Venture Republic CEO Kei Shibata on coronavirus: “Web traffic is down to the floor”

This week has been a pivotal point in the coronavirus situation in Japan. Tuesday, prime minister Shinzo Abe and the International Olympic Committee agreed to postpone the 2020 Olympic Games - scheduled to take place in Tokyo in August – until 2021.

Wednesday, the capital city of Tokyo saw a sharp rise in the number of infections, with 41 people confirmed infected up from 17 on Tuesday, leading the city’s governor to request residents refrain from going outside this weekend unless essential and to work from home if possible. 

And the Japanese government raised its advisory for outbound travel to a Level 2 – advising citizens to avoid nonessential overseas travel – and has implemented bans or quarantine requirements for foreign visitors from nearly two dozen countries. 

Kei Shibata is co-founder and CEO of Venture Republic, a Tokyo-based online travel company that owns Japan’s largest metasearch and content platform, LINE Travel jp, and also Trip101, a Singapore-based global travel guide. 

We spoke to Shibata to assess the impact of the COVID-19 coronavirus on him personally, on his business and on the broader travel industry.

What is your current situation?

Right now I am Tokyo. But I have my life based on going back and forth between the two cities – Singapore and Tokyo – every month. We have business in Japan, and at the same time we have business in Singapore. I am heading both of them as CEO, so I try to spend equal time in two locations. This lifestyle is not existing, at least for now. I was in Singapore until two weeks ago and then I was trying to travel back to Singapore last weekend, but I was locked out.

Tokyo for now is not in a lockdown. I still go to the office two or three days a week. As a company, we don’t recommend employees to come to the office, but some people come.

In the last couple of weeks, we’ve heard that some attractions are re-opening their outdoor areas. The Dutch-themed resort Huis Ten Bosch reopened March 16 and Legoland Japan reopened Monday, both with some restrictions such as asking guests to wear masks, taking temperatures, etc. What have you heard about that?

Yes, some of the attractions, some of the entertainment locations – people are hanging out. Last weekend, it was a three-day weekend here and right now Japan is in the cherry blossom season. It is very pretty, and then the weather warmed up and people started going out. And then on social media, over the last couple of days you see people talking how that is not good, we need to be more disciplined, etc.

The mayor has now said this coming weekend they would like to request people stay home. But it is just a suggestion. Restaurants are open. And as far as I know, big events are all cancelled. Except there was a big controversy last weekend - a big martial arts event with tens of thousands of people took place. People were upset. 

And of course the big news this week – the official postponement of the Olympics. What impact will that have?

In my personal opinion, I think Japan may take a bigger action now such as lockdown. You can imagine the prime minister here, he has really been trying to push to make the Olympics happen. There has been a lot of criticism around that – a lot of people saying it’s not possible. And then athletes saying that too. And then other teams started boycotting.

You can imagine how Japan has been trying so hard to make the Olympics happen, but what’s happened behind that is they’ve been kind of relaxing the regulations and restrictions in order to make Japan look better in terms of infections.

Now that’s gone, so the whole country may take the harder action such as lockdown. I kind of feel mixed. If Japan is in a critical situation, we probably have to do that. But at the same time, if it’s not, the economic impact will be significant if we lock down everything.

What effect is the pandemic having on your company’s operations?

Our Japanese business – LINE Travel jp - first got hit back in January, that's when we really started seeing a downturn. Basically in the month of February it started going downhill nonstop. And then March it keeps going down. The actual amount of demand or web traffic is pretty much down to the floor. 

We have a business in Singapore - Trip101 - which targets all the international English-speaking markets around the world with articles about destinations and accommodations all over the world. Our business is a truly global business, we just happen to have headquarters in Singapore, but it’s not specific to APAC. The good news in that business is we haven’t seen much drop until literally two weeks ago. And then now we see even worse numbers than Japan, especially as far as users from the United States and United Kingdom.

In the U.S., for example, we’ve seen traffic is down by 75%, U.K. is worse, about 80%. Australia is down 76%. And then interestingly some countries in Asia, it’s even worse - Malaysia is 82% down, Singapore 70% down. We’ve seen crazy, crazy numbers. And it was a sharp, sharp drop. We’ve never seen anything like that.

Comparing to other markets I described – the U.S., U.K., Australia, Singapore - Japan is slightly better off. We’ve seen a little smaller drop of our business in traffic and sales revenue, maybe because Japan has not been into a lock down or anything. That’s slightly good news for us.

But at the same time, our business can not exist without our partners - OTAs and travel agencies - and those guys have been even more hit. So we’ve started seeing a bigger impact than what the numbers on paper means. Our users come to our websites to find something, but they are not able to find, for example, the tour packages or flight deals or hotel deals because our advertisers or partners are pulling out. Through their API, they don’t actually give us the full product line up, because they need to cut down their marketing costs.

Worst case scenario some of the partners have completely cut their marketing cost, which means we are not able to show their products on our website. One example is Marriott, which is one of our big partners. But right now on our LINE platform as well as web platform, we are not able to show Marriott because Marriott says get rid of our links please because we can’t pay.

The only good news for us is Japan is relatively in better shape comparing to the other regional markets.

Have you had to have any layoffs?

Fortunately we haven’t done anything like that. There is some culture aspect, especially in Japan. We have a very strict labor law, so it’s not easy to lay off or fire people. But putting that aside, we are really trying to hard not to get into that kind of action. And so far we’ve been fortunate not to have to do that. 

Through both LINE Travel jp and Trip101, you provide travel guides and articles for destinations around the world, so I’d imagine as the virus subsides, this type of inspirational and educational content will be in demand. Do you agree? 

Yes I think the content can play some important roles, and we’ve already started publishing some articles to generate ideas. For example, in Japan we’ve already started seeing some trends, such as some demand picking up for going to outdoor camping and trips not using flights or rail but using your own car. So the domestic travel is picking up in limited ways, and so we’ve started publishing some articles, some content trying to promote it a little bit.

I think that kind of thing will happen elsewhere in the world. We are having conversations about this within our team. For example, if the U.S. gets back to some recovery more, I think domestic travel will be the first segment to pick up. Not the long-haul drive but maybe people in Los Angeles driving to Big Sur or somewhere, so what can we provide to help. 

And looking more broadly, what are you thoughts about the impact of the coronavirus on the global travel industry?

It is an extraordinary situation. I don’t think this industry can weather this storm without help from the public sector. The local governments, the state governments, it’s an inevitable. I’m really worrying about that. I know the governments will look at airlines and hotels first, but I’m worrying about also the technology-only companies and startups whether they can find a way to get help from the public sector. We have to all understand that risk and be a voice for ourselves, to make one bigger voice.