Seibu : July. 14, 2023 IR Meeting on Hotel and Leisure Business Handouts with commentary

The Seibu Group's Hotel and Leisure

Business Strategy

SEIBU HOLDINGS INC. General Manager, Business Strategy Department II, Corporate Planning Department ISHII Yusuke

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Work Experience Introduction

SEIBU PRINCE HOTELS WORLDWIDE INC. President and Representative Director

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目次

1. Current operating status
2. Initiatives toward building the industry's No. 1 quality hotel chain
3. Sales and marketing area
4. Personnel status

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Current operating status

■April and May results for the Accommodation Division

・Increase in ADR raised RevPAR to pre-COVID-19 levels, surpassing market recovery

※The Company's indicators do not include service fees

For comparison, RevPAR with service fees included is +1.4% for April and +2.1% for May

■April and May results for the Banquet Division

・FY2023 forecast is for a recovery to 80% of FY2018 levels. Strong performance in April and May

～Trends～

✓In addition to events aimed at raising employee engagement, such as internal kickoff events and training, we are smoothly incorporating face-to-face events that enable direct dialogue with customers, such as seminars and agency incentive events

Since the G7 summits, inquiries and bookings concerning inbound MICE events have been increasing

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• Although the COVID-19 situation was very severe, the turning point was last October. Border measures have been eased and inbound tourism has been recovering steadily since then.
• Most recently, there has been more domestic activity with the downgrading of COVID-19 to Class 5 in May.
• Against this environment, April and May results show that RevPAR has generally recovered to pre- COVID-19 levels for the Accommodation Division.
• Furthermore, our RevPAR growth rate exceeds that of the Japanese market.
• RevPAR in April was -2.0pt for the Company and -2.6pt for the market compared to FY2018, both slightly lower than pre-COVID-19.However, both the Company and other hotels have been aggressively raising unit prices, and ADR was +23.8pt for the Company and +15.0pt for the market compared to FY2018. We have been able to raise our ADR above the market.
  On the other hand, occupancy was -16.0pt for the Company and -13.3pt for the Japanese market.
• The industry as a whole is experiencing a personnel shortage, and thus the strategy is to raise unit prices while keeping occupancy low.
• Our RevPAR was +6.7pt in May, which is high even compared to the Japanese market.
  Worth noting is ADR, which was +29.0pt for the Company and +21.3pt for the market compared to pre- COVID-19.
  As in April, occupancy was -13.1pt for the Company and -10.6pt for the Japanese market compared to pre-COVID-19.
• Since the Accommodation Division has variable costs such as cleaning and amenities, an effective strategy to generate GOP is to generate profit by increasing RevPAR not by occupancy but by unit price. Raise RevPAR by unit price even at the expense of occupancy. In that sense, we believe that an ideal number has been reached here.
• The Banquet Division has not yet recovered to pre-COVID-19 levels. The plan for the current fiscal year is budgeted to recover approximately 80% of pre-COVID-19.
• COVID-19was recently downgraded to Class 5 and companies have been unable to hold events such as banquets and meetings in real time for nearly three years. The Division is performing well as planned, including what is anticipated going forward. Meetings such as internal kick-off events and trainings to deepen employee engagement, seminars and incentives for large groups, and MICE have been steadily recovering.
• The G7 Summit was also held this year at the Grand Prince Hotel Hiroshima. Previous G7 meetings have been held in Ise-Shima and Toyako, which were handled and serviced by a team of Japanese hotels, including our Company. This was the first time that our employees were solely responsible for the entire operation, which put a lot of pressure on us. However, it turned out to be a great success, with the Prince Hotel's operational know-how, especially in MICE operations, leading to a successful outcome.

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