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