Key Drivers of Japan Market Performance

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Key Drivers of Japan Market Performance

• Tim Hunter
• Tourism New Zealand
• 29 May 2006

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Key Drivers of Demand for a Destination
State of Economy Proximity to Market Consumer
Trends Destination Knowledge Exchange Rate
Tourism Product Promotion Air Capacity
Airfare Pricing Tour Pricing
Difficult to Influence
Easier to Influence
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Japan Market Study - 2005Prepared by Centre for
Asia Pacific Aviation

• Examined critical issues with New Zealands
  competitiveness as a tourism destination
• Examined impacts of exchange rate, air capacity
  and pricing, tour pricing
• Identified future challenges for New Zealand

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Outbound Japan 1995 - 2004
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Key Findings of CAPA Study

• We have lost all of the significant exchange rate
  advantage we gained in 1997-2000 period
• New Zealand is not price competitive due to
  high airfares and high dollar
• The Japan travel market has become more price
  sensitive
• Our safe haven advantage has diminished as a
  driver of demand
• New Zealand needs to keep focusing on a high
  value positioning

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Do tour prices to New Zealand representgood
value ?
Market Garden Survey May 2005 10 major travel
agencies/operators
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Tour Packages - Price Levels compared with
NZHigh Season 2004
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Tour Packages - Price Levels compared with NZLow
Season 2004
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Price CompetitivenessSo, why are we so far off
the pace ?
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(No Transcript)
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Recent TrendsNZD/Yen Cross Rate has declined by
16
Source Oanda FX
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Direct Air Seats Japan to NZ
Sources OAG NZ Statistics
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Air Fare Competitivenesswith other long haul
markets
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Air Fare Competitivenesswith other long haul
markets
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Seasonal Variation in Fare Levels
NRT AKL 8804 km, LAX AKL 10461 km
Sample of Tue departures for 27Jun 04 Jul, 15 -
22 Aug, 21 - 28 Nov, 26 Dec - 02 Jan Source Air
New Zealand website
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Other Observations

• Few operators believed that a reduction of less
  than 15 in tour prices would greatly benefit
  the market
• Levels of repeat travel are very low - less than
  20
• New Zealand needs more intensive and co-ordinated
  marketing, greater product innovation and more
  expansive media exposure to lift its competitive
  position

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Not all bad news

• Despite the pricing differential with other
  destinations, New Zealand is acknowledged
  generally as an appealing destination by Japanese
  tour operators.
• New Zealand has managed to maintain an annual
  growth rate in Japanese visitors consistent with
  that of the Japanese outbound market over an
  extremely volatile period.
• This reflects NZs underlying strength as a
  stable, safe haven destination, particularly at
  times when the international travel market has
  been ridden with external crises. It also
  underscores the fundamental quality of the New
  Zealand tour product.