Investing in Japan
TripAdvisor K.K. (Shohei Nishibayashi)
TripAdvisor, a major US-based travel information service company, has steadily cultivated its market presence and customer base in Japan through partnerships with domestic companies. The firm also expects the number of inbound travelers to increase in the future due to the growing popularity of their site among foreign tourists. We interviewed manager Shohei Nishibayashi, who is in charge of business development at TripAdvisor.
Focused on potential of Japanese market over long term
TripAdvisor, which operates the world's largest travel site, was established in 2000, and launched its first international site in Ireland and the UK in 2005. Following expansion into France, Germany, Italy, Spain and India, the company launched its Japanese site as well as subsidiary in 2008. At the time, Expedia, Inc. was the parent company of the US-based TripAdvisor (the company would spin off from Expedia later). The Japanese subsidiary was established after the staff of Expedia’s own Japanese subsidiary stepped forward to take charge of TripAdvisor’s Japan-based operations.
Service users can freely share their travel experiences and leave reviews on the website of TripAdvisor. Moreover, searches under topics like accommodations result in displays of the lowest prices and vacancy state of multiple online travel agencies in real time. A mechanism is in place in which advertising income is paid to TripAdvisor when users select a travel agency through the website after comparing it with other displayed information. Given its large population, there are expected to be many potential users in Japan. Manager Shohei Nishibayashi (photo), who has been with the Japanese subsidiary since its foundation and is currently leading the Business Development Division, looks back at the time of foundation and says "The US headquarters had extremely high expectations for the Japanese subsidiary from the very beginning."
Manager Shohei Nishibayashi
Rapid increase of inbound-related users
The number of TripAdvisor website users has been expanding, recently reaching 350 million people per month (announced in Q3 of 2015). In line with this, the number of users searching for information related to Japan has also been increasing. "According to a list compiled by the US research company comScore ranking travel-related websites by the number of users of in Japan (April of 2015), TripAdvisor stands out as the only foreign-affiliated company to be included among top ranks, coming in at No. 5.”
Since its foundation, the Japanese subsidiary has made expansion of domestic users in Japan their focus. However, the recent rapid increase of inbound travelers is directly leading to greater utilization or their services by foreign tourists considering to visit Japan. Mr. Nishibayashi explains "As compared to 2014, the number of Japan-related information views increased by 1.5 - 2 times." It has also been generating word-of-mouth publicity. The jump in website views could also indicate a further increase in travelers in the future. Mr. Nishibayashi says "I actually feel that the inbound industry has been growing at a good speed." When looking at the regions in which the number of users has been significantly growing, they are those with a growing number of inbound travelers, including China, Korea, Hong Kong and Taiwan.
Strength as portal site for travelers
As mentioned above, the most important mission of the Japanese subsidiary is to expand utilization by Japanese people. This is because, in terms of the TripAdvisor's business model, the company’s value increases as more Japanese travelers use it as a portal site for finding online travel agencies (OTAs). Preparing attractive content is the most effective way to achieve this.
In general, the main services of OTAs include the coordination of transportation means such as flight reservations as well as accommodation such as hotels. TripAdvisor, meanwhile, provides comprehensive information necessary for travelers, including not only flight information and accommodations but also eateries, tours, sightseeing facilities and recreational activities. In order to attract customers, the global OTA industry has been expanding the scope of travel-related information and reservation services in recent years. TripAdvisor got a significant head start over other companies by providing abundant content from the beginning and increasing its appeal as a portal site.
Utilization of partnerships with domestic companies and local governments
The company has also been diligently enhancing its provision of travel information, particularly in coordination with Japanese companies. For example, in 2013 TripAdvisor announced that they concluded a deal with Gurunavi, which provides information on restaurants in Japan (see table). Since then, both parties have promoted the fact that each utilizes content provided by the other. In spring of 2016, the restaurant information and the booking link provided by Gurunavi are scheduled to be available on TripAdvisor's website.
To help reinforce business operations, TripAdvisor globally has also added 23 travel-related companies to its group through M&As across the globe. In the future, Mr. Nishibayashi says, the company might do the same in Japan if it finds an appropriate partner.
Growing while adapting to different culture/business practices
TripAdvisor has been growing on a global level. In 2014, the total number of user comments posted on its site exceeded 200 million. From the perspective of such a company, how do market conditions in Japan look? Mr. Nishibayashi has this to say: "The Japanese market is not easy for European and American OTAs, although there are no particular legal issues." As one example, he describes the fact that the European and US styles of negotiating terms with hotels cannot be used in Japan. In addition, he expresses his strong hope for “local governments and industry-related parties to show more initiative in trying new things by demonstrating stronger leadership." According to him, when promoting initiatives for new inbound travelers, local governments and industry-related parties usually consult with known travel companies, with which they have had transactions in the past, without considering to adopt new partners. Therefore, there are challenges faced even by local companies in the inbound travel business. Since TripAdvisor has built collaborative relationships with a number of Japanese companies while recognizing these differences, it can be said that this company's case can offer suggestions to such local companies.
|*||TripAdvisor was founded in the US in 2000 as a travel information site, enabling travelers to plan their trips according to user reviews. It currently has approximately 3,000 employees and operates their services in 47 countries/regions of the world in 28 languages. The sales for 2014 were 1.246 billion US dollars. The Japanese subsidiary started its business with one employee in 2008 and has approximately 35 employees as of December of 2015. The sales are not disclosed.|
(November 2015 interview)
|2008||2008 Established Japanese subsidiary "TripAdvisor K.K."|
|2009||Started business partnerships with domestic companies|
|2014||Total number of user comments exceeded 200 million. Started partnerships with local governments|
|2015||Relocated to current headquarters (Ebisu)|
|Business:||Operation of travel information site|
|Parent company:||TripAdvisor, Inc.|