Highest-ever number off overseas travelers att 734,000 Desiree for travel remains robust, with total number of travelers at an

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1 Decemberr 6, 2018 Travel Trends for Year- -end/new-year 2018/2019 (Dec. 23,, 2018 Jan. 3, 2019) Highest-ever number off overseas travelers att 734,000 Desiree for travel remains robust, with total number of travelers at an all-time high Total no. of domestic travelers: million (+1.1%y-o-y) Total no. of overseas travelers: millionn (+4.3% y-o-y) 12/19 W T F S NH NH T W T /1 2 3 F S S M NH W T Survey period (departure basis) JTB Corp. has just published a survey of forecast travel trends involvingg at least one e overnight stay for the year-end/new-year season from the national holiday (NH) on December 23, 2018 through to January 3, 2019 on a departure basis. The survey was based on a questionnaire survey about travel trends, industry and d economic trends, the status of airline reservations and thee status of bookings at JTB Group companies, from m which estimates have been compiled. The results of this, the 50 th such survey since the first in 1969, are as follows. Table 1: Estimates for Year-end/N New-Year 2018/2019 Travel Trendss Total no. of travelers Domestic Overseass Average expenditure on domestic travel Average expenditure on overseas travel Total expenditure Domestic Overseass 2018/2019 season s (estimated figures) f million million million 33,000 JPY 214,000 JPY 1,143.6 billion JPY billion JPY billion JPY Change year-on-year +1.2% +1.1% +4.3% +3.4% +3.9% +5.1% +4.6% +8.3% Increase/decrease year-on-year million m million ,100 JPY +8,000 JPY billion JPY billion JPY billion JPY 2017/2018 season (actual figures) ) million million million 31,900 JPY 206,000 JPY 1,,088.3 billion JPY billion JPY billion JPY Change year-on-year +1.0% +0.9% +2.8% +3.2% -0.5.% +3.9% +4.2% +2.3% Average length 3.8 days 0.2 days 0.22 days 3.6 days ±0..0 days Notes on the table: 1. Numbers of travelers are cumulative totals; average expenditures are per person. 2. Numbers of domestic travelers aree those making overnight stayss (only for tourism and trips to o the family home). 3. Numbers of overseas travelers are for all those departing Japan (including business travel). 4. Domestic travel average expenditures comprise all costs incurred during travel, including transport, accommodation, meals and souvenirs. 5. Overseas travel average expenditures include fuel surcharges, accommodation, transport and meals at the destination. 6. Year-on-year changes are roundedd to the nearest first decimal point

2 Socioeconomic Environment and Travel-related Environment 1. Socioeconomic environmentt Winter bonuses paid out by companies each year have an impact on year-enafter a two year y period when the bonus did not travel plans, and thiss year the average bonus is projected to increase by 3.5% year-on-year exceed the previous year, reaching an all-timee high (figure announced by Keidanren (Japan Business Federation) ), November 16). Moreover, many major listed companies have announced highest-ever profits for the first-half of the 2018 fiscal yearr ending September However, due to outstanding concerns such as U.S.-China trade friction, projections for full year results ending March 2019 remainn cautious. Due to the impact of torrential rains and earthquakes in Japan the preliminary figure for gross domestic product (GDP) in the July-Septembeyear-on-year downturn for two consecutive periods. However, accordingg to the Economy Watchers Survey quarter was effectively down 0.3% on the same period of the previous year, marking a issued by the Cabinet Office in November the diffusion index (DI) for current c conditions in October (*1) showed a 0.9 point increase month-on-month to 49.5, with the Economy Watchers Survey concluding as follows: The economy has continued to make a moderate recovery. As for f the future, while concerns over cost increases and developments in trade t issues exist, expectations are being observed regarding thee year-end shopping season. Share prices havee remained broadly around the 22,000 yen y level, andd in terms of exchange rates, the yen-dollar, yen-euro rates have remained relatively stable since the beginning of the year (Fig. 1, 2). (*1) A diffusion index (DI) thatt expresses the results of a survey y of people who are particularly sensitive to changes in the economy, including taxi drivers and owners of retail outlets. Figure 1: Trends in the Nikkei Stock Average (November 1-30, 2018) Figure 2: Trends in Foreign Exchange Rates (USD, EUR) (January-No ovember 2018) -2-

3 2. Environment surrounding the year-end/new-year season and desire for travel among consumers In the standard case the year-end/new-year break would be a six-day period from December 29 (Sat) to January 3 (Thu), but if people can take time off on January 4 (Fri) it would be possible to have nine consecutive days of holiday. As many manufacturers are also setting January 4 as a holiday, this could generate greater momentum for people to take a longer holiday than normal this year. There is also a long Christmas weekend ahead of the year-end holiday period, from December 22 (Sat) to 24 (NH) and it is projected that more people will travel during this period too. According to the results of the questionnaire implemented on year-end/new-year travel trends by JTB each year, when asked about the difference between year-end/new-year season last year and this year, 10.4% of respondents indicated that they would be more likely to be able to take a longer holiday (+6.2 points y-o-y), and 2.2% indicated that they would be less likely to be able to take a holiday (-2.2 points y-o-y). With regard to income, 13.7% of respondents indicated that income has increased since last year (+1.7 points) and 8.7% indicated that income has decreased since last year (+0.3 points). However, given that the proportion of respondents who indicated that they intend to spend less money than last year on only the bare essentials stood at 5.5% (down 1.1 points y-o-y) and that the proportion of respondents who indicated their intention to spend more money than last year on more luxury stood at 4.9% (down 5.3 points y-o-y), it can be seen that there has been a significant decrease in the number of people seeking to spend money on luxury (Table 2). When asked about motivation to spend on travel in the next year, 15.1% of respondents indicated that they would like to spend more, a 1.9 point increase on the previous year, and those indicating that they would like to spend less were down 3.8 points to 24.1%. The combined total for those people indicating that they would like to spend about the same (55.6%, comprising More trips at lower unit cost (8.8%), Fewer trips at higher unit cost (5.4%), and Same cost and frequency of trips (41.4%)) was up year-on-year by 1.7 points (Table 3). It is thought that given the improvement in economic fundamentals, the relative stability of exchange rates and share prices, and the convenient way in which the holiday dates fall this year, this year-end, New Year period will be one that is conducive to travel. The results of this year s questionnaire also show that households have increased income and are motivated to spend. Table 2: Differences Between Year-end/New-Year Season Last Year and This Year (multiple answers) % Y-o-y change More likely to be able to take a longer holiday this year Less likely to be able to take a holiday this year Will travel a longer distance than last year Will travel a shorter distance than last year Will travel for a longer duration than last year Will travel for a shorter duration than last year Will travel for the same duration as last year Income has increased since last year Income has decreased since last year Will spend more money than last year on more luxury Will spend less money than last year on only the bare essentials No particular differences

4 Table 3: Changes in Motivation to Spend on Travel in the Next Year (responses based on the month of the survey) Would like to spend more Would like to spend about the same (figures in parentheses indicate year-on-year % change) 15.1 (+1.9) 13.2 ( 2.5) 15.7 (+3.9) 11.8 (+0.8) More trips at lower unit cost 8.8 (±0.0) 8.8 (+0.9) 7.9 ( 0.4) 8.3 (+0.2) Fewer trips at higher unit cost 5.4 (+0.3) 5.1 (+0.9) 4.2 (+0.0) 4.2 (+0.1) Same cost and frequency of trips 41.4 (+1.4) 40.0 ( 0.3) 40.3 ( 0.7) 41.0 ( 0.2) Would like to spend less (2018/2019) (2017/2018) (2016/2017) 24.1 ( 3.8) 27.9 (+3.0) 24.9 ( 1.9) 26.8 ( 1.2) * As some respondents did not provide an answer, totals for single answer questions may not total 100%. (2015/2016) Anticipated Trends in Year-end/New-Year Travel Number of overseas travelers set to increase to million (+4.3% y-o-y). Average expenditure on overseas travel is projected to be JPY214,000 (+3.9% y-o-y), with peak dates for departure on December 29 (Sat) and 30 (Sun). The number of overseas travelers for this year s year-end/new Year season is projected to be the highest ever, rising to 734,000. In 2017 the total number of travelers for the year reached million, the second-highest figure ever. The cumulative total for 2018 so far from January to October shows a year-on-year increase of 5.6% at million (figures according to announcement by Japan National Tourism Organization (JNTO) in November) and it is anticipated that this positive trend will continue to the year-end, with the possibility of the record for the highest number of overseas travelers in one year being renewed (the current record was set in 2012, with million travelers)(fig. 3). Fuel surcharges were reinstated in February 2017 and increased in August 2018, but will remain static for the December-January travel period. Given that the increase in the fuel surcharge did not dampen the number of travelers, it is anticipated that the impact on year-end/new Year travel will be minimal. The exchange rate is almost the same as the previous year (Table 4, 5). With regard to average expenditure on overseas travel, given the increase in the fuel surcharge and that many people are projects to take longer holidays to long-haul destinations such as Europe, it is projected that expenditure will be up 3.9% year-on-year, rising to JPY214,000. The projected peak dates for departure are December 29 (Sat) and 30 (Sun). However, many people are also looking to depart on January 2 (Wed) and 3 (Thu), particularly for closer Asian destinations. In terms of travel destination, with the exception of Guam/Saipan, for which airplane seat capacity to Saipan continues to decrease, all destinations are showing increases, with Korea, Hong Kong and Europe in particularly demonstrating a five point or more increase on the previous year (Table 6). Looking at the booking status of JTB overseas package tours (LOOK JTB), for destinations like Hawaii and Korea, in addition to departures at the end of the year, many people are also selecting a departure date on or after January 2 (Wed), when prices fall. European destinations continue to perform well, with Scandinavia proving to be particularly popular. In Asia, Hong Kong/Macao and Vietnam are popular. Hong Kong and Macao have attracted attention following the opening of the Hong Kong-Zhuhai-Macao Bridge, which links the two territories by road for the first time. For Vietnam new destinations have opened up and travel links have improved, including the opening of a route from Kansai Airport to the resort of Danang in October by Vietnam Airlines, and flights from Fukuoka to Hanoi having increased from four per week to daily. -4-

5 Figure 3: Year-on-Year Comparisons of No. of Departing Japanese Overseas Travelerss Source: Compiled by JTB Tourism Research & Consulting Co., based on data issued by the Japan National Tourism Organization Table 4: Fuel Surcharges (for JAL, return flights from Japan; unit: JPY) Ticket sale period Korea China, Hong Kong,, Guam Hawaii Taiwann Dec Jan Dec Jan Dec Jan Dec Jan Dec Jan , , ,000 3, ,000 7,000 13,000 4, ,000 8,000 27,000 8, ,000 17,000 Thailand, Malaysia, Singapore 21,000 6, ,000 13,000 North America, Europe, Oceania 42, , , ,0000 Table 5: Tokyo Foreign Exchangee JPY Market/TTS rate, according to t the Bank of Mitsubishi-Tokyo UFJ as of November 25 Each Yearr (Unit: JPY) ) 100 KRW 1 HKDD 1 TWD 1 CNY C 1 USD 1 EUR (Tue) Nov. 25, 2014 (Wed) Nov. 25, 2015 (Thu) Nov. 25, 2016 (Fri) Nov. 24, 2017 (Mon) Nov. 26, Number of domestic travelers set to increasee to million (+1.1% y-o-y). Average expenditure on domestic travel is projected to bee JPY33,000 0 (+3.4% y-o-y) with peak departurere dates concentrated around the return to family homes on December 29 (Sat) and 30 (Sun), with many departures also being seen at the start of the New Year. In terms of the number of Japanese people engaging in domestic travel, according too the Statistical Survey of Overnight Travel conducted by the Japan Tourism Agency, the total number of overnight stays by Japanese -5-

6 guests for the January to September period of 2018 was down three percent year-on-year, due to the impact of torrential rains and earthquakes. However, the preliminary figure for September alonee was a totall of million overnight stays, marking a 0.7% increase on the previous year and suggesting that a recovery is underway. Given that it is easier to take a holiday this year and workers bonuses are set to increase, it is likely that more peoplee will seek to take a slightly longer holiday at the year-end y or at the beginning of the New Year. It is projected that that number of domestic travelers will increase 1.1% year-on-year to million and average expenditure willl increase 3.4% to JPY33,000. According to the results of this year s questionnaire, fewer people responded that they would bee taking a two-night, three-day holiday, with more peoplee indicating plans for a three-day, four-night or four-night, five-day2 holiday, suggesting that more people will be traveling for longer (Table 12). With regard to means of accommodation, while the number of respondents indicating that they are a planning to stay in husband or wife s family home has decreased, more peoplee are planning to stay in a hotel (30.6%, up 2.2 points y-o-y) or ryokan (15.6%, up 0.4 points), suggesting that more holidays will include accommodation otherr than the family home (Table 7). With regard to means of f transportation, although the most popular option is i still the car at 65.9%, this figure is down 3.1 points on the previous year due to rising r gasoline prices. Respondents indicating plans to use Express/long-distance bus were up 4.3 points to 7.5%, while e those planning to use LCC airlines accounted for 1.7% of the total l (up 0.5 points). The second largest increase year-on-year, following on from Express/long-distance bus was JR Shinkansen, with a 2.6 point t increase year-on-year to 19.1% (Fig. 4, Table 8). In termss of travel destination, there were increases in people indicating plans to travel to the Kinki and Hokkaido regions (Table 10). Looking at the booking status of accommodatia ion facilities and domesticc products forr reservationss received by JTB, popular destinations during the three-day Christmas weekend andd working days prior to the end of the year are Okinawan beach resorts, Tokyo Disney Resort and Karuizawa. Hot spring resorts in the t Kanto region are also popular for bookingss after January 4, when prices decrease. In an internet survey conducted c by JTB Tourism Research & Consulting Co., respondents were asked about places they would like to visit during the year-end, New Year period. The most popular response acrosss all age groups was food-themed event. Hot springs are popular among a relatively older generations, and theme parks are more popular among the young. Figure 4: Trends in Retail Price of Regular Gasoline Over the Past Year Source: Compiled by JTB Tourism Research & Consulting Co., based on data from the Ministry of Economy, Trade and Industry s s Petroleum Products Price Survey. -6-

7 Reference: Internet Survey Places of Interestt for Year-en nd/new Year Season (multiple answers) Survey Methodology Survey locations: Survey period: Respondents: Sample size: Content: Method: 200 locations throughout Japan; stratified comparative distribution November 1 13, 2018 Males and females between the ages of 15 and 79 1,200 individuals i (six at each of the 200 locations) Travell plans involving at least one night away from home departing between December 23, and January 3, Individual surveyss conducted by specialist staff using a questionnaire (100% response) on personal visits. Contact for Press Inquiries: I Corporate Communication Division, D JTB Corp., Tel:

8 Table 6: Estimates of Overseas Travelers at the Year-end/New-Year Season (December 23, 2018 through January 3, 2019) (Unit: 000s) Overall Total 2018/2019 Y-o-y change 2017/2018 Y-o-y change % % Asian Total % % Korea % % China % % Hong Kong % % Taiwan % % Thailand % % Singapore % % Indonesia 14 ±0.0% 14 ±0.0% Malaysia 14 ±0.0% 14 ±0.0% Others % % North American Total 56 ±0.0% % U.S. Mainland 51 ±0.0% % Canada 5 ±0.0% 5 ±0.0% Hawaii Guam/Saipan % % % % European Total % % Oceanian Total % % Australia % % New Zealand 4 ±0.0% 4 ±0.0% S. Pacific Islands 8 ±0.0% 8 ±0.0% Others (Middle East, Africa, Latin America, etc.) % % -8-

9 Results of the Survey (Tables 7 to 14) Table 7: Means of Accommodation (single answers, excluding overseas travel) Table 8: Means of Transportation (multiple answers, excluding overseas travel % Y-o-y change % Y-o-y change Ryokan, hotel, minshuku, pension Car Hotel JR Shinkansen Ryokan JR / private railway lines Minshuku, pension, publicly-run facility, etc Airplane Family home Standard airlines Husband or wife s family home Low-cost carriers (LCC Live away due to work and returning home for New Year Express/Long-distance bus Single and returning to parental home Charter bus Friend or acquaintance s home Ferry / ship Other Table 9: Travel Companions (single answers, excluding overseas travel) Table 10: Travel Destination (single answers, excluding overseas travel) % Y-o-y change % Y-o-y change Family Hokkaido Children (through junior high school) Tohoku Married couple only Kanto Others (mother & daughter, three generations, etc.) Koshinetsu Family, friends and acquaintances Tokai Friends and acquaintances Hokuriku Group (fellow workers, etc.) 0.0 ±0.0 Kinki Alone Chugoku Shikoku Kyushu Okinawa Table 11: Reasons for Travel (multiple answers) Table 12: Length of Trip (single answers, excluding overseas travel) % Y-o-y change % Y-o-y change Because I do every year days 1 night To spend time at the family home with family and friends days 2 night To spend time with family days 3 nights It s the only time we can travel together days 4 nights To relax at a resort or hot springs, etc days 5 nights It's the only time we can take a long holiday days 6 nights To enjoy nature and scenery days 7 nights To eat good food nights or more Have fun at a theme park, etc It s no fun just staying at home

10 Table 13: Day of Departure (on furthest trip) (single answers, excluding overseas travel) % Y-o-y change 12/22 (Sat) or earlier /23 (NH) /24 (NH) /25 (Tue) /26 (Wed) /27 (Thu) /28 (Fri) /29 (Sat) /30 (Sun) /31 (Mon) / 1 (NH) / 2 (Wed) / 3 (Thu) Table 14: Reasons for Not Traveling (multiple answers) % Y-o-y change Prefer to relax with the family It s too crowded Travel is expensive Can t take time off work, etc Our relatives live close by Don't particularly want to Domestic situation prevents leaving home Companions holiday dates, etc. clashed Family budget limitations I have other things to do than travel On health grounds Family budget is tighter than last year Concerns over future livelihood Lower bonus The dates don't fall very well this year Personally affected or family affected by earthquake/natural disaster, e Note: In the above Tables 7 to 14, the lack of replies from some respondents or rounding down to the nearest decimal means that the total may not add up to 100%, even in the case of single response questions

11 Table 13: Trends in Published Numbers for Year-End/New-Year Travel (Dec. 23-Jan. 3 period) *First survey was conducted in / / / / / / / / / / / / / / / / / / /2019 Travelers (Ten thousand) Average expenditure (per person, JPY) Total expenditure Duration Total Domestic Overseas Domestic Overseas (100 million JPY) (Days) % of previous year % of previous year % of previous year % of previous year % of previous year % of previous year Change from previous year 2, , , ,284 12, , , , ,927 12, , , , ,170 11, , , , ,940 11, , , , ,923 11, , , , ,449 11, , , , ,510 11, ±0.0 2, , , ,700 11, , , , ,400 11, , , , ,400 10, , , , ,100 10, , , , ,800 10, , , , ,000 10, , , ,000 11, ±0.0 3, , , ,000 11, ±0.0 3, , , ,000 11, ±0.0 2, , , ,000 10, , , , ,000 10, ±0.0 3, , , ,000 1,