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JATA Independent Surveys

(29 December 2007)

JATA Survey on Travel Market Trends (December 2007)

Overseas travel market retreats in the face of local supplier price increases combined with high fuel prices. Little cause for optimism in domestic travel market, as DI falls into negative territory. In the next three months, the overseas travel market will continue to languish with the domestic travel market also experiencing a slight downturn.

In order to assess prevailing business conditions, JATA (the Japan Association of Travel Agents) keeps abreast of changes in the travel market by carrying out a quarterly survey on the market trends among member companies, indexed by type of travel, destination and customer segment. (An outline of the survey appears below.)
According to the "Survey on Travel Market Trends," conducted during the period from late October to mid-November 2007, both the overseas and domestic travel markets deteriorated as the appeal for overseas travel was eroded by high fuel prices combined with rising prices for goods abroad and domestic travel showed little hope for optimism.

In the next three months, the overseas travel DI is expected to continue to decline while the domestic DI should remain stable in negative territory.


Business Activity for the Overseas Travel Market as a Whole

The cost of overseas travel was driven up by high fuel prices and rising prices for local goods and services. Even China travel was brought to a standstill, and the overseas travel DI deteriorated even more than forecast in the previous outlook. There is little hope for recovery in the next three months and the DI values are expected to continue on their downward spiral.

Current Situation:

High prices for fuel and local goods and services depressed overseas travel, and the fall in travel to China caused further detriment.





"Local prices abroad are climbing, and this has dampened the desire to travel overseas "because it's affordable."(Overseas travel wholesaler)
" It seems as though customers have become reluctant to travel to China due to issues such as food safety."(Second-tier retailer)
As a whole, the overseas travel DI, which was initially expected to hover at roughly the same level, deteriorated more than was expected.

 

Outlook for the next three months (January to March):Fuel surcharge hikes and an increasing number of last-minute reservations paint a murky picture of the future.





Fuel prices are having a massive impact on travel and I believe that customers are holding off making reservations in anticipation of next year s price hikes." (First-tier retailer)
" The internet is the hub for an extremely large number of last-minute reservations. As a result, our yield portion from early-stage reservations has deteriorated badly." (Full service travel agency)
The next three months give little hope for optimism as the slump is expected to continue.


Summary

 

Unstable foreign exchange rates combined with high fuel and goods prices acted to further erode the appeal of overseas travel. The factors depressing the overseas travel market were also compounded by the slowdown of travel to China, which had boomed continuously for over one year.
There are no signs of these conditions improving and last-minute reservations, mainly for short-haul destinations, have become the norm painting a very murky picture of the future. For these reasons, it is likely the overseas travel market will encounter more difficult and uncertain times ahead.

(Units: DI)

 

2005
(Oct-Dec)

2006
(Apr-Jun)

2006(Jul-Sep)

2006
(Oct-Dec)

2007
(Jan-Mar)

2007
(Apr-Jun)

2007
(Jul-Sep)

2007
(Oct-Dec)

2008
(Jan-Mar)

All Overseas Travel

-15

0

9

- 6

- 2

- 10

- 7

- 11

- 13

*-8





http://www.jata-net.or.jp/tokei/shijo/070328/images/00.gif

*Indicates forecast figures from the September, 2007 Survey

 

2006
(Apr-Jun)

2006
(Jul-
Sep)

2006
(Oct-Dec)

2007
(Jan-Mar)

2007
(Apr-Jun)

2007
(Jul-Sep)

2007
(Oct-Dec)

2008
(Jan-Mar)

Full service travel agency

4

14

- 12

0

- 14

- 12

- 16

-4

Overseas travel wholesaler

- 12

12

- 22

- 11

- 28

- 20

- 27

- 36

Overseas travel specialist agency

- 33

- 11

9

- 40

9

9

0

15

First-tier retailer

0

7

- 4

18

- 10

- 24

- 22

-32

Second-tier retailer

- 8

- 5

- 11

- 10

- 19

-6

- 3

- 11

In-house travel agency

30

47

20

10

21

11

-6

0

Trends in overseas travel demand (by customer segment)

The family travel segment tumbled by 30 points, and both the female office worker and middle-aged customer segments fell by more than 10 points. In the next three months, all customer segments are expected to enter or stay in negative territory. Senior and business and technical visit segment DIs are forecast to join the other customer categories in negative territory.

In terms of current DI by customer segment, in comparison with the summer vacation period three months ago (July-Sept.), the family segment DI, which had been performing strongly, fell 30 points, while the female office workers and middle-aged customer category DIs fell 18 and 15 points, respectively. The other segments exhibited no significant movement. Compared with the same period last year, the incentive and female office worker segments fell approximately 10 points.

In the next three months (Jan.-Mar.), DI values for all customer segments are expected to be negative with the previously booming senior, business and technical visit segment expected to join the others in negative territory. On the other hand, the formerly declining incentive travel category is expected to rally slightly, while the honeymoon segment, which was showing signs of improvement, is expected to fall once again bringing the DI values for all customer segments into negative figures.

(Units: DI)

 

 

2006
(Oct-Dec)

2007
(Jan-Mar)

2007
(Apr-Jun)

2007
(Jul-Sep)

2007
(Oct-Dec)

2008
(Jan-Mar)

Honeymoon

- 38

- 42

- 36

- 39

- 35

- 42

Family

- 33

- 27

- 28

- 6

- 36

-36

Female Office Worker

- 35

- 32

- 35

- 26

- 44

- 41

Middle-aged (See Note1)

- 10

0

-3

0

-15

- 16

Senior (See Note 2)

-1

2

6

2

1

-6

Incentive

- 25

- 24

- 29

- 32

- 38

-34

Business/technical visit

2

4

1

1

0

-6

Note 1: Middle-aged customers are customers aged between 45 and 59
Note 2: Seniors (Previously OAPs) are customers aged 60 or over

 

 

Trends in overseas travel demand (by destination segment)

Overseas travel DI declined for nearly all destination segments. China fell 20 points, while Europe, Hawaii and Micronesia also took a tumble.
In the next three months, China travel DI is expected to fall back into negative territory, while the Europe segment DI is also expected to take a nosedive

 

Looking at current DI by destination segment, almost all segments declined in comparison with three months ago (July-Sept.). China fell by more than 20 points and Micronesia, Hawaii and Europe all fell by more than 10. The doldrums persisted for the US/Canada and Oceania. On the other hand, although China took a tumble it remained in positive territory with the other Asian destinations.
In comparison with the same period last year, Asia remained stable while China, Hawaii and Oceania each fell by more than 10 points and Europe and Micronesia failed to reach their previous year levels.

In the next three months (Jan.-Mar.), Micronesia and Oceania are expected to rally slightly; however, all of the other segments are expected to either remain stable or decline. China, which hovered in positive territory for over a year, is predicted to backslide into negative figures and Europe is also expected to take a tumble.

 

 

 

 

 

(Units: DI)

 

2006
(Oct-Dec)

2007
(Jan-Mar)

2007
(Apr-Jun)

2007
(Jul-Sep)

2007
(Oct-Dec)

2007
(Jan-Mar)

Hawaii

- 16

- 29

- 35

-21

- 34

- 36

USA/Canada

- 40

- 35

- 41

- 36

- 34

-40

Europe

- 7

- 7

- 1

0

-14

- 22

Oceania

- 33

- 36

- 47

- 41

- 44

- 38

Micronesia

- 26

- 29

- 41

- 22

- 35

- 25

China

17

20

27

22

2

-6

Asia

1

9

-3

6

3

2

 

 

About the Survey on Travel Market Trends

In January 2007, JATA (Japan Association of Travel Agents) asked all member companies to register as survey monitors and 575 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, Oct 29, 2007 to Monday, Nov 13
Registered companies: 575
Responding companies: 219
Response rate: 38.1%

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

27

Overseas travel wholesaler

A dedicated overseas travel wholesaler

22

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

14

Domestic travel wholesaler

A dedicated domestic travel wholesaler

8

First-tier retail agency

Other than the above, a travel agency with a business volume of 3 billion yen or higher

30

Second-tier retail agency

Other than the above, a travel agency with a business volume of less than 3 billion yen

79

In-house travel agency

A travel agency which mainly handles travel arrangements for its parent company

39



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