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Tadayuki (Tad) Hara, PhD, Associate Professor, Senior Research Fellow
University of Central Florida Rosen College of Hospitality Management
Strategic Vision Towards
60 Million Inbound VisitorsDiscussion on Threats and (your) Opportunities
14:45 ~ 16:15 June 13, 2016
Room 法経済学部東館1階法経第5教室Building 12, Kyoto University, Kyoto, Kyoto, Japan
Administrative Notes (1)• All slides should become available online.
– No needs to take notes
• I will allocate time for Q & A at the end while
you may ask questions at any time.
– Please just identify your name, so that I can
address you by name.
– You can ask questions either in English or
Japanese, and I will respond in English.
Administrative Notes (2-1) Why in English? How many are using?
Administrative Notes (2-2) Why in English? How many are studying?
(123+3)/ 7,200 =?
That is the size of
your world, if you
speak, read and
communicate with
Japanese in
Japan.
You must earn
export revenues
which is good for
the nation and for
you.
Contents of the Lecture(Total 46 pages)
1. Tourism, Management versus Hospitality
Management (P5-7)
2. Confirmation of Goals – Why Promote Tourism (P8-9)
1. Goals for Corporation and Governments
3. Mission Statement: Example - Planning for Tourism
as an Industry (p10-22)
1. Case of Mission Statements in Orlando, Florida
2. Tourism Public Infrastructure Funding Scheme and Alternative Funding
4. Identifying Possible Bottlenecks and Plan for
Mitigations to Achieve National Goals (P23-40)
5. Additional Topics: Storytelling, International
Internship, Research Formats (P41-52)
Tourism
Anthropology Psychology
Marketing
Financial
management
History
Policy Analysis Economics
Government
GeographyQuantitative Tourism
Industry AnalysisStrategy
HR/OB
Planning
I: Overall Field of Tourism and Hospitality Management Field
More Public policy
orientation
Business Application orientation
Quantitative
Requirements
Source: Quantitative Tourism Industry Analysis, T. Hara
Difference between “Management” and
“Hospitality Management”• In a manufacturing sector, you create
your tangible products at factories. You can
store them and check their quality before
sales. (Most MBA programs are based on this model)
• In our hospitality industry, customers are
purchasing “experience” which is
intangible, and cannot be produced and
stored by the factory. Employees produce it
• How can you ensure the quality?
• How can you differentiate your product
from others?Importance of managing the
whole processes for consumers
Part II: Purposes of our Mission
• It would become highly useful for all of us
(researchers, practitioners, students,
workers in the hospitality and tourism
industry) to confirm our mission, why we
must promote tourism as an industry.
– Many, if not all, of misguided discussions
derive from deviation from our mission.
– Goals and “means to achieve goals” should
not be mixed.
II. Confirmation of Goals:
“Why do we promote tourism?”
• Goals of Profit Organization?– Maximize Shareholder Values by maximizing profit
• Ultimate National/Regional Goal for
government?
– Maintain & Improve Quality of lives of taxpayers
(= Customer Satisfaction)
• How do you achieve those goals?
– By Securing Export Revenues– Which industrial sectors are competitive enough at 2016?
– Rely on Tourism as an Industry (to secure
alternative export revenues)
III. Importance of Confirming
Organizational Mission
III. Importance of Confirming
Organizational Mission
• When you are engaged in tourism planning, you
have to create common themes across different
industrial sectors & organizations to let the visitors
enjoy cohesive experiences in the destination.
• Remember, you are selling experiences which
should be smooth, pleasant, and consistent.
• BUT, always keep in mind why you promote tourism
as an industry.
Answer: http://ja.orlandoairports.net/
III. Tourism as an Industry: Case Study 1
Which organization’s Mission statement?
(1) Hilton Orlando
(2) Mears (bus & taxi company)
(3) Orange County Convention Center
(4) Orlando Magic (Professional Basketball team)
(5) Disney Cruise
(6) Greater Orlando Aviation Authority (airport)
Our “Mission” is to provide a safe,
secure, customer friendly, affordable
services and facilities that promote the
Orlando Experience.
III. Tourism as an Industry - Case
Case: DMO - Visit Orlando http://www.visitorlando.com/ (leisure travelers)
http://corporate.visitorlando.com/ (corporate page)
http://www.orlandomeeting.com/ (MICE)
The mission of Visit Orlando, as the industry's leader,
is to market the area globally as a premier leisure,
convention and business destination for the continual
economic benefit of the community.
Why leisure web pages for many different languages? See thishttp://corporate.visitorlando.com/research-and-statistics/orlando-visitor-
statistics/overseas-visitor-profile/
III. Tourism as an Industry - Case
Case: Orange County Convention Centerhttp://www.occc.net/pdf/Info_MissionStatement.pdf
The mission of the Orange County Convention
Center is economic development.
By hosting regional, national and international
conventions, meetings and trade shows, the
Center infuses the local economy with new
money and expanding business opportunities.
10/13/2017 15
III-2. Case Study : Tourism Public Infrastructure - Orlando Convention Center
Partly Based on Presentation prepared by the Orange County Convention Center, Orlando, Florida, USA
3-2 Tourism Infrastructure Funding– Business Model of Convention Center may be an
useful example.
– Convention Center is usually built by local/national
government as a public facility
• They are often operated at losses if you look at its
Financial Statements (I/S, B/S).
• Draws certain tourists segments (longer staying, higher
spending visitors) to the region, benefiting wider hospitality
industrial sectors at Off-peak season
– Hotels, Restaurants, Local transports, retail shops, amusements,
translators, destination service companies, interpreters, AV
rental, luxury limousine car companies benefit from increased
visitors.
– Resulting in job creation, tax revenue generation as a critical
infrastructure for export revenues of the regional economy
3-2 Issues with Tourism Infrastructure Funding
Government
Tourism Public Infrastructure
(Convention Center)
Inbound
Visitors
Construction of Tourism Public
Infrastructure is often funded by
government’s ordinary budget.
And often the project does not
generate enough cash flow, so
government has to continue to
subsidize its operation while it
benefits industry and create jobs
by attracting visitors.
3-2 観光インフラ資金調達:オーランドの例
Government
Tourism Public Infrastructure
(Convention Center)
Muni.Bond
Investors
Inbound
Visitors
Special Purpose
Escrow Account
Debt Service
Destination
Marketing
Government issue a municipality bond to raise construction cost of the Tourism
Infrastructure. It is non-recourse and government offers no guarantee.
Government impose a special purpose tax (TDT) which will be used for (1) Bond
debt service (2) destination marketing only.
3-2 Issues with Tourism Infrastructure Funding
4-1910/13/2017 19
III-2: Build a structure in which tourism revenues
will be circulated in regional economy and
contribute for growth of the revenue
Tourist Development Tax (local special purpose tax on hotel
room charges
Visitation by tourists will generate special purpose tax
revenues
Do not put it in ordinary account but earmark it for
1. tourism promotion (destination marketing), which is
conducted by DMO
2. Debt service for municipal bond for construction of a
Convention Center (= tourism infrastructure)
3-2 Orange County Municipal Bonds
4-2110/13/2017 21
3-2 TDT $175 Million in 2012
TDT to be used for (1) Debt service for Convention Center Construction
Municipality Bond (2) Annual Marketing Budget for Orlando
Table 2: Orange County, FL Tourism Development Tax Revenues
Orange* tax % Increase %
1995 $68,257,785 5.0% --
1996 $81,059,719 5.0% 18.76%
1997 $92,862,345 5.0% 14.56%
1998 $97,935,188 5.0% 5.46%
1999 $100,539,325 5.0% 2.66%
2000 $109,411,700 5.0% 8.82%
2001 $97,932,100 5.0% -10.49%
2002 $94,701,200 5.0% -3.30%
2003 $94,512,900 5.0% -0.20%
2004 $114,317,500 5.0% 20.95%
2005 $122,151,700 5.0% 6.85%
2006 $137,204,800 6.0% 12.32%
2007 $165,661,400 6.0% 20.74%
2008 $165,064,400 6.0% -0.36%
2009 $140,202,100 6.0% -15.06%
2010 $153,276,500 6.0% 9.33%
2011 $176,533,100 6.0% 15.17%
2012 $177,607,100 6.0% 0.61%
Source: Orange County, FL, Comptrollers' Offices
$226 million in
2015
4-22Buses(23%)Taxis(46%) Restaurants(17%)
Shopping (3%)Airplanes(76%)
Ships(17%)
Auto Rental &
Leasing (58%)Travel Agency
(21%)
Amusement
(20%)
Sports(32%)
Cinema(18%)
Gas Station (7%)
Hotel (80%)
3-2 Tourism Industrial Sectors and dependence
Source: Data based on Bureau of Economic Analysis, Commerce Dept, USA
The latest National Goals for Japan• This is NOT to discuss if the national goals can be
achieved, BUT to discuss how they can be achieved.
• [Annual number of Inbounds]
– Currently 20 million 40 M in 2020, 60M in 2030
• [Expenditures by Inbounds]
– $34Billion in 2015 $80B in 2020, $150B in 2030
– (J: $185B in 2015 $210B in 2020, $220B in 2030)
– (34/219=15%, 80/290=27%, 150/370=40%)
– (Japanese GDP = $4,170 Billion in 2015) relative share would be
5.2%, 6.9%, 8.8% at least)
Do you think these are impossible, or challenging?
Historical Data on Inbound to &
Outbound from Japan
IV. Possible Bottlenecks and Plan
for Mitigations20 M 60 M, 3 times more visitors to Japan!
• Non-physical bottlenecks
– Shortage of Labor force (front and back)
– Shortage of Managerial Personnel (top, middle)
• Physical bottlenecks
– Accommodations – Hotels, rental units
– Airports, Immigrations, JR Pass exchange
– Transportations- buses, trains, rental cars
Relative Importance of TourismFigure 29: Size of Tourism GDP to National Economy
Country (Study Year) TGDP Spain (2004) 11.0% Austria (2005) 6.4% Switzerland (2004) 5.1% New Zealand (2005) 4.8% Australia (2005) 3.9% United Kingdom (2003) 3.4% Germany (2003) 3.2% Norway (2005) 3.1% USA (2005) 2.6% Sweden (2004) 2.6% Finland (2005) 2.4% Canada (2006) 2.0% Japan (2006) 1.9%
Source: Presentation by Tadayuki (Tad) Hara, PhD, at the 2008 UNWTO Conference in Bali
Paper Title: “Results of 7th Research on Economic Impact of Travel and Tourism in Japan”
Subtitle: “Quantifying the Relative Importance of Tourism as an Industry”.
FIGURE 30: Size of Tourism Employment to Total Employment
Country (Study Year) Employment % Norway (2005) 6.8% New Zealand (2005) 5.8% Switzerland (1998) 5.2% Australia (2005) 4.6% USA (2003) 4.2% Canada (2000) 4.0% Sweden (2002) 3.0% Japan (2006) 2.6%
Source: Presentation by Tadayuki (Tad) Hara, PhD, at the 2008 UNWTO Conference in Bali,
Paper Title: “Results of 7th Research on Economic Impact of Travel and Tourism in Japan”
Subtitle: “Quantifying the Relative Importance of Tourism as an Industry”.
Relative Importance of Tourism
External Business Environment
Source: MLIT PDF: http://www.mlit.go.jp/common/001033672.pdf
From 2010 to 2050,
population is expected to
decrease from 127M to
90~100M range, while
inbound visitors are aimed
to increase from current 10M
to 30M+ in the next 10
years. Labor shortage =
time for Japan to thinkabout utilization of (1) short-
term labor (2) immigration of
skilled (and unskilled)
workers (3) subsequently,
cross cultural management.
Strategic Requirement: Develop Human
Resources suitable for the National Goals
• There will be no doubt about shortage of labor force in Japan
• You cannot expect all foreigners (98.3% of people in the world)
to speak Japanese
• Japan will need not only those foreign labor forces but also
many younger generation of their own who can understand,
communicate with, lead and manage diversified labor force in
Japan. (If you can do this, you will get paid higher salary) – Start from better utilization of female workers, and hospitality industry
has been one of the most receptive industrial sectors to embrace
those diversified workers/management
Internship – cross cultural management experience
• An update on my Japan adventure! Today is
June 6, 9am… The resort caters to guests from
all over the world, so I have been using both
Japanese and English to communicate with
guests. Some guests don't speak either
language so it has been exciting and a great
learning experience figuring out how to
communicate with them. I am very proud of how
far my Japanese has come so far. I love the
language and it is much easier than I initially
thought it would be…. The staff at Kafuu is so
incredibly kind and helpful, and I have noticed
that is a trend here in Okinawa. Also, everyone
in Okinawa has an incredible work ethic no
matter what they are doing. Everything that is
done in Okinawa is thoroughly thought out and
completed to perfection. I am excited to
continue my adventure and I will try to keep
everyone updated as I do so!
IV. Possible Bottlenecks and Plan
for Mitigations20 M 60 M, 3 times more visitors to Japan
• Non-physical bottlenecks
– Shortage of Labor force (front and back)
– Shortage of Managerial Personnel (top, middle)
• Physical bottlenecks
– Accommodations – Hotels, rental units (Airbnb)
– Airports, Immigrations, JR Pass exchange
– Transportations- buses, trains, rental cars
LCCs and Japan as Destination in Perspective
LCC Market Shares Around the WorldLow Cost Market Shares Around the World
Region (country)Year low cost operations
beganYear(s) in which market de-regulation took place Share of Overall Market (%)
North America
USA 1978 1978 24-25%
Canada 1996 1996 30
Europe
UK/Ireland 1995 1993 40
EU 1999 1995 20
EU expansion 2002 2004 less than 1%
Australia/NZ
Australia 1990 1990 30+
NZ 1996 1984 30+
Asia
Malaysia 2001 2001 2
Singapore 2001 2001 less than 1%
Japan 1998 1998 1
China n.a ongoing n.a
Thailand 2004 2003 less than 1%
India n.a 2003 less than 1%
Rest of World
Brazil 2001 1998 3
South Africa 2001 1999 1
Gulf States 2004 2003 less than 1%
Source: Table 1 "Where next for low cost airlines? A spatial and temporal comparative study"
Francis, Humphreys, Ison and Aicken, Journal of Transport Geography 14 (2006)83-94
Market Development Stages (2006)
Market Developments of Low Cost Airlines Compared to the US
StagesUSA (as a
benchmark) Canada UKEurope
MainlandEastern Europe Asia Australia NZ
Rest of World
1. Innovation V V V V V V V V V
2. Proliferation V V V V V
3. Consolidation V V V V V
4. Second Phase of new entrants V
5. Consolidation V
6. Market Maturity V
Source: Table 2 "Where next for low cost airlines? A spatial and temporal comparative study"
Francis, Humphreys, Ison and Aicken, Journal of Transport Geography 14 (2006)83-94
Strategic Identification of Hidden Assets
• There appear to be existence of high quality
airports with excess capacity in Japan
– Japan has an extensive network of airports across the
nation. Currently there are five first class airports which
are able to handle intercontinental flights.
• Narita International Airport (Narita: NRT)
• Kansai International Airport (KIX)
• Tokyo International Airport (Haneda: HND)
• Chubu International Airport (NGO)
• Osaka International Airport (ITM)
Airports: Important Infrastructure
for Inbound Tourism
• Japan’s airports system is well developed with
five first class airports near major cities, over 20
second class airports, some of which can handle
international flights, and nearly sixty third-class
“domestic only” airports.
• Capacity constraints exist predominantly with
two first class airports three first class airports
and most regional airports have excess
capacities = critical infrastructure already exists
to meet increase in inbound tourism!
Source: Ministry of Land, Infrastructure, Transport and Tourism, Japan
Interesting Case of Sanford Airport Orlando• Orlando Sanford International Airport covers 2,010 acres (813 ha) and has four
runways:– Runway 9L/27R: 9,600 x 150 ft. (2,926 x 46 m), Surface: Asphalt
– Runway 9C/27C: 3,578 x 75 ft. (1,091 x 23 m), Surface: Asphalt
– Runway 9R/27L: 6,647 x 75 ft. (2,026 x 23 m), Surface: Asphalt
– Runway 18/36: 6,002 x 150 ft. (1,829 x 46 m), Surface: Asphalt/Concrete
• The airport is owned by the Sanford Airport Authority and managed by TBI plc, one
of the world's leading airport operators, which owns London Luton Airport, Cardiff
Airport, and Belfast International Airport in the United Kingdom, as well as
Stockholm-Skavsta Airport in Sweden, and operates airports in South America.
• Because of that affiliation, Orlando Sanford International Airport is served primarily
by British charter air carriers servicing the European market for leisure travel to
Central Florida. TBI is also the provider of ground handling services for airlines.
Although it is primarily a landing point for European travel, Sanford is also the
second largest focus city for Las Vegas-based Allegiant Air.
• Airlines http://www.orlandosanfordairport.com/airlines.asp
4 Promotion of Inbound – Hidden Asset
• An academic research on perceptions of Japan among
US residents (FL, VA-2010) showed– “Food, High-tech” images as the strongest associations with Japan
– “Airfare being too expensive” perception was statistically significant
among those who never visited Japan
• LCC can definitely contribute to mitigate this perception.
– Bring first-time visitors to Japan and expose them to “Food & High-tech”.
• Some local airports have good land transports to major Rail systems.
• Almost all Japanese regions have distinctively tasty local foods &
surprisingly abundant choices of International Foods. (Not marketed
to inbound visitors)
• According to Japanese TSA, visitors impacts to railroads
are relatively larger in Japan
– indicating possibility of joint-marketing by LCCs and Japanese
Rail companies)
V. Additional Topic: Importance of Proper
Story-telling to Inbound Visitors
If a non-Japanese visitor asks you “how
Japan with beautiful old culture, away from
any industrialized Europe suddenly became
a global economic power in the last 150
years”, can you explain that in English?
S/he wants to visit tourism destinations to
learn about the process of how Japan
transferred itself from closed agriculture-
based feudal system to industrialized
democracy. What do you recommend?
https://www.youtube.com/watch?v=ItFrI6n73wg
https://www.youtube.com/watch?v=RgdRJ74mBwI手に取れない「経験」を売るのは、物を販売するのとは違う
V. Additional Topic: Importance of Proper
Story-telling to Inbound Visitors
10/13/2017 43
4-2 Ex-3 Marketing and Sales Concept• This is the difference between selling concept and
marketing concept for Tourism Products.
Starting Point Focus Means Ends
Selling
Concept
Japan (from
Japanese
viewpoint)
Existing
Tourism
Products
Selling &
Promoting
Profits from Higher
Number of Visitors
Marketing
Concept
Market (potential
inbound visitors)
Customer
Needs
Integrated
Marketing
Profits through
Visitors' Satisfaction
You do not use visitors’
detailed data
Lots of
promotion
materials
Simple Data on #
visitors, expenditure
would suffice
Start from
“knowing
customers”
Focused marketing
on differentiated
segments
Detailed Data on
Visitors required
for measurement
of success
CONCLUSION: Enabling 60 Million
• Confirm Goals for Tourism Promotion– Development of tourism as an high-growth regional export industry
– Japan already has hidden assets (airports & ground transportation
system) for regional tourism export.
• Create Business Model to finance “tourism”– Consider taxation scheme to tax on consumption, not on providers of
commodities
– Tourism must be marketed (not only to visitors but also to residents)
• Human Resource Development
– Not enough HR developed before critical shortages surface.
• This means there are unprecedented opportunities in the hospitality
industry & tourism-related sectors, if you are capable of “cross
cultural management & hospitality management to earn export
revenues! Then you should be paid top-level salaries”
Thank you very much. Tad Hara http://www.youtube.com/watch?v=C0u9s0LWxqo
Extra Issue: Current Status of Higher
Education in Hospitality & Tourism in Japan[USA] 180 Universities with Hospitality/Tourism
programs (2/3 hospitality management, ¼ tourism?)
• Around 50 offers Masters degrees, 15+ offers Doctorates.
• About 50,000 students
• Tenure-truck system led to high-research environment
[Japan] 46 Universities with Tourism Studies (none in
Hospitality Management)
• Around 6 offers Masters degrees, 3+ offers Doctorates
• About 15,000 students
• Self-Imposed seclusion led to low research outputs
全学術分野による世界学術研究国別ランキング
17年間
All Area Refereed Research Paper output 1996-2012
新薬開発分野学術研究国別ランキング
“Drug Discovery” Research Paper output 1996-2012
経済・計量経済分野学術研究国別ランキング
Economics & Econometrics Research Paper output 1996-2012
観光・レジャー・ホスピタリテイ経営分野学術研究国別ランキング
“Tourism, Leisure & Hospitality Management”
Research Paper output 1996-2012
Historical Data on East
Asian Regional Competition
in Research in Hospitality &
Tourism
• Japanese Advantage of
being the first to create
tourism department
appears to have been fully
amortized & depleted.アジ
ア初の観光学科設置の先行者利益はほぼ崩壊。
• Fierce regional competition
among China, Taiwan,
Hong Kong and Korea left
Japan completely in the
dust. 2007年頃からの中韓
台湾観光系学者による世界での熾烈な研究競争に劣後
最新データ(2014)日本:18
韓国:97
(香港:100)
台湾:138
中国:186
50
Optional: Another Hidden Export Industry - Education
• Doubling the number of Japanese students studying
abroad from 60,000 to 120,000 by 2020
• Doubling the number of overseas students in Japan
from 140,000 to 300,000 by 2020– Funding for Environmental Infrastructure (Housing, tuition, etc.)
– Rapid expansion of courses offered in English
• Thorough Internationalization of Universities (all English)
– School year adjustment (April vs September)
• lead to “international competitiveness of
universities” • Currently: Self-Imposed seclusion = lack of international
competitiveness”. (similar to the end of Edo era)Ripe for
Evolution (first, recklessly fight against the world, and learn your self)
Globally Accepted Academic Research
Format: Important for Graduate Students1. Introduction
1. Why should people read this research paper?
2. Literature Review
1. Weak in many research manuscripts from Japan
3. Methodology and Data
1. Quantitative vs Qualitative
4. Analysis
5. Further Discussion & Analysis (optional)
6. Conclusions/limitations/future research
Recommended