Japanese SMEs aspiring to advance overseas
Thursday, June 30, 2011
EGL Tours (Hong Kong): Proactively working to resume Japan bound tourism
JETRO Hong Kong, China and North Asia Division
Amid the flood of tour cancellations to Japan by travel agencies around the world following the Great East Japan Earthquake, EGL Tours (Hong Kong), which maintains a market share of over 50% of Japan bound tours from Hong Kong, quickly resumed its tours to Japan on April 16th and has been working to further increase its share of the market. JETRO spoke with Mr. En San Yuen, Managing Director of EGL Tours, about the company's current initiatives and the future direction of tours to Japan.
<Full refund if a major earthquake occurs>
Question: What kind of measures have you taken after the earthquake in order to resume tours to Japan?
Answer: In an effort to quickly return Hong Kong tourists to Japan, we needed to think of a plan to ensure the safety of our customers as well as to compensate them should an earthquake occur.
Consequently, we came up with a scheme where tour participants who have signed up for our overseas travel insurance will be refunded for the full amount of the tour in the event that an earthquake of a magnitude 6.0 or greater occurs at the tour destination (e.g. earthquake in the Kansai region for tours headed to the Kansai region) prior to the tour participant leaving the departure gate. Even while on tour, if an earthquake of a magnitude 6.0 or greater occurs by the third day of a 4-day 3-night tour, the full amount of the tour will be refunded.
Although most Hong Kong tourists do not apply for travel insurance in advance, we are marketing these insurance products through banks as a revenue source other than the revenue stream from the actual tours.
When we initially resumed tours to Japan after the earthquake, we offered them at discount prices. For example, a 4-day 3-night tour to Okinawa was offered at HK$3,599 (approx. JPY 37,000). Currently, the same tour is being offered for HK$5,999 (approx. JPY 62,000), but it is fully booked.
<Tours to Hokkaido and Okinawa are doing well>
Question: Which tours are particularly popular since you resumed the tours to Japan?
Answer: The tours to Hokkaido and Okinawa are doing very well. All the tours in June were fully booked. The next available opening for our Hokkaido tour is on July 3rd. In light of these circumstances, we are asking Cathay Pacific (CX) and Dragonair (KA) to increase the number of charter flights to Hokkaido, Kyushu and Okinawa.
In addition to Hokkaido and Okinawa, the Kansai / Wakayama region is also a popular destination. From June, we began operating a 5-day 4-night tour using a CX flight that departs daily. We visit such tourist spots as the Nachi Falls in Wakayama. Two nights are spent in Wakayama followed by a tour of Osaka and Kobe. We only change hotels once during the four nights. Women do not like changing hotels because they are more burdened by the process of packing and unpacking.
In Osaka, we include the Universal Studios Japan (USJ) theme park into the tour and are receiving a special price in June. In addition, our company is serving as USJ's Hong Kong agent, so we are also selling tickets in Hong Kong that can be used for admission into the park.
<Tour plans emphasizing customer convenience are necessary>
Question: What are your feelings about the movement among the regional governments in Japan to try to attract tourists to their region?
Answer: Our company frequently receives requests from regional governments to organize tours to their area. However, in such cases we need to address issues such as the location of the tour destination relative to the international airport where the tourists will disembark and embark and the convenience of transportation.
For example, when putting together a tour to Shikoku, we generally use Kansai International Airport as the port of disembarkation. However, incorporating Shikoku into the tour inevitably raises the cost of the package since the tolls for the bridges connecting Honshu and Shikoku, such as the Akashi Kaikyo Bridge, are expensive. The round-trip toll for crossing the bridge is JPY 60,000, which equates to JPY 3,000 per person for a party of 20. This is equivalent to three lunches (Lunch is usually JPY 1,000 per person per meal). Another factor is that the tourism industry in Shikoku is not accustomed to overseas travelers, which translates into higher accommodation costs.
For our Hokkaido tours, the port of disembarkation / embarkation is usually the New Chitose International Airport. If we try to incorporate remote locations in Hokkaido into the tour, it will require longer transportation times from Sapporo, which would be unacceptable to our customers.
When organizing tours, the rule is to "make the bus rides as short as possible and the activities off the bus as long as possible."
Moreover, tours with accommodations at remote onsen (hot spa) locations with no other points of interest also tend to fail. Hong Kong tourists always need to make trips from where they are staying. Because of this desire, a 5-day 4-night tour of Hokkaido will require that the final night's accommodation be in Sapporo. Although these are a few of the subtle points involved in organizing a tour, these points tend to be the difference between the success and failure of a tour.
Additionally, when hiring charter flights, there are cases where the incoming flight is fully booked with passengers while the return flight is empty. Therefore, we are operating two-way flights through tie-ups with Japanese travel agencies.
Hong Kong tourists tend to spend more money on meals than on what they wear, including clothes and watches. Therefore, Japan, which offers numerous points of interest, such as onsens (hot spas) and delicious meals, tends to match Hong Kong tourists' tastes.
<Customers are quick to return to "kaitenzushi restaurants (revolving sushi bars)" in Hong Kong>
Question: How are Japanese products and Japanese restaurants in Hong Kong doing?
Answer: Japanese industrial products, agricultural products and meats are widely available throughout Hong Kong. Japanese food sold at the high-end supermarkets in the city is expensive, but it is considered to be high quality and is preferred by the people of Hong Kong. Hong Kong people feel that products "made in Japan" have added value. The "made in Japan" label is an invaluable "intangible asset" that has been built up by our forefathers.
The response of the Japanese people after March 11th has been highly acclaimed throughout the world. Unlike after major earthquakes that have occurred in other countries, the people did not resort to looting; they still formed orderly lines and refrained from hording supplies, unlike the Chinese who horded salt after the earthquake. The Japanese people were viewed as the paragon of civility in the eyes of the world.
In terms of Japanese restaurants in Hong Kong, despite concerns over radiation, customers were quick to return to the kaitenzushi restaurants. Nowadays, there are long lines outside of the restaurants located in the residential areas.
I think it is unnecessary to use the term "safe and secure" in the promotions aimed at restoring the value and brand of Japanese products. The usual promotions will suffice. The use of the term "safe and secure" could have the opposite effect and instill a sense of doubt in the consumer.
EGL Tours is the industry leader in Hong Kong for Japan bound tourism. EGL Tours handles over 100,000 tourists traveling to Japan each year. Mr. En San Yuen, founder of EGL Tours, is a self-made man who is well regarded throughout Hong Kong. From his humble beginnings as a Japanese-speaking tour guide, he has built up a major business that, in little over twenty year since its founding (1986), now occupies a 35-storey building that he owns. The turning point for his company came in 1995. This was the year of the Great Hanshin Earthquake, the Subway Sarin attack and the super strong yen, and most Hong Kong travel agencies withdrew from Japan bound tours. Even under such difficult circumstances, EGL Tours specialized in promoting tours to Japan. At that time, the company was such a minor travel agency that it was barely able to secure airline tickets from the airlines. However it was able to have the leftover tickets to Japan, which turned out to be a golden opportunity, and the company began to increase its sales from the same year and has grown rapidly from there.
This interview was conducted on June 11, 2011.