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  • By Mar-Vic Cagurangan

Why the South Korean market is no match for Japan

Japan arrivals to Guam saw a rebound in March, reclaiming the top spot after being dislodged by the South Korean market in February. South Korean arrivals totaled 53,517 compared to Japan’s 49,834 in February, showing a 38 percent surge from the previous month. Bouncing back in March, Japanese tourists filled out 61,142 seats out of the 68,585 total seat capacity for March, indicating that all Guam-bound flights from Japan were nearly 90 percent of the total air lift capacity, according to the Guam Visitors Bureau.

While the two markets’ positions went back to the usual rankings a month later, Japan holds a fragile top spot. A three-hour flight away from Guam, Japan has dominated Guam tourism for five decades, reaching a peak of 1.12 million in 1997 and accounting for 80 percent of total number of tourists that year. This market is associated with the history of tourism on Guam, which saw the creation of demand after the initial 109 passengers aboard Pan Am Flight 801 departing from Haneda, Japan traveled to a newly discovered exotic tropical destination in 1967. Now a $1.75 billion industry, tourism is a main driver of Guam’s economy, providing 21,000 local jobs.

In recent years however, arrivals from this Asian country have been constantly dwindling for a number of reasons including the strengthening of the American dollar against the yen and the Japanese tourists’ growing preference for domestic travel. According to the Pacific Association of Travel Agencies, Japanese tourists’ overseas travels shrunk by 2.1 percent while domestic tourism went up 2.4 percent in 2015. These factors were exacerbated by seat capacity reduction resulting from Delta’s and Korean Air’s recent termination of the Osaka and Nagoya routes.

On Guam, the number of Japanese visitors continues to trend negatively from 753,000 in 2016 to 674,000 in 2017. Consequently, available airline seats were reduced from 972,000 to 861,000. In contrast, the South Korean market has shown a constant upswing. Guam welcomed 649,000 Korean visitors in 2017, up from 519,000 in 2016. GVB celebrated the 500,000th Korean visitor to the island in December 2016 in a “Hafa Millionth” ceremony, marking a strong growth in the Korean market, which composed 41.6 percent of total arrivals. Airline seat capacity grew due to the increased demand to travel to Guam. In summer last year, Air Seoul launched its direct Incheon-Guam service.

While they welcome the rise of the Korean market, industry stakeholders won’t just give up on Japan. They have been doubling efforts to keep Japanese visitors coming to Guam in a bid to keep this market from shrinking further. “Our team has been working diligently to secure charter flights for our Japan market and encourage existing air carriers to increase their flight service and potential ones to consider flying directly to Guam,” said GVB president and CEO Nathan Denight.


But Guam’s efforts to recapture the Japan market are challenged by intense competition from destinations favored by Japanese travelers including Korea, Taiwan and Hong Kong.


There’s good reason Guam tries desperately to hang on tight to Japan. While South Korean arrivals continue to surge, dollar-wise, this market is no match to Japan.

“As it has always been the case, when one looks at exit surveys, such as the one in December 2017, one Japanese visitor spends $525.28 while a Korean visitor spends $231.63— less than half,” said Dr. Maria Claret Ruane, professor of economics at the University of Guam. “This means that, although the total visitor arrivals might be the same, the total dollar amount of visitor spending was lower. Another way to state this is that you need 2-plus Korean visitors to replace the spending of each Japanese visitor who did not come to Guam, and hence, who did not spend money on Guam.”

But Guam’s efforts to recapture the Japan market are challenged by intense competition from destinations favored by Japanese travelers including Korea, Taiwan and Hong Kong. The biggest hurdle in reclaiming this weakening market was North Korea’s on-and-off missile threats aimed at Guam. The ‘fire-and-fury’ August of 2017 led to the cancellations of school groups, MICE trips and general consumers.

While Guam was the center of international attention late last year, a Google search for the island mostly turned up hits to the nuclear threat crisis. The top five entries include: “Distance from Guam to North Korea,” “Guam population 2017,” “Map of Guam and North Korea,” “Guam missile defense” and “military population on Guam.”

The nuke attack scare has thus made it imperative for GVB to make an extra push through aggressive advertising, creating online content and promoting its Visit Guam 2018 campaign, as well as expanding its travel trade network. It has initiated multiple air service development plans to help rebuild air seat capacity. The bureau’s charter plan has spurred additional flights for the summer months. Industry officials said more than 350 charters are planned to operate throughout the remaining part of the year. United also recently announced 20 additional flights between Tokyo and Nagoya and Guam to run in August.

“Additionally, GVB is in constant communication with existing carriers about increasing more service and in discussion with full service carriers and low-cost carriers to open up flights to Guam,” Denight said. “The most recent result of the success of the air service development initiatives is Japan Airlines committing to a second daily flight from Narita to Guam, which will bring an additional 40,000 seats to Guam through the end of October.”

The Guam population’s attitude toward tourism has made it quite easy for GVB to execute its goals. “A majority of residents view tourism favorably as an industry on Guam; residents also have a positive outlook for the growth of Guam’s economy,” according to recent study released in March by University of Guam professor Dr. Fred R. Schumman at the 2018 International Conference on Business Economics and Information Technology held in Osaka.

But while “most residents agree that tourism creates many well­-paying jobs,” Schumman said the study indicated “an increase in the perception that most tourism jobs don't offer much chance for advancement."


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