The effects of a worsening dispute between South Korea and Japan over trade and historical issues is spilling over into the tourism sector, with South Korean travel firms reporting a sharp decline in bookings and a spike in cancellations for Japan-bound vacations amid a widening boycott of Japanese products and services.
More than 54 per cent of Koreans are participating in a widespread boycott of Japanese products and services, according to the Hankyoreh newspaper. The number of South Korean tourists to Japan fell 3.8 per cent in the first six months of 2019, according to government data. It’s the first decline in five years, with that figure expected to rise in light of the growing intensity of the bilateral row.
If the dispute drags on – neither side is showing hints of giving ground – Japan may fall short of its ambition of welcoming 40 million visitors next year, when Tokyo plays host to the Olympic Games.
Since July 8, there have been a mere 500 bookings from South Korea to Japan per day – less than half the 1,200 daily average recorded previously – according to a report from The Korea Herald.
Similarly, package tours to Japan sold through Gmarket have tumbled 12 per cent between July 8 and 14 from the same period one year ago, the JoongAng Daily reported. Oh Chang-hee, the Korea Association of Travel Agents president, told the paper that the industry expects the number of South Koreans visiting Japan to drop 20 per cent to 6.5 million.
Japanese travel agencies say the first signs of a downturn in the inbound market from South Korea are becoming apparent, but the full impact of the boycott of Japan remains to be seen.
“We are beginning to feel (the effects),” said an official of domestic travel giant JTB Corp, who declined to be named. “We do not ask customers why they are cancelling their reservations. But there is a visible trend of more South Korean travellers cancelling trips to Japan from last year.”
Tatsuki Miura, corporate planning head at HIS, said South Koreans typically account for the second largest number of inbound travellers – behind the Chinese – but in recent weeks, that number has declined to “a couple of percentage points”.
Mark Morimoto, a Japan Airlines spokesman, said figures on Japan-South Korea routes were up seven per cent last May and that there are no indications of a decline at present, though that may change when next month’s figures are released.
“It’s really too early to see any trends, but we are watching the monthly numbers very closely and we are ready to look at campaigns for that market if we feel they are needed,” he told TTG Asia.
Johta Takahashi, a spokesman for the Universal Studios theme park in Osaka, echoed that thought. “It’s much too early to say because we lack specific numbers,” he said.
He added: “Osaka is popular with Koreans, but travel companies will simply switch their attention to other markets and make more flights and hotel packages available to travellers from Hong Kong or China.”
It seems that Japanese travellers, however, do not share the same sentiments as their South Korean counterparts. A JTB official said there has been “no change” in the numbers of Japanese travellers to Korean cities over the coming weeks.
“We are not seeing any impact on outbound reservations to South Korea later in the year either. All the trends appear to be steady at the moment,” he said.
That observation was echoed by Gina Piao, the senior sales official of Jane Tour in Busan. “We have not seen any Japanese cancellations at all. We know that Koreans are cancelling trips to Japan but we are not seeing the opposite happening. And I don’t think we will,” she said.
She added: “This is a question of history and things that happened decades ago. There are so many Japanese who visit Korea and there should not be these feelings any more. I hope things will get better soon.”
Think about the last time you booked a flight. Did you visit your preferred airline’s website or call a travel agent? Did you compare prices using a third party’s online platform and then shop around for the best deal?
If you’re like the majority of consumers, you booked your flight online only after you compared the costs of the same flight from different airlines. Indeed, recent research on flight pricing found 56 per cent of travellers cited price as the primary influence on flight booking decisions. What’s more, they conduct a lot of research before booking a flight – McKinsey estimated travellers go through up to 100 touchpoints before making a purchase.
Because travellers booking holidays online are willing to put in lots of research time to get a great price on a flight, it’s no wonder third-party booking platforms like Expedia, Kayak and Skyscanner have become a preference and have transformed the air travel industry.
It’s easy to see why they’ve been successful: these sites considered the customer journey and worked to provide a user-friendly, one-stop price comparison and shopping experience that reduces the number of touchpoints and makes finding the right deal much simpler for customers.
In addressing the customer’s pain points, these third-party websites have outpaced airlines in capturing today’s digital consumer. In fact, these disruptive competitors have done such a great job that many airlines have been unable to keep up with them technologically – including mobile platform offerings and personalisation – and now fail to meet customer expectations altogether.
The tech challenge
The digital challenges facing airlines are multifaceted, but can generally be traced back to a common issue: outdated technology.
While the majority of airlines’ desktop websites are serviceable, they are not nearly as streamlined and user-friendly as the sites from the third-party competitors. A lacklustre, clunky interface can immediately prompt customers to leave, opting for a more user-friendly site.
As for mobile options, many airlines do not presently have mobile-optimised websites, leading to slow page loading times, unappealing interfaces and hard-to-use features. These inefficiencies, coupled with the amount of touchpoints required during the customer journey, cause many travellers to lose patience and head to another site.
Getting an upgrade
Not all hope is lost – there are ways for airlines to implement newer technologies to meet customer expectations, but it does require them to retool their thinking and to make vast changes to their digital presence.
The first shift is to develop mobile-first strategies. In 2017, McKinsey found that 43 per cent of travel-related searches were made on smartphones, and it’s likely this percentage rose over the past year. This means airlines should invest in their mobile channels more heavily than their desktop options to meet customers on the channels they already use. Then, brands need to provide fast, efficient and simple customer interactions by creating mobile-optimised websites and applications.
Aside from booking a flight, the rest of the air travel experience occurs offline, but there are ways to enrich that offline experience with digital tools that provide real-time offers based on location and a 360-degree customer view courtesy of personalised customer data.
For example, when Singapore Airlines revamped its mobile app, the airline added features like loyalty programme user management, Android Pay and Apple Pay, connectivity with tablets and smart watches, and full integration with entertainment systems. Additionally, the app provided customers with travel suggestions and maps when they reached their travel destinations. These changes boosted the app’s ratings by 2.5 stars, and led to 4.6 million downloads and 17 number one rankings on app stores globally.
Let data be your pilot
By implementing digital tools such as automation and machine learning, airlines can easily store customer data such as seat, meal, and entertainment preferences and auto-populate these fields for the customer’s next booking, providing a more personalised user experience – something travellers have said they want.
A study by American Express found a staggering 83 per cent of millennials would allow travel brands to track their digital patterns in exchange for a more personalised experience. And they weren’t alone – 85 per cent of all respondents said customised itineraries based on their personal interests were more desirable than mass-market offers.
Airlines can also boost personalisation through customised prompts for offers and upgrades in the lead-up time to the customer’s flight. Then on the day of the flight, digital boarding passes, reminders of gate numbers, and special in-airport shopping or dining deals based on the customer’s individual data can be sent via push notifications or emails.
By shifting thinking towards the end-to-end customer journey, airlines can not only overcome digital challenges, but exceed customer experience expectations. Though the changes required are extensive, and even overwhelming, they are necessary steps that airlines must take in order to be competitive in the crowded digital travel space.