Japan's Tourism Industry - Who is choosing package tours?

2013-2021 Japan travel agency group transaction volume (trillion yen) Data source: Statista.com

The transaction value generated by Japanese travel agencies through domestic tourism was approximately 1.13 trillion yen in 2021. Domestic tourism is the leading category by far in terms of transaction value recorded by travel agencies.

2021 Japan travel agency travel transaction amount (by travel type) (trillion yen) Data source: Statista.com

Industry characteristics

While privately organized trips are admittedly more common and also account for a significant share of the travel and tourism industry's revenue, group tours and package tours also account for a significant share of the industry's market size. Package tours have several distinct characteristics, one of which is the higher unit price per trip compared to private tours. Most package tours are overnight trips for tourism purposes, but service providers cater to a wide range of needs, including shorter day trips and business trips. Package tours (group tours) account for a large share of outbound travel, while the share of domestic travel using package tour services is lower.

As of 2021, the average cost of domestic overnight leisure tours organized by private organizations is about 53,400 yen, while the average cost of group tours or tours is about 86,800 yen.

The proportion of people who use group tours when traveling abroad in Japan from 2018 to 2022 Data source: Statista.com

Towards more flexibility

The COVID-19 pandemic has hit the package tour industry hard. However, even before the pandemic, the industry had already begun to contract. According to data on the use of package tours by age group, the business model and services seem to have been successful with the older generation so far, but not with the younger generation. In order to provide more attractive services, the industry has started to offer dynamic packages that allow travelers to customize various aspects of their trip. Currently, such personalized travel packages are more popular than package tours when it comes to domestic travel. Japan's tourism industry is striving to provide people with more choices and maximum flexibility. The diversification of the industry can also be seen in trends such as glamping, which are adding new content to the tourism industry. It remains to be seen whether the package tour industry will be affected by the pandemic in the long term or whether it will be able to adjust its business model to adapt to the new market environment.

In a 2022 survey in Japan, 38.5% of people in their 70s said they often used group tours when traveling domestically. This group had the highest utilization rate of group tours among all age groups.