Technology Opportunities in Japan Inbound Travel Market By

Technology Opportunities in Japan Inbound Travel Market By Terrie Lloyd Japan Travel KK July, 2018

Self Introduction • • Dual national (Australia/NZ), resident Japan 35 years Strong believer in creating new products and services – – 1983: Started first company, in translation field, in my apartment 1987: First to start importing PCs from China 1990: Established first PC outsourcing business in Japan, LINC Computer 1994: Founding member of YEO in Japan – providing life-long network of contacts • 1995: Sold LINC Computer to EDS of the USA – 1998: Established first mid-career online recruiting web site www. daijob. com – 1999: Bought first Chinese web business to Japan (Chinadotcom) – 2000: Started Bi. OS, bilingual Datacenter engineering business • • 2005: Sold Daijob. com 2008: Sold NZ neural network security sw company, Esphion, to Israeli firm Allot – 2010: Started Metro. Works – unique crowdsourcing software • – – – Sold Bi. OS, to shareholders -> 2013 assisted further sale to TMJ (Benesse group) 2011: Started Japan. Tourist – first crowdsourced tourism network 2012: Founding member of Ti. E Tokyo chapter 2013: Started Japan Travel KK to monetize tourism business 2014: Placed several patent applications for ACQ 2015: Earned Type II travel agency licence, received MVNO licence 2018: Started share bike business with Do. Co. Mo

Introducing Japan Travel KK • • Japan has been the fastest growing inbound travel market in the world for the last 5 years Japan Travel KK started 4 years ago – – • Focus on – – • • www. japantravel. com business Now leading inbound portal 30, 000+ contributors 5 MM PVs, 1 MM uniques in March, 2018 Content Systems Relationships and partnerships Contributing to build out of Japan’s tourism sector This document outlines major technology opportunities in Japan inbound travel market This is the result of – 100’s of meetings in Japanese travel sector – CEO Lloyd’s 30 years in technology – Dozens of reviews of foreign travel technology & platforms

Business Units Media & Content Japan Travel Hub Travel Agency (Custom/groups) Automated Digital Transactions (Self serve)

Us From Travel Sector Viewpoint TRAVEL SECTOR “FULL SPECTRUM PLATFORM” Everything leveraged by community, technology • • Content portal to attract users Online travel product/services sales Distribution of product to resellers Tour operations nationwide, using community members, partners Ground operations for corporates, overseas travel agents Systems for community & partners Full-spectrum data: build own in community, aggregate remainder from partners Supporting both end users and partners: planning, language, systems, payments, backup services Media Motto: “Share everything” OTA* GDS DMC Tour Operators Software & Data Acquirers Community Individual Merchants & Suppliers Support Collaborate Connect Web : Mobile * Note: OTA = Online Travel Agents, GDS = Global Distribution Suppliers, DMC = Destination Management Companies

Inbound Market Size (2018) ¥ 11. 49 trn (US$108 bn) TOTAL TOURIST SPEND Overall spending both before and during travel to Japan. Includes Package tours, FIT, Airfares, and in-country spending. ¥ 7 trn (US$66. 7 bn) PRE-TRAVEL SPEND (Our estimate) 65% direct bookings, while 35% through overseas travel agents and remainder through airlines. ¥ 4. 42 trn (US$41. 7 bn) IN-COUNTRY SPENDING Our target market is 1% of this number, plus whatever customer conversions we can achieve in-country.

Background to Opportunity • Japan’s travel market is technologically 5 -10 years behind USA/Europe/Asia – Until 2014, focus was on domestic/outbound markets – Dominated by incumbent travel agents such as JTB, KNT, NTA, others, who have custom-built systems, and a closed one-stop business culture – Weak marketing and poor understanding of foreign travelers – Poor foreign language skills • JTB example – From enquiry to delivery, JTB has 4 separate computer systems (web sites, CRM, quotations, invoicing) – each needs separate data entry • Inbound changes all this – Foreign OTAs and operators are outflanking Japanese incumbents – Japan inbound market controlled by foreign firms (our guess 70% of spend) – Foreign firms have 5 -10 years of collaboration experience and millions of on-line customers already – All major names are here or arriving • Expedia, Booking. com, Hotelbeds. com, Agoda. com, rentalcars. com, etc. – Only two Japanese firms seem to be keeping up • Evolable Asia (develops own software) • HIS (buys in its major systems)

Technology Trends Abroad • Travel sector is very active abroad – – • APIs – – • – Many smaller companies globally are combining forces under a single banner, to compete with big guys E. g. , Zozi. com, Treksoft. com, Travel. Local. com, WEGO. com, Hotelbeds. com, etc. Special Interest travelers (Westerners) – – – • Any company wanting to sell or buy inventory, today has to have an API or be able to access someone else’s API Almost 100% of travel businesses use APIs in some way Collaboration – • Driven by Expedia, Booking. com, Trip. Advisor, etc. Collaboration and affiliate sales are main models Whether teens or retirees, having adventures in exotic places, with treks, sport/work-outs, unique foods, special hobbies, culture, events, or thrills, is becoming popular Such travel requires strong native (article-based) marketing Also requires automation of logistics, so focus of trip can be on the interest itself Repeat travelers (Asians) – – – Get aways from crowded cities and frenetic jobs Travel meccas having excellent (trusted) food and service Low base pricing but with lots of options

Solution: The Japan Travel Hub End-user Customers (B 2 C) Corporate Customers Systems Customers Collaborators Consulting Team ACQ 2 community manager User Portal www. japantravel. com User Info. Bank B 2 B, B 2 B 2 C Travel Agents Connectivity Tour. Soft Agency Manager Travel Supermarket Services Custom APIs & Standard APIs Contributor & Services Community Travel Suppliers: OTAs, GDS, Locals, Payments Project Management Strategic Corporate Enablers

Technologies Already Developed by Us • ACQ 2 user content generator & management (Cloud) – Manages 10 K+ contributors, 26 K+ articles – PHP, Mongo, Java – Deep control of crowd, quality control, rewards • SIM control app (Android , i. OS) – We control SIM, and thus service packages offered – Frequent (1 x minute) tracking to 5 meters, cloud repository • Bike rental/management system (Cloud) – Tourists rent bicycles through us – Payment and support provided by us • Bag handling order/router system (Cloud) – Tourists submit their itinerary and we parse to work out bag delivery schedule – Customer can then turn into digital order, without paper or Japanese ability - support by us – Currently under development • Cloud PBX – Developed virtual PBX (Elastix) in cloud, will combine with SIM business for local calling, use of existing overseas phone numbers while in Japan (through POP->forwarding)

Equipment Rentals § Have signed partnership with NTT Do. Co. Mo Bike Share (DBS) q Japan’s largest bike sharing co. q We are their Inbound partner § Connected to their system Bots to start, then API First time for DBS to interconnect § Customer value proposition: easy, quick credit card payment for bikes § Upselling of helmets, cycling tours Credit Card Payment City cycling tour itineraries Year 1 (2018) Year 2 (2019) Year 3 (2020) No. Bikes 6, 800 10, 000 20, 000 % foreign riders 1% 3% 7% 6, 800 bikes = Largest Tourist Bike Share in JP

ACQ 2 Crowd Content Platform

Other Tech-Travel Gaps in Japan • National networks, connectivity – API resource for the travel industry • Business management – – Simple booking systems for small operators Payments intermediation Crowd-based translation Borderless, multilingual travel agent systems • Apps solving specific traveler problems – – Overcoming foreigner access to telecoms Visa application automation Automated itinerary builder Tourist services comparison shopping site • Commerce from traveler data – – Points and rewards for travelers National events system Tickets and coupons Crowd-based content and support

National Networks, Connectivity Using APIs • What – An Application Program Interface (API) allows companies to create automated but controlled access to their internal data, products, & services, for partners accessing the API – E. g. , airline API that feeds travel agents, Tour Operator API feeding global GDS distributors • Opportunity – No single API authority in Japan, but there is huge need (JP companies struggle with APIs) – Opportunities in API Creation, Standardization, Security, Analytics, and Marketplace • Size of Market – Overall API business in USA is US$500 MM, JP will be 1/3 by 2020 (partly due to Io. T surge) – JP Travel Sector (approx. no’s): 20, 000 travel agents, 3, 500 activities (体験: Taiken) vendors, 10, 000’s stores, 40, 000 hotels, etc. • Our Involvement – Pioneering API connectivity to broad range of companies, including: Asoview (largest taiken co. ), Hyakuzen Renma (like Airbnb), GMO Payments, etc. – Our APIs will connect to broad range of GDS, metadata search, and OTA companies overseas – API team is in Pune, India, through a j/v there

Business Management Small Booking Systems • What – Many small taiken, events, and minshuku operators don’t have computer systems – Need low-cost mobile apps to post inventory & schedules, handle bookings, make/receive payments • How Applied – Good model is www. toreta. io – can operate restaurants from a smart phone – Toreta revenue: JPY 10, 000/month x 6 K clients • Size of Market – We estimate: 10 K taiken operators, 20 K local events organizers, 100 K minshuku & minpaku owners • Our Involvement – Contracted with Treksoft in Switzerland to help deliver taiken operationrs system in Japan – Contracted with Hotelrunner in Turkey to deliver hotel channel marketing in Japan – Negotiating for bicycle fleet management s/w

Business Management Payments Intermediation • What – JP businesses feel exposed to foreign tourist cancellations – JP businesses have many internal rules about customer onboarding – Payments intermediation removes these risks, by middleman taking calculated risk (experience then actuarial input) and doing payments • How Applied – Middleman is customer of record, and accepts payments responsibility – Alleviated by pre-paid coupons, cancellation policies, & good customer support – 10% - 15% per transaction • Size of Market – We estimate: 10, 000+ service operators, 10, 000+ taiken operators, 150, 000+ restaurants, 100, 000+ beauty, 500, 000+ retail stores • Our Involvement – In 2017 we contracted with Do. Co. Mo Bike Share to become payment intermediation partner foreign tourist customers – In discussions with Harajuku & Omotesando shouten-gai associations to start prepaid coupon system for beauty salons, where we sell partially-refundable coupons (effectively creating a cancellation policy between customer and proprietor)

Low-cost Travel Agent Systems • • What – No E-J bilingual, multinational Travel Agent systems available for Japan inbound use – Local products don’t support API connectivity with overseas resellers & GDSs – No English content to offer on automated API basis, to populate itineraries How Applied – Systems need to connect to Japanese vendors and foreign resellers – Requires multiple APIs and language support – Example of high-grade (but not bilingual system) is http: //www. codegen. co. uk/ (leader in Europe) Size of Market – We estimate: 10 K outbound travel agents/consultants in Japan, 50 K across Asia by 2020 Our Involvement – We invested in Tour. Soft in Pune, India, a Japanese-Indian travel management software development – – company We use their product internally and are guiding them on new features Extremely competitive pricing (US$20/person/month) – will become industry leader

Apps Smart. Phone Access/Payments • What D E L L E C N A C – Low cost LTE network access foreign travelers – SIMs shipped app allow tracking and geo-aware ads/offers – SIM access also allows SIM-based payment systems • How Applied – Cheap, easy-to-get SIMs = viral market – Traveler prepaid SIMs are 4 x-6 x more expensive than Japanese post-paid – Recycling SIMs cuts costs, Io. T infra also cost effective • Size of Market – 1. 8 MM foreign travelers per month • Our Involvement – Worked with Soracom. io, were ready to launch first free SIM service in early 2017 – Stopped after seeing dramatic industry developments • Handy • Low-cost Roaming plans • Significantly expanded Wi. FI in Japan’s cities

Immigration Application Automation • What – Documentation, advice on immigration paperwork – For countries not visa-free (India, Middle East, etc. ) – Sponsorship service • How Applied – https: //www. ctshk. com/english/useful/chinesevisa. htm – Already 13 China-focused visa firms, but no specialists for other nationalities • Size of Market – Approximately 15 MM foreign travelers need visas and sponsors – First opportunity is non-China countries • Our Involvement – In planning stage

Apps Auto-Itinerary Builder • What – Events/activities based itinerary builder based on search or maps or calendar – Choose activity/event, system dynamically pulls all relevant data into itinerary format – User can modify by drag/drop, new search • How Applied – Need to tie in with events, hotels, activities, transfers, guides, restaurant databases – www. triphobo. com, www. tripplantica. com (both need work for Japan) • Size of Market – Could kill the travel agency business, as users would self-serve • Our Involvement – In planning stage

Apps Shopping Comparison Site • What – Kakaku. com of travel – Search based, metadata engine • How Applied – Requires sophisticated crawling, search tech – Example for flights: www. cheapoair. com • Size of Market – Front-end tool would be widely used by travelers BEFORE using Online Travel Agencies – 20 MM unique user sessions per month (our estimate) • Our Involvement – Waiting for market to settle down

Points & Rewards Card • What – T-Point or Ponta for tourists – On SIM card as scannable codes (not cards) – Tie in with existing points networks? • How Applied – Small downloadable app – Tracking for minor points, rewards for purchases • Size of Market – 32 MM travelers a year – Tens of thousands of advertisers • Our Involvement – Have had discussions with all the major points companies outside of Rakuten, and none of them get it (Ponta, T-Points, d-Points) – Need major points partner to back project, work with sponsors

Traveler Data National Events System • What – Stage one: Calendar of paid and NPO events around Japan – Stage two: e. Commerce taking bookings for events – Stage three: Collaborate with local authorities/businesses to create tourist events • How Applied – www. eventbank. com is leader in Japanese NPO content – Sells subscriptions to OTA and Metasearch web sites for JPY 350 K/month • Size of Market – Potential user base is huge – No competitor so far, reach is 32 MM travelers plus 100 MM more dreaming of Japan – Large opportunity working with GDS and OTA companies overseas (Hotelbeds. com, etc. ) • Our Involvement – Have spoken to Ticket Pia, Eventbank, NTT Goo, Jorudan, etc. Japanese companies don’t like to collaborate – Will start a crowd-based effort in 2019

Traveler Data Coupons & Vouchers • What – Discount coupons & vouchers for tourists – Smart phone based vouchers (e. g. , https: //tixeebox. tv/) • How Applied – Inventory size is important, require 500+ offers per month – Start with restaurants, attractions, apparel/beauty retailers • Size of Market – Mostly Asian travelers = 14 MM travelers/month • Our Involvement – Discussions with Mitsui-Sumitomo Card, 350, 000 merchants – Discussions with Tixee for their one-time use system – Still looking for partners

Traveler Data e. Books, Podcast/Video Tours • What – e. Books, Podcast & video self-guided tours – All user generated (but we will curate) – Sell for JPY 300~500 for 30 -min tour • How Applied – Popular overseas already – www. voicemap. io • Size of Market – London market is similar to Tokyo, Voicemap selling 10 k packages/quarter after one quarter • Our Involvement – – Tie-up with Voicemap for podcasts Harness our 30 K contributors to start building itineraries Co-sell on Voicemap market podcasts Create similar internal system for e. Books/videos, then sell on Amazon

Unified Emergency System • Summer 2018 natural disasters were frequent – Almost no tools foreign tourists – Certainly nothing unified, very little real time • Most apps/sites focus on earthquake preparedness – But considering low frequency of serious quakes, need more everyday issues • Yurekuru – missile alerts might be interesting…! – Expected flooding, public transport delays, roading delays, air delays, emergency areas, rerouting info, etc. – National resources – hospitals, local doctors, police station local phone numbers, coast guard, etc. Google Play: 1 MM downloads Google Play: 500 K downloads

Contacts • Product Development – Terrie Lloyd (CEO) – terrie. lloyd@japantravel. com • Software Development – Guilhem Malfre (CTO, Head Engineer) – guilhem. malfre@metroworks. co. jp • Operations Development – Geoff Day (COO) – geoff. day@japantravel. com • Web sites – www. japantravel. com (main travel site) – www. japantravel. co. jp (corporate site) – www. japantravel. bike (Sharebike site)