Travel to Japan is Booming, But Tour Operators Face Capacity Crunch

Skift Take

Taipei-based tours and activities operator KKday wants to grow its market share, but with it comes delivery challenges beyond the sector’s offline fragmentation.

Tours and activities operators in Asia expect at least another 6 to 12 months of pent-up travel demand. However, maximizing this opportunity depends on addressing capacity bottlenecks, especially in markets like Japan. 

“It gets so chaotic that we have to help the suppliers,” said Wei-chun Liu, chief operating officer for KKday, a Taipei-based experiences booking company. 

Visitors to Japan surpassed 2019 levels for the first time in October, the Japan National Tourism Organization said Wednesday.

Liu said that Japan has struggled to manage the surge in travel demand after restrictions lifted a year ago.

“We are seeing a lot of constraints from the industry, for example, the bus capacity, the tour guide capacity, are all a challenge right now,” said Liu. “Our team spent a lot of time trying to secure capacity for buses. The price of buses has probably doubled.”

KKday claims to have doubled its market share in key destinations like Taiwan, Hong Kong, Korea, and Japan over the past year.

In particular, bookings for outdoor activities have grown 350% in 2023 compared to 2019.

Founded in 2014, KKday’s business model has transitioned from business to consumer to include business to business, with the company reaching 6 million customers this year. In July last year, KKday raised $95 million in series C funding, which it used to expand with brands such as Fine Day for the luxury market, and Activity Japan, one of the largest tour booking platforms in the country.

KKday also services over 3,500 small and mid-sized activity providers, offering 15,000 travel experiences in 550 cities through its reservations management software platform, Rezio.

Curating Less-Conventional Experiences
Whereas KKday would typically outsource its specially curated tours, the company now manages more tour components to better deal with the service delivery issues it sees. Liu explained that KKday’s approach to creating less conventional experiences strategically looked at operational tension points in inconvenient and off-the-beaten destinations.

“We wouldn’t do our own tour in Singapore just because it’s so convenient. We do places a bit far out, where it’s not easy to get to, where there’s no public transportation,” said Liu.

“Because our demographic is mostly young people, age 25 to 35, they don’t want to go somewhere other people go. They want to take a new picture for their Instagram,” said Liu. “We curate products, look at social media trends, and the upcoming new destinations.”

Demand and the size of the route were added considerations. Liu said Southeast Asia destinations like Vietnam, Cebu, and the outskirts of Bangkok all matched this criteria.

Local Seasonality

KKday continues to capitalize on the domestic business growth spurred by the pandemic, with local tours highlighting seasonal activities unique to the region, like apple picking and experiencing local festivals.

Liu said it expanded the company’s customer profile to include more families and older people with kids, with 15% of customers now coming from this new base. 

Luxury is another sweet spot for KKday, according to Liu. Its signature tours range from $40 to $60 per person, while Fine Day branded experiences can be 20 times higher.

Winning Asia’s Experiences Market

For Liu, KKday’s focus remains on delivering unique experiences rather than being a full-scale online travel agency (OTA) offering flights and hotels.

“I think it has to do with the region. In Asia, you still have a lot of suppliers that haven’t gone fully digitalized. And you cannot do that until you find them enough distribution channels, whether that be their channels, other partners, or our own KKday channels,” said Liu. 

The company is involved in supply partnerships with bigger OTA’s, including a partnership signed with Traveloka in October, but Liu declined to detail any other players it was working with.

“In our business, there’s always going to be regional players. Sometimes we compete against them, sometimes we work with them. I think it is really a very tactical decision. I don’t believe anyone will win the entire market share.”

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