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(September 27, 2006)

18th JATA Survey on Travel Market Trends: Overseas (September 2006)

Overseas DI rose on strong summer vacation demand and the improving domestic economy, while domestic DI leveled off on the minus side
Over the next three months, overseas DI may retreat but should remain positive; domestic DI expected to improve

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 "18th JATA Survey on Travel Market Trends" conducted from the middle to the end of August 2006, the overseas travel market continued to grow steadily although it did not achieve predicted levels. The domestic travel market leveled off on the minus side.
Over the next three months, the overseas DI may retreat slightly, but should remain in the plus column, while the domestic DI is expected to improve, but remain negative.

Business activity for the overseas travel market as a whole

Overseas travel DI rose favorably on the recovering domestic economy and strong family summer vacation demand Over the next three months, activity expected to retreat slightly as a result of worries over counter-terrorism measures and high fuel costs

Current situation: Overseas DI rose favorably thanks to strong family summer vacation demand

  • "With the economy recovering, travel demand is up for all companies." (Opinion of overseas travel wholesaler)
  • "Family summer vacation reservations are increasing." (Opinion of second-tier retail agencies)
  • The overseas travel DI on the whole rose 6 points. While not reaching the 9 points predicted, it is expected to continue to increase, exceeding 21 points compared with the same period last year (July to September).

Outlook for the next three months (October to December): Activity is expected to remain on the plus side, but may retreat slightly due to worries over counter-terrorism measures and high fuel costs

  • "A big jump in fuel surcharges will have a major impact." (Opinion of full-service travel agency)
  • "Lengthy immigration and customs clearing procedures due to counter-terrorism measures will unfavorably affect overseas travel." (Opinion of in-house agency)
  • Over the next three months (October to December), the overall overseas travel DI may retreat slightly, but should remain in the plus column

Summary

  • The overseas travel market improved over the last survey thanks to the recovering domestic economy and strong family summer vacation demand.
    Viewed by destination segment, demand for Europe, Asia and China was brisk. Especially strong leisure and business travel to China helped that country further expand its share of the Japanese overseas travel market.
    Over the next three months (October to December), worries over counter-terrorism measures and high fuel costs are likely to have an adverse effect on travel.

Change in Combined Demand for All Destinations
2005
2005
2006
July-Sept.
Jan.-Mar.
Apr.-June
July-Sept.
Oct.-Dec.
Jan.-Mar.
Apr.-June
July-Sept.
Oct.-Dec.
15
-2
-8
-12
-15
-18
0
9
5
*15
*Indicates figures from the June 2006 Survey

Trends in overseas travel demand (by customer segment)

The family travel segment approached the plus side by rising 18 points on summer vacation travel demand. The female office worker segment also rose 11 points.
In the next three months, the family travel segment is expected to decline as summer vacation demand tapers off, but the senior travel segment should remain positive. The inspection tour and business travel segments are expected to move out of the minus columns.

  • Compared to the previous three months (April to June), thanks to strong family travel, the current customer segment DI rose 18 points-approaching the plus side-while the female office worker segment also rose 11 points. The senior travel segment fell off slightly, but the DI remained positive. Although the middle-aged travel segment was unchanged, it was just a step away from reaching the plus side. Compared to the same period in the previous year (July to September), all customer segments did well, with family, female office worker, middle-aged and senior segments rising over 10 points.
  • Over the next three months (October to December), the family travel segment is expected to fall 22 points as summer vacation demand dissipates. The honeymoon, incentive, inspection tour and business travel segments are expected to rise by about 10 points, and inspection tour and business travel should take a favorable turn toward the plus side. The senior segment is expected to remain positive.
2005
2006
July-Sept.
Oct.-Dec.
Jan.-Mar.
Apr.-June
July-Sept.
Oct.-Dec.

Honeymoon

-39
-29
-42
-30
-33
-24

Family

-16
-35
-31
-20
-2
-24

Female office worker

-32
-31
-38
-28
-17
-19

Middle-aged (45-59)

-13
-16
-14
-1
-1
-3

Senior (60 and over)

-12
-6
-10
4
1
4

Incentive

-37
-28
-34
-22
-31
-22

Business / technical visit

-7
0
-10
-2
-4
4


Trends in overseas travel demand (by destination segment)

Demand was brisk for destinations in China, Asia and Europe, with the China DI continuing to increase by double digits.
Over the next three months, overall overseas travel demand is expected to decline. In particular, Micronesia, the U.S.A. and Canada will continue to be sluggish.

  • In comparison to the previous three months (April to June), China led with a rise of 14 points, followed by Asia, which moved into the plus column with a 9-point rise, and Europe, which was up 5 points. Compared with the same period last year (July to September), China climbed 39 points, Asia rose 28 points and Europe was up 10 points.
  • Over the next three months (October to December), overall overseas travel demand is expected to decline. Micronesia, the United States and Canada will continue to be sluggish, with an anticipated drop of approximately 30 points.
2005
2006
July-Sept.
Oct.-Dec.
Jan.-Mar
Apr.-June
July-Sept.
Oct.-Dec.

Hawaii

-8
-5
-17
-13
-12
-13

USA (other)/ Canada

-10
-18
-29
-20
-25
-32

Europe

-7
-21
-21
-2
3
0

Oceania

-33
-25
-29
-36
-36
-34

Micronesia

-12
-26
-20
-18
-24
-29

China

-28
-21
-32
-3
11
10

Asia (other)

-19
-9
-11
0
9
3


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 550 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, August 7, 2006 to Thursday, August 24
Registered companies: 550
Responding companies: 233
Response rate: 42.4%
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 34
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 9
Domestic travel wholesaler A dedicated domestic travel wholesaler 11
First-tier retail agency Other than the above, a travel agency with a business volume of 3 billion yen or higher 32
Second-tier retail agency Other than the above, a travel agency with a business volume of less than 3 billion yen 85
In-house travel agency A travel agency which mainly handles travel arrangements for its parent company 37

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