* * * * * * * * TERRIE’S (TOURISM) TAKE – BY TERRIE LLOYD * * * * * *
A bi-weekly focused look at the tourism sector in Japan, by Terrie
Lloyd, a long-term technology and media entrepreneur living in Japan.
(http://www.terrielloyd.com)

Tourism Sector Edition Sunday, Sep 16, 2018, Issue No. 961

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+++ A New Guide Service for the Naive and Trusting

With nearly JPY5trn being projected for inbound tourist spending this
fiscal year, the Japan inbound travel market is certainly stoking the
commercial hopes of many start-ups around the country. Every day some
new firm with JPY10m~JPY20m of initial funding, announces a grand
strategy for taking over the tourism sector. While I suspect that many
of these firms won’t make it past the Olympic Games in 2020, the types
of businesses they are jumping in to do signify notable trends in
Inbound Tourism, and furthermore reveal the thought processes of the
larger public firms and private investors backing them.

One such company to catch our attention this last week was Huber, a
matchmaker of mostly Japanese students acting as low-cost uncertified
guides to foreigners who feel intimidated by the language barrier here.
In essence Huber’s business model is extremely simple, and although
already incorporated into larger businesses by a number of players,
including the likes of HIS and NEC, the company has successfully defined
its niche with a pure-play message, and is reaping the benefits as a
result. Indeed, this do-one-thing-really-well differentiation may be the
magic ingredient they need to become a leader.

The announcement last week was actually by Huber’s investor and main
collaborator, ANA, which said that the two firms would start offering a
tour guide matching service for foreign travelers by December this year.
In making the announcement, ANA is continuing its push to extend its
services line-up to become a full-service travel resource and not just
an airline selling tickets at the cheapest price. Whether this approach
will work for an airline is hard to say, because selling seats on
airplanes is pretty much a commodity business, but we don’t doubt that
ANA is looking at Airbnb and its expansion into experiences, as a
direction for the future. Our take is that after making all these
alliances, ANA will eventually come to realize (some years from now)
that it’s all too complicated, and risky, and eventually return to its
core business.

[Continued below…]

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[…Article continues]

But in the meantime, having a partner like ANA will be great for Huber.
If nothing else, they will have a flood of traffic, since airlines, not
OTAs, are where most intending tourists make their first substantial
travel purchase. Huber has also done a great job of bringing in
investment from another local powerhouse – Tokyu – a very large
conglomerate with all the right assets to service tourists, including:
trains, hotels, shopping districts (Shibuya), entertainment facilities,
and office complexes. The other big factor for Huber is that its service
only became legal this year, when the Japanese government decided to
change the law allowing unlicensed guides to work for money, so they are
still a first-mover in the space. FYI, until 2018, guide licenses were
notoriously hard to get and resulted in guide rates well beyond the
pockets of most foreign tourists (typically JPY60,000~JPY70,000 per day).

The challenges Huber faces in succeeding in the guide matching business
are also significant. The first is that there is a basic shortage of the
types of guides that Huber wants to recruit – being bilingual university
students. Japanese students have famously lost interest in learning
foreign languages and also in working during their free time, and so
Huber will be challenged to find even a thousand individuals interested
in showing foreigners around. They might have better luck with Chinese
and Korean students, but those kids are already well tapped and employed
by the likes of CTrip and China-related travel companies, and I don’t
see Huber having better marketing than these online powerhouses.

Huber also faces challengers from a host of competitors. Such as a large
NPO guide confederation which is providing free tour guide services
around the country. The electronics giant, NEC, seems to be one of the
sponsors behind this initiative, and you can find the website here:

https://www.japan-tourismguide.com/tourism_guide.html

As you can see, the guides are typically students in the area, or older
retired folks who want to keep themselves active. It’s going to be
difficult for Huber to offer a paid service that is significantly better
than these free NPOs, or cheaper than the commercial operators who will
happily sell you an unlicensed but much more experienced guide for
JPY30,000/day.

Another competitor for basic resources will be the Tokyo Olympics, which
is recruiting up to 80,000 volunteers, starting September 26th. That’s a
lot of people being pulled into a 2-year project, and I seriously doubt
there will be many bilinguals left over in the Kanto region to provide
scalability for a guide service like Huber. OK, sure, the Olympics are
mostly about Tokyo and Yokohama, but this also happens to be where about
50% of all foreign tourists land as well.

Then there are the likes of Airbnb, Rakuten, Travelience (with their
TripleLights guide service), HIS and all the conventional travel
giants… all these companies offer guides in one shape or another. Some
package the guides with defined activities, to become experiences – a
great way to gather multiple travelers into a group so as to reduce the
per person pricing, and some are just straight-out competitors. My guess
is that as Huber gains more exposure for their service, other “student
rentals” companies will pop up overnight. The barrier to entry is almost
zero.

What is more likely to be a major challenge is the same thing that
bedevils all “share economy” type businesses in Japan – and that’s
negative news. Readers will remember when we reported an accidental
death of a Chinese child at an illegal Airbnb apartment on the 12th
floor of a Tokyo high rise. I personally thought that the opprobrium
stemming from that incident would get Airbnb closed down for good, which
didn’t happen, although it could have been a contributing factor for how
they were partially closed down through regulatory maneuvering a couple
of years later.

I believe the same risks exist for Huber and their business model. Some
tourists coming in to Japan for the first time may have misguided ideas
from Japanese manga/anime about Japanese sexuality and what’s acceptable
behavior here. Huber’s website appears to target female and male
students equally in terms of recruiting, and I have no doubt that some
of them will experience unwanted attention or worse from some of their
customers. Indeed, Huber itself seems to be aware of this risk, by
offering a “team-of-guides” format, where a guide can team with a friend
for activities such as “casual and deep experience like hanging around
with friends”. (Huber’s own web copy).

Whatever the circumstances, the first time you see a press report of a
Huber female student guide being hurt by a foreign male customer, you
can be sure that Huber will receive “guidance” to change its business
model. In fact, in my opinion, this risk factor is so high, I’m really
surprised that ANA didn’t take it into account when making the
investment. But then, all share-economy business models create similar
exposure, and in the end it boils down to whether you’re able to take
care of yourself when physically threatened (most Japanese kids don’t
learn this skill), and if you’re feeling lucky or not. Hopefully most of
Japan’s visitors using the Huber service are just as naive and trusting
as its local recruits are.

…The information janitors/

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END

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+++ ABOUT US

STAFF
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