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(June 28, 2006)

17th JATA Survey on Travel Market Trends: Overseas (June 2006)

Favorable sequence of days off during "Golden Week" and brisk domestic economy lift domestic and overseas travel
Over the next three months, domestic and overseas DI should enter the plus column

In order to better assess prevailing business conditions, JATA (Japan Association of Travel Agents) keeps abreast of changes in the travel market by carrying out a quarterly survey of market trends among member companies, indexed by types of travel, destination and customer segment. (A digest of the survey appears below.)
According to the "17th JATA Survey on Travel Market Trends" conducted from the middle to the end of May 2006, the overseas and domestic travel market improved, while the DI (Diffusion Index) performed as expected.
Over the next three months, the situation is expected to improve, and both the domestic and overseas DI should enter the plus column.

Business activity for the overseas travel market as a whole

Overseas travel demand spurred by expanding domestic economy and favorable sequence of days off during GW
Overseas travel DI rose 18 points on the whole, escaping plus-minus 0 range
Over the next three months, in the absence of negative factors, the DI is expected to make a double-digit increase

Current situation: Overseas DI emerged from negative territory on brisk Golden Week activity

  • "The consecutive days off during Golden Week were the principle reason for the upturn." (Opinion of second-tier retail agencies)
  • "The World Soccer Cup, among other factors accounted for brisk European travel demand." (Opinion of in-house agency)
  • "China did well in spite of the fact that there has been some kind of negative factor every year for the past several years." (Opinion of second-tier retail agencies)
  • The sluggish overseas travel market moved toward improvement, with the DI for the market as a whole rising 18 points to enter the plus-minus 0 range. The market is expected to gain over eight points compared to the same period (April to June) last year.

Outlook for the next three months (July to September): Based on reports of high volumes of summer vacation inquiries and bookings, the market appears to be changing for the better

  • "Summer vacation trends compare well with last year. Things are moving at a quick pace." (Opinion of full-service travel agencies)
  • "The economic recovery is spurring travel demand, especially in the family travel segment." (Opinion of second-tier retail agencies)
  • Over the next three months (July to September) the market should continue to improve, with the DI for the overseas travel market as a whole expected to make a double-digit advance.

Summary

  • The synergistic combination of a recovering domestic economy and a favorable sequence of days off during "Golden Week" resulted in a significant improvement in the overseas travel market.
    Viewed by destination segment, barring any unforeseen negative factors, China should regain its former vigor led by the senior and middle-aged segments. The World Soccer Cup should also have a favorable impact on European travel.
    Over the next three months (July to September), in light of family summer vacation travel which has already begun to pick up, the market is expected to continue to improve.

Change in Combined Demand for All Destinations
2004
2005
2006
Apr.-June
Oct.-Dec.
Jan.-Mar.
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar.
Apr.-June
July-Sept.
9
2
-2
-8
-12
-15
-18
0
15
*-1
*Indicates figures from the March 2006 Survey

Trends in overseas travel demand (by customer segment)

DI for all customer segments rose approximately 10 points as the senior segment entered the plus column.
Demand should continue to rise over the next three months with the middle-aged, technical visit and business travel segments expected to enter the plus column.

  • Viewed by customer segment DI, all segments rose approximately 10 points compared to the survey conducted three months earlier (January to March), and the senior segment entered the plus column. With the exception of honeymoon travelers, all segments rose approximately 10 points compared with the same period last year (April to June).
  • Over the next three months (July to September), all but the honeymoon segment are expected to rise, with the senior segment remaining positive, and the middle-aged, technical visit and business segments steadily moving up and over to the plus side. In addition, a 15-point rise is anticipated in the family and female office worker segments, moving both into the plus column.
2005
2006
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar.
Apr.-June
July-Sept.

Honeymoon

-33
-39
-29
-42
-30
-30

Family

-28
-16
-35
-31
-20
-5

Female office worker

-38
-32
-31
-38
-28
-13

Middle-aged (45-59)

-15
-13
-16
-14
-1
4

Senior (60 and over)

-9
-12
-6
-10
4
7

Incentive

-34
-37
-28
-34
-22
-19

Business / technical visit

-13
-7
0
-10
-2
4


Trends in overseas travel demand (by destination segment)

The DI for Asian destinations climbed out of the minus column, with China rising 29 points. European destinations rose 19 points, approaching the plus side, on interest generated by the World Soccer Cup.
Over the next three months, all destinations are expected to rise.

  • Viewed by destination segment DI, compared to the survey conducted three months earlier (January to March), all segments were up with the exception of a 7-point drop in Oceania. China and Europe rose 29 and 19 points, respectively.
  • China shot up 38 points above the same period last year (April to June).
  • Over the next three months (July to September), the outlook is good for all destinations to rise, with China, Europe and Asia expected to move over to the plus column.
2005
2006
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar
Apr.-June
July-Sept.

Hawaii

-11
-8
-5
-17
-13
-3

USA (other)/ Canada

-15
-10
-18
-29
-20
-16

Europe

6
-7
-21
-21
-2
6

Oceania

-32
-33
-25
-29
-36
-31

Micronesia

-15
-12
-26
-20
-18
-8

China

-41
-28
-21
-32
-3
6

Asia (other)

-7
-09
-9
-11
0
5


About the Survey on Travel Market Trends
In January 2006, JATA (Japan Association of Travel Agents) asked all member companies to register as survey monitors and 562 companies did so.
The quarterly Survey on Travel Market Trends seeks to grasp trends in the market based on responses to a questionnaire on conditions now and those anticipated over the next three months.
The survey asks participating companies to rate their sales results for each destination and customer segment by choosing from three categories: "good," "average" and "poor". Respondents indicate "do not handle" for items outside their business scope. Each share of "good," "average" and "poor" is then divided respectively by the denominator, which is equal to the total number of responses minus the "do not handle" and "no reply" responses. Finally each share is processed into the Diffusion Index (DI). The highest possible index figure is +100, and the lowest is -100.
Survey Overview
Survey area: Japan nationwide
Survey target: JATA member company management
Survey method: Internet survey
Survey period: From Monday, May 15, 2006 to Monday, May 29
Registered companies: 562
Responding companies: 251
Response rate: 44.7%
Business Classification
The JATA Survey on Travel Market Trends analyzes business conditions based on business content. A definition of each business classification and the number of respondents to the survey is shown below.

Designation
Definition
Respondents
Full service travel agency A large-scale travel agency with a national network that provides a full range of travel products 30
Overseas travel wholesaler A dedicated overseas travel wholesaler 25
Overseas travel specialist agency A travel agency with a business volume of more than 5 billion yen, 80% of which is related to overseas travel 10
Domestic travel wholesaler A dedicated domestic travel wholesaler 10
First-tier retail agency Other than the above, a travel agency with a business volume of 3 billion yen or higher 28
Second-tier retail agency Other than the above, a travel agency with a business volume of less than 3 billion yen 104
In-house travel agency A travel agency which mainly handles travel arrangements for its parent company 44

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