Travel businesses are rushing to restructure their operations as they struggle due to slumping demand amid the COVID-19 pandemic.
In addition to weak demand, an increase in the use of online reservation services that do not involve sales staff has shaken the traditional business model in the industry, which are typically supported by physical branches set up nationwide.
To stay afloat, firms are reducing branches and personnel as well as freezing new hires.
Some have even scrapped travel packages and started developing new areas of business such as dining, shifting their focus away from individual travelers.
KNT-CT Holdings Co. will shut a third of the branches it runs to accommodate individual customers at its Kinki Nippon Tourist travel agency.
The company will also terminate its Mate and Holiday brands of travel packages for individuals, which had been on offer since 1972, at the end of next March.
“We won’t stick to our existing business structure,” said KNT-CT Chief Executive Officer Akimasa Yoneda.
The company will instead focus on services for corporate clients, such as support for school and study trips and events, as well as offering travel plans for member customers.
Travel agency H.I.S. Co., which already sees half of its customers for overseas travel make bookings online, will also shutter a third of its domestic outlets.
JTB Corp., for its part, will reduce its domestic branches by 25% and cut group personnel by 6,500 by fiscal 2021 from some 29,000 in fiscal 2019.
JTB, Kinki Nippon Tourist and Nippon Travel Agency Co. are also halting new graduate hiring for fiscal 2022 in order to shrink their workforce. The moves are expected to impact many students’ job-hunting activities as the industry is popular among those looking for work.
As part of their restructuring efforts, the companies are looking to boost operations not directly related to travel in hopes of securing future growth.
JTB is looking to make its human resource development business for corporate clients a key source of revenue. H.I.S., also eager to enter new lines of business, opened soba noodle stores in Tokyo and the neighboring prefecture of Saitama this year.
Despite the success of the government’s Go To Travel tourism promotion scheme in shoring up industry sales, it is seen as merely a stopgap measure.
“The travel industry is facing a turning point, with the coronavirus as a trigger,” said Hideo Sawada, president and chairman of H.I.S.
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