In Thailand, an ongoing price war in the sale of Japan tour packages has altered the image of the destination, once associated with luxury.
While Japan continues to be among the top destination choices for Thai travellers, lower airfares offered by LCCs and the visa exemption policy the Japan government extended to Thai nationals since 2012 have brought package prices down and triggered a price war.
Prices have dropped by more than 50 per cent, from between 40,000 baht (US$1,219) and 60,000 baht per package five years ago to less than 20,000 baht at present.
Somchai Chomraka, chief executive of Weekend Tours, added: “There have been many groups of Thai seniors who have time and money and wait until tour operators offer their lowest prices (before buying packages). This becomes a habit.”
Thanapon Cheewarattanaporn, president of the Thai Travel Agents Association (TTAA), said Japan tour package prices should average around 25,000 baht each. Any prices lower than this would likely mean a loss-making service for tour operators.
“The question is how they can run business in the long run without profit,” he stressed.
Weekend Tours’ Somchai said Japan has already become the riskiest destination to sell in terms of loss-making potential, followed by South Korea, adding that the situation is likely to persist in 2019.
But Somchai believes that the price war will end in 2020 after some players either go out of business or realise the downsides of engaging in price war.
If China and South Korea tours were any indicator, perceptions of product quality are likely to be affected with such high levels of competition, opined Chotechuang Soorangura, the associate managing director of NS Travels & Tours (NS).
Five years ago, Japan was seen as a coveted destination for holidays and trips sold out fast, Chotechuang said. But as perceptions of Japan change, demand has begun shifting to new destinations.
However, executives of TTAA, NS and Weekend Tours are confident that Japan will remain in high demand for Thais, thanks to the rise of FITs.
TTAA projects that the number of tourists from Thailand to Japan will exceed 1.3 million in 2019. As of October 2018, the arrivals from Thailand to Japan numbered about 900,874.
Thanapon said arrivals to Japan would reach at least one million by the end of 2018. The number of FITs will form the majority of the tourists within 2020, compared with the present 30 per cent proportion, he forecasts.