Travel Market Forecast in Japan Domestic and overseas travel has been recovering from the financial crisis in 2008. The influence of the Great East Japan.

88,480

81,370 82,760 82,410

76,96081,022

79,103 79,63576,783

26,753 28,11330,120

26,445

21,789 23,267 23,130 23,857 23,940

7,89710,105 11,266 10,612 10,100 11,625

8,423 9,10911,156

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2005年 2006年 2007年 2008年 2009年 2010年 2011年 2012年 2015年

Travel Market Forecast in Japan• Domestic and overseas travel has been recovering from the financial crisis in 2008. The influence of the Great East Japan

Earthquake was critical in the 1st half of 2011 but it seems recovering in 2012. Although overseas travel is increasing until 2015 but domestic travel is expected to decrease gradually by reduction in productive population.

• Although inbound market showed recovering in 2008 and afterwards, it decreases greatly under the influence of the earthquake and the Fukushima nuclear power plant disaster in 2011, and the market is expected to take several years for recovering the level in 2010.

Consumption (domestic travel)

-1.4%

-4.4%

-7.4%

2008-2011 　 CAGR

Consumption domestic travel)

Consumption (overseas travel)

Consumption (Japan inbound)

Consumption(overseas travel)

Consumption(Japan inbound)

　　　 Japan Tourism Marketing Co.: Survey in June 2012

Note) excluding local expenses (eating and drinking, shopping, etc.). Japan inbound excluds transportation expenses to Japan, and package tour expense, Since consumption in domestic and overseas revised the calculation method in 2010, the prospect as of 08 year is indicated on the basis of the ratio in the previous year.

出所： JTM

JPY 100 000

Forecast as of 2012(Actual value up to 2007)

Forecast as of 2008

copyright (c) 2005 JTB Corp. all rights reserved.

2

Competitors’ Business Development • The European market is large but it is the main battleground for global

companies.• Major companies focusing on leisure travel in Europe and business

travel in North America.

Europe

Asia Pacific

North America

Source: JTM estimates based on ＷＴＯ provisional figures

Little advance from globally competitive companies in the Asian region with many small-to mid-sized companies.

• The number of overseas offices (92 cities 116 offices / as of January 31, 2012) • The global strategy and WEB strategy especially in Asia business are strengthened. • Japan inbound 、 Non-HIS company is strengthened as group company • (Europe Express, Japan holiday travel).

Europe, Middle and Near East, and

Africa Asia-Pacific and Micronesia

North,Central and South America

HIS’s handling number in particular country of Asia is No.1. (From Thai to Japan: HIS 85000 ,JTB 37000)

Global Business Development of HIS

GB, Italy, Austria Netherlands, Spain, Switzerland, Germany France, Russia, United Arab Emirates , Egypt

and Turkey

India, Indonesia, Cambodia, Singapore, Sri Lanka, Thailand , Taiwan, China, Philippines, Vietnam, Hong Kong, Macao, Malaysia, Maldives, Mongolia, Micronesia, Hawaii, Australia ,Fiji and New Zealand

United States of America, Canada, Brazil

and Mexico

　 33 Countries, 82 Cities, 131

Offices 　

JTB Group Global Network

London

Paris

Madrid

Barcelona

Prague

ViennaBudapest

AthensGuangzhou

Bangkok

Kuala Lumpur

SingaporeJakarta

Auckland

San Francisco

San Jose

Los Angeles

Torrance

Miami

Atlanta

New York

New Jersey

Chicago Toronto

Vancouver

Honolulu

Melbourne

SydneyGold Coast

Washington D.C.

Detroit

Cincinnati

Houston

Seattle

Costa Mesa

Oslo

Stockholm

Copenhagen

Helsinki

Moscow

Beijing

Shanghai

Hong Kong

Taipei

Seoul

HanoiHo Chi Minh City

Macau

Busan

Gwangju

Las 　 VegasOrlando

Richmond

SurreyBurnaby Coquitlam

Banff

Whistler

Cairns

Fiji

Christchurch

Denpasar

Phuket

Penan Langkwai

Kota Kinabaru

SaipanGuam

Palau

KonaMaui

Jeiu-Do

Giri-si

Seongnam

Zagreb

Naples

Rome

Florence

Venice

Milan Nice

Amsterdam

Geneva

Franfurt

Tallin

St. Petersburg

Gurugaon

copyright (c) 2005 JTB Corp. all rights reserved.

5

From Star to Network configuration

• Aim to create a corporate group from a Japan-centered star type to a network type pursuing optimization on a global level.

Star configuration Network configuration

Overseastravel

There is a center connecting all hubs with it Japan outbound, inbound

No center, all hubs are equal with mutual connective relations

Global outbound, inbound

International travel

Travel between three countries

International travel

Overseas travel

Hub network providing centered (Japan) optimization

Globally optimized hub network

Business model trend 　

Business model

Current model 2020 model

Earning model

Commission modelMargin model

Margin modelService fee model

Profit source Outbound businessInbound business (basic margin)

Outbound businessInbound business (Basic margin & revenue from Destination Product and Services)

Main factors for success

Sales force

( Large number of retail shops, sales force for marketing and variation of sales channels)

A combination of sales forces and MD skillsMatching both consumer + business partners need

*Relations with suppliers & Customer

Multicultural Communications Business(MICE, demand creation)

Business model trend

• To establish “2020 model”

⇒ 　 Main driving strategies during next medium-term

management plan

1. Expand our business model to Guarantee model and Procurement & Sales model.

2. Strengthen business model to promote DPS(B2C)

DPS = Destination Product & Service

3. Create new demand by proposals in MICE (B2B)

Action to be taken for 2020

1. Enhance strategic competitiveness by strengthening purchasing & procurement capabilities

2. Utilize JTB group’s management resources effectively to realize the group synergy and enhance the DMC network

3. Expand WEB(FIT) business

4. Strengthen initiatives to increase tourist from emerging market such as Asia and to focus on promising business fields (DPS* and MICE) *Destination Product & Service

5. Establish global management structure

JTB Group success scenario

z +

Profit from leisure business market in Japan

Profit from corporation business market in Japan

Proactive and continual investment to global business , mainly in Asia

Establish overwhelming No.1 position in the Asian market

Global Vision 2020 as global businessAdvancing Toward “Global JTB”: Innovations with Synergy and A

mbition ‘ISA’ is one-letter-advance-shift from ‘JTB’, therefore we shall establish a overwhelming number one position for next 100 years’ history of JT

B as ‘global JTB’. 　 ’ ISA toward GLOBAL’ ( 「いざ、グローバルへ」）’ in Japanese means that we shall shift our business field into global market 　 and we shall achieve our goal as Global JTB with innovations in inbound and outbound business with JTB’s group synergy and our ambition t

o be number one. 1.Become a global organization that promotes Multicultural Communication Busines

s and strives to meet the needs of its customers by thinking from the perspective of customers, and to meet the needs of business partners globally with MD function by cooperation between tours operator, wholesaler and sales organization.

2.Maintain a constant awareness of competition with other global players in the tourism industry.

3.Implement measures to generate steady profit from customers in/from emerging markets and simultaneously cultivate customers in these markets, particularly in Asia, to realize a robust and leading position as

“Number 1 in Asia”.

=Operating Income : 10 billion yen (125M-USD,100M-EURO)=

Management Strategy

1. Business strategy　　 1) In-house business 　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　

　　　　　　　　　　　　　　　　　　　　　　 Contribute to establishing the JTB Group’s dominance in the market and establish a

value chain to maximize profits　　 2) Inbound business 　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　

　　　　　　　　　　　　　　　　　　　　　 Win customers through the provision of products, value-added services and sales

channels that link the source markets and the destinations　　 3) Outbound business 　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　

　　　　　　　　　　　　　　　　　　　　 Establish a structure to acquire entire corporate orders focusing on MICE business and

strengthen measures in the expanding leisure market 　　 4) Strategy common to above three businesses 　　　　　　　　　　　　　　　　　

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　 Implement a global shift to profitable business models providing DPS 2. Further development in the global management structure　　 1) Allocate business resources, infrastructure and staff function appropriately　　 2) Maximize cash flow （ secure funds for investment in growing business fields) 　 3) Continue investment in recruiting and developing employees who can work globally

Become a global organization that promotes Multicultural Communication Business through “proactive approach”

Maximizing the effective use of our management resources & our current network, and focusing on Asia’s economic growth as the emerging market, we plan the expansion of stable global business by activating our world largest DMC Network including Japan Inbound, MICE , Web Business and Destination Product & Service (DPS). In promoting the business, clarification of competitive strategy as well as regional business strategy will be needed with strategic option and necessary investment.

Basic Policies towards Year 2015

(A) Expand business operations in the fast-growing emerging markets, particularly in Asia

(B) Make full use of management resources and business models that can be employed globally

(C) Clarify measures to achieve strategic competitiveness

(D) Strengthen product, service and sales capabilities

Business Strategy

In –house business (Trend of Japan market)

1.Travel trend Japanese Overseas Travelers continues

to increase to Asia, China, and Europe. Especially to South Korea, Taiwan, Hong Kong, and Macao.

2. High expansion in FIT is expected.

Group tour is also recovering since 2009.Package tour remains the volume.

3.”MUST’ for In-house business(1) Strengthen group business that JTB

has advantage in the market.(2) Increase market share for Package

Tour.(3) Take countermeasures against FIT

that is behind in the market.

OVERSEAS TRAVERS FROM J APAN

0

1000

2000

3000

4000

5000

6000

7000

2007 2008 2009 2010 2011 2012 2013 2014 2015E-ASIA Other Asia OCEANIACHINA N-AMERICA HAWAIIEUROPE MICRONESIA

OVERSEAS TRAVELERS BY SEGMENT

0100020003000400050006000700080009000

10000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

ＦＩＴ GROUP ＰＡＣＫＡＧＥ

ＵＮＩＴ000

ＵＮＩＴ000

In-house Business Major Implementation ■■ Contribute to establishing the JTB Groups 'dominance in the Contribute to establishing the JTB Groups 'dominance in the

market and establish a value chain to maximize profit.market and establish a value chain to maximize profit.

1. Contribute to realizing an overwhelming dominance of the market by JTBCost reduction: Aim to achieve cost reductions across the value chain and provide customers competitive prices Strengthened functions: 1) Thoroughly implement sales measures in Japan, bolster procurement, planning and operational capabilities in destination office and create new demand

2) Strengthened functions: See below for MICE.

2. Initiative in FIT businessDestination Product and Service:: Boost “DPS related business” through strengthened marketing strategies 1)Product strategy: Create products linked to the Look JTB and reinforce the development of FIT products 2)Distribution strategy: Expand the use of online distribution channels (OTA/LCC) 3)Pricing strategy: Implement pricing measures based on detailed market surveys 4)PR strategy: Secure purchase routes accessible from SMARTPHONEs

Hotels: Strengthen purchase and procurement strategies to realize an overall increase in sales, mainly by FZKStrengthened functions: Enhance MICE producing and operational capabilities 1) Share organizer information and other RHQs’ knowhow, and create better inbound structures

　　 (B)(B)Management Resource & BManagement Resource & Business Modelusiness Model

B) Enhance purchasing and procurement capabilities through synergy between in-house and inbound business organizations

　　 (C)Competitive Strategy(C)Competitive Strategy

　　 (D.)(D.)Sales & Promotion, ProducSales & Promotion, Products, Servicests, Services

D) Bolster sales measures in Japan; increase the number of DPS contents and create new demand

Stra

teg

y

C) Strengthen operations in the region with low market share and change to the high added-value in-house operator

Inbound Business Major Implementation

■■ Connect the Market & Destination with Valued Products & Services. Connect the Market & Destination with Valued Products & Services. ■■ Provide Distribution Channel to gain more clientsProvide Distribution Channel to gain more clients

①PRIDE NETWORK STRUCTURE 　

・ Business Structure: Global DMC Structure collaborating with Japan Inbound.

・ Brand Strategy ： Develop uniform Inbound Brand to target Global Market

・ Sales Strategy: ①Construct Sales Office Function within China/Asia 　　　　　　　

② Collaboration with Japan Bound & Global IB for joint

Sales & Promotion.

③ Develop Inbound Online System (Japan Bound & Global inbund)

②BUSINESS MODEL THAT PROMOTE DESTINATION PRODUCT & SERVICE・ Seat In Coach Business Development, New Business Model Development

・ Global Excursion Business Development for FIT Business Expansion

③CONSOLIDATE INFRASTRUCTURE for INBOUND BUSINESS・ Consolidate B2B Online FIT Platform → to be submitted at GBU Board MTG.

・ Procurement for WEB Market

・ Destination Information Offering link with the above FIT System

・ Select & Assign appropriate human resources for Global Inbound

　　 (B)(B)Management Resource & BManagement Resource & Business Modelusiness Model・ Lassen/Silk/Tumlare/SHM: Driving

Force

・ GMTAgent Sales Network & MICE Knowhow

・ Seat-in-Coach Business （ AME,EUR ）　　 (C)Competitive Strategy(C)Competitive Strategy

・ Exotissimo/Destination Asia/Kuoni (GTA ） :

Global DMC

　　 (D)(D)Sales & Promotion, ProductSales & Promotion, Products, Servicess, Services

・ Joint Sales structure with PRIDE Members

・ Construct & Strengthen PRIDE Sales Office Function

・ Development & Expansion of Destination Products & Service

　　 (A)Gain the Asian Market (A)Gain the Asian Market ・ ASIA as the Major Source Market

Stra

teg

y

Team PRIDE (Preferred Region for Inbound Development)

○ ： DMC 　◎： Sales Offices & cooperation with outbound create JTB DMC network by sharing agents, operation know-how and implement joint sales

Outbound Business Major Implementation ■■ Establish a structure to acquire entire corporate orders and

strengthen measures in the expanding leisure market

1. Establish structures to handle global/regional BTM bidding of Japanese companies 　 1) Formulate BTM strategies by region and establish low cost operational structures　 2) Study BTM implementation options （ system and business related investment) 2. Expand sales areas and strengthen MICE functions to enable handling of entire corporate orders 　 1) Widen the sales territory targeting corporates （ non-Japanese companies, educational institutions, religious organizations, EC, etc.) and foray into new territories　 2) Pour greater efforts into the Solutions Business for administrative affairs (social welfare and other businesses) 3) Sales functions required to reinforce MICE business (upstream sales like incentive house , knowhow on event ） and reinforce MICE business among 3rd countries （ linked to PRIDE ） 3. Turn the business profitable through reinforced measures in the expanding leisure market 　 1) Strengthen product capabilities by utilizing Group strengths （ links to DPS-PJT and 2-way charters) 　 2) Implement sales and product strategies that are customized to suit each local markets (retail shop, websites and products ） 3. Cultivate local tourist in the Asian emerging markets

　　 (B)(B)Management Resource & BManagement Resource & Business Modelusiness Model

Make full use of the expertise gained from corporate sales knowhow in Japan （ implement the SAMURAI scheme ）

　　 (C.)Competitive Strategy(C.)Competitive StrategySecure the advantage in competition （MICE), ensure product differentiation （leisure market ） , and implement HIS countermeasures

　　 (D)(D)Sales & Promotion, ProductSales & Promotion, Products, Servicess, Services

Establish an infrastructure for sales by local staff and bolster sales activities for non-Japanese companies

　　 (A)Gain the Asian Market (A)Gain the Asian Market Accelerate the creation of MICE business among 3rd countries with integration of Outbound and Inbound organization in mainly Asian corporate market

Stra

teg

y

New businesses

1. Explore new business models　 1) Visa processing business 　 2) Solutions business for administrative affairs　 3) Conventions planning and organization

business

2. Penetrate into new countries 1) Land transportation & hospitality service

provider business

Infrastructures1.Human Resources, Legal Affairs, CSR, Internal Control

・ Establish the foundation to discover, develop, and appropriately allocate the global human resources.

・ Reduce the “Negative Cost” （ the cost which put the brakes on Company profit) and establish the global legal infrastructure to support the business expansion.

・ Establish corporate communication framework and promote it’s activities efficiently.

・ Establish infrastructure for right and prompt countermeasure for the risks.・ Strengthen and impel global internal system and risk management system.

2.Finance・ Detail planning of the functions and empowerments of JTB head office/GBU, RHQ, and business units, in order to realize optimal schemes related to investment, foreign exchange and taxes ・ Optimal efficiency through the use of a standard accounting system taking into account the introduction of IFRS, quicker closing of accounts, and confirmation of tour balance sheets in view of monthly settlement of accounts・ Improved risk management measures through self verification of risks associated with transfer pricing taxation and other taxes, and through GBU analysis.

Infrastructures

3. ＩＴ・ Build and continually improve an online sales system in order to win over

the competition, based on the business strategy （ global inbound hotel bookings,

systems for sales of DPS, systems for B2B and B2C sales of DPS)・ Develop an accounting system to enable quicker closing of accounts・ Develop new systems that will bring about innovation in the areas of purchasing, procurement and operation 　（ for example, enable dynamic rate, acquisition of inventory, and enhanced operational efficiency through the adoption of IT systems)

4.Corporate Planning・ Optimal use of management resources based on appropriate business

portfolio management・ Study and prepare measures to create a global management structure・ Further improvements in business management process