Kinki Nippon Tourist Co. and Nippon Travel Agency, Japan`s second- and third-largest travel agencies, announced Thursday that they have agreed to merge in January 2003.
The in-house travel agency of West Japan Railway Co., known by its brand name TiS, will also join the merger, brining the new firm`s total turnover to more than 1.3 trillion yen.
The size of the company will be almost equal to that of the nation`s No. 1 travel agency, JTB Corp., which boasts a turnover of 1.4 trillion yen.
Japanese travel agencies are reeling from plunging corporate demand, the prolonged economic slump and intense competition from newcomers offering discount packages.
Travel agencies are also facing challenges from Internet-based services, which allow travellers to directly access the latest information, reserve hotel rooms and buy air tickets.
Expensive investments for computer systems is an element that prompted the merger talk, said Akio Tsujii, president of Kintetsu Corp., the largest shareholder in Kinki Nippon Tourist.