California Travel & Tourism Commission Asia Mission Japan Briefing Meeting June 30 th , 2011

1. California Travel & Tourism Commission Asia Mission Japan Briefing Meeting June 30th, 2011

2. Japan Market Profile • Language: Japanese • Population: 127, 930,000 (as of May 2011) • Government: Democratic Party of Japan • Unemployment Level: 4.7%(as of April 2011 • Real Economic Growth: +2.3% in 2010 (2011: -0.9%/2012:+2.2%) • GDP: total $5.47 trillion (2010) • Capital City: Tokyo • Key centers of influence: Tokyo, Osaka, Nagoya

3. Japan Outbound & California Visitation

4. Japanese Visitation to California Purpose of Trips

5. Breakdown of Japanese Visitation Booking Method • 65% of Japanese travelers can be categorized FIT travelers (49% + 16%), purchase travel parts such as air tickets, accommodation separately via travel agents. • Even though they do not purchase tour package, they still tend to use travel agent (71.5%) for arrangements.

6. Breakdown of Japanese Visitation Booking Timing • 80% of Japanese travelers book their travel from one to six month s prior to departure with 2-3 months representing almost half the market.

7. Airlift from Japan to California Flight Frequency Per Week

8. Airlift from Japan to California Seat Capacity per Week

9. Airlift from Japan to California To Los Angeles • 7 airlines from Narita – all daily flights • American Airlines, Japan Airlines, All Nippon Airways, Korean Air, Delta Airlines, Singapore Airlines and United Airlines • 2 airlines from Haneda – daily (ANA and Delta) • 5 airlines from Narita – all daily with different aircraft sizes • 1 flight from Osaka – daily by United Airlines • 1 flight from Haneda – daily (JAL) To San Francisco

10. Challenges & Opportunities Challenges • Stagnant outbound market situation – on a recovery • Big and Expensive market to carry out marketing programs – Budget reductions • Rapidly changing distribution (lesser margin for travel agencies) • Low ratio of “Fly and Drive” travels – tougher to promote “rural”

11. Challenges & Opportunities Opportunities • Sheer market size – Recovery potential (over 1 million visitors in Year 2000) • Increasing number of FIT/well-experienced travelers • “Open sky” agreement – flights from Haneda Airport • Main gateways to the U.S. • Strong in-market presence by key industry partners • Better exchange rate • TPC

12. Challenges & Opportunities Outlook: Overall Outbound • Prior to the disasters that began March 11th, signs were pointing to an increase in outbound travel this year, thanks to the recovering economy and strong value of the yen. • The Japan Association of Travel Agents (JATA) had set a goal for 2011 to surpass the all-time record of 17,818,590 outbound pax (set in the year 2000) on the way to 20 million pax in 2012. • The impact on tourism after the earthquake, tsunami and nuclear crisis is being felt the most by domestic and inbound Japan travel, more than outbound travel.

13. Challenges & Opportunities Outlook: March 11th Recovery • Since the earthquake, outbound travel is on a steady path to recovery: -9.1% in March, -9.0% in April and -8.4% in May. • The U.S. mainland is outperforming the average, with just a 6.0% decline in March. • The International Air Transport Association (IATA), like other experts, links travel demand to economic performance. It is expecting a travel slowdown from Japan during the first half of 2011, leading to a recovery as pent-up demand releases, and reconstruction progresses in the second half of the year.

14. Challenges & Opportunities Outlook: U.S. Travel • R&C Tours is targeting to handle 56% more pax to North America in July. • Climbing fuel surcharges, especially to long-haul destinations, are affecting agents’ outlook on U.S. travel.

15. Challenges & Opportunities Outlook: U.S. Travel / JATA • JATA’s latest survey of booking levels at Japanese travel agencies (released April 20th) shows how the earthquake and climbing fuel surcharges has affected package tour bookings for the North American mainland. • January 2011: 99.7% • February 2011: 120.6% • March 2011: 101.0% • April 2011: 87.6% • May 2011: 81.8% • June 2011: 86.8% • The survey was completed; however, before the mood of self-restraint abated and last minute bookings poured in for the Golden Week (late April/early May) holidays, so the next survey should be more positive.

16. Challenges & Opportunities Outlook: U.S. Travel / Open Skies • The Japan-U.S. open skies agreement went into effect in October 2010, which has resulted in new routes from Japan to the U.S. mainland, including new flights to California.

17. Japan Mission 2011 Schedule: June 30th (Thu)

18. Japan Mission 2011 Schedule: June 30th (Thu)

19. Japan Mission 2011 Schedule: June 30th (Thu)

20. Japan Mission 2011 Schedule: June 30th (Thu)

21. Japan Mission 2011 Schedule: June 30th (Thu)

22. Japan Mission 2011 Schedule: June 30th (Thu)

23. Japan Mission 2011 Schedule: July 1st (Fri)

24. Japan Mission 2011 Schedule: June 30th (Thu)

25. Japan Mission 2011 Schedule: June 30th (Thu)

26. Japan Mission 2011 Schedule: July 1st (Fri)

27. Japan Mission 2011 Schedule: July 1st (Fri)

28. California Travel & Tourism Commission Asia Mission Japan Briefing Meeting June 30th, 2011