspective of the purposes for overseas travel, the economic recovery is limited to urban areas. The market is becoming more and more polarized between people selecting a tour product based on price and people selecting based on content. In addition, the sudden rise in airfares due to fuel surcharges has had a prolonged impact. Travel to Chinese destinations is generally for specialized business travel.
    Recovery is anticipated after the spring, starting with the silver segment and extending to the female office worker, family, middle-aged and other segments.

Change in Combined Demand for All Destinations
2004
2005
2006
Jan.-Mar.
July-Sept.
Oct.-Dec.
Jan.-Mar.
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar.
Apr.-June
-46
15
2
-2
-8
-12
-15
-18
-1
*-17
*Indicates figures from the December 2005 Survey

Trends in overseas travel demand (by customer segment)

Overall demand is expected to decline, with the DI for honeymoon, inspection tour and business travel falling 10 or more points.
Over the next three months all customer segments are expected to improve, and the DI for the silver segment should enter the plus column.

  • Although compared with the previous three months (October to December), the current DI for the family and middle-aged market segments improved somewhat, honeymoon, inspection tour and business travel fell more than 10 points, and demand overall fell.
    Compared to the same period last year (January to March), family and female office worker travel fell 10 points.
  • All market segments are expected to improve over the next three months (April to June); the silver segment is expected to increase 16 or more points, and the DI should enter the plus column.
2005
2006
Jan.-Mar.
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar.
Apr.-June

Honeymoon

-37
-33
-39
-29
-42
-30

Family

-21
-28
-16
-35
-31
-21

Female office worker

-28
-38
-32
-31
-38
-26

Middle-aged (45-59)

-8
-15
-13
-16
-14
0

Senior (60 and over)

-4
-9
-12
-6
-10
6

Incentive

-29
-34
-37
-28
-34
-27

Business / technical visit

-3
-13
-7
0
-10
-2


Trends in overseas travel demand (by destination segment)

Hawaii, America, Canada and China fell more than 10 points; China DI hovering at -32.
Improvement expected over the next three months, led by China, Hawaii and Europe.

  • Compared with the previous three months (October to December), the current DI for Hawaii, America, Canada and China is down more than 10 points, and the China DI remains at an all time low of -32.
    Compared to the same period last year (January to March), China plummeted 54 points, while Hawaii and Micronesia fell more than10 points.
  • Over the next three months (April to June), with the exception of Micronesia which is not expected to change, business should improve across the board, with double digit increases anticipated in Hawaii, Europe and China.
2005
2006
Jan.-Mar
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar
Apr.-June

Hawaii

-3
-11
-8
-5
-17
-4

USA (other)/ Canada

-36
-15
-10
-18
-29
-23

Europe

-16
6
-7
-21
-21
-8

Oceania

-21
-32
-33
-25
-29
-26

Micronesia

-6
-15
-12
-26
-20
-21

China

22
-41
-28
-21
-32
-17

Asia (other)

-8
-7
-09
-9
-11
-8


About the Survey on Travel Market Trends
In January 2006, JATA (Japan Association of Travel Agents) asked all member companies to register as survey monitors and 587 companies did so.
The quarterly Survey on Travel Market Trends seeks to grasp trends in the 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, February 20, 2006 to Monday, March 6
Registered companies: 537
Responding companies: 290
Response rate: 49.4%
* 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 28
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 11
Domestic travel wholesaler A dedicated domestic travel wholesaler 7
First-tier retail agency Other than the above, a travel agency with a business volume of 3 billion yen or higher 32
Second-tier retail agency Other than the above, a travel agency with a business volume of less than 3 billion yen 132
In-house travel agency A travel agency which mainly handles travel arrangements for its parent company 50

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