VELTRA Corporation

The core overseas local experience tours business faces the risk that tour operations may become difficult due to natural disasters, terrorism, war, or conflict at the destination. In addition, if the company's main customers, Japanese residents in Japan, are affected by domestic disasters, the number of bookings could decline significantly. Furthermore, personal injury or accidents during a tour, even if not directly related to tour operations, could lead to reputational damage, potentially resulting in a substantial decrease in membership numbers and bookings.

If major online travel companies with strong capital resources and sales capabilities in airline tickets, hotels, and other segments enter the local experience tour sector, the Group could face competition more intense than currently anticipated. While the Group holds a unique position as one of Japan's largest platforms specializing in local experience tours, entry by major players could lead to price competition and rising customer acquisition costs. As countermeasures, the Group is working to maintain and enhance its competitiveness by strengthening its network with tour operators and forming business alliances with domestic and international tourism businesses.

Customer needs are rapidly changing due to the spread of travel comparison and recommendation services utilizing generative AI, and if the Group falls behind in adopting technological innovation, this could constrain business execution and affect performance. The pace of technological innovation in the internet-related market is extremely fast, and delays in response could directly lead to a loss of competitive advantage. The Group's policy is to respond by promptly capturing changes in market trends and customer needs and flexibly developing and introducing new features and services.

Since the operation of the booking site is heavily dependent on the internet environment, if services are disrupted due to IT infrastructure failures, computer virus infections, cyberattacks, or similar incidents, this could affect performance through lost sales opportunities and reduced customer trust. As countermeasures, the Group is migrating its IT infrastructure to the cloud and implementing continuous system monitoring to reduce the risk of failures.

The Group holds personal information of service users, and if an information leak occurs due to unforeseen circumstances, it could seriously affect the business and performance through loss of public trust and claims for damages. The Group has established internal regulations such as the information systems management regulations, information security management regulations, and personal information protection regulations, and is working to ensure the confidentiality of its information systems.

Securing and developing specialized personnel and management talent is essential for business expansion and strengthening the management structure, and if this is insufficient, it could slow the pace of growth. The Group regularly reviews its recruitment structure and conducts periodic skill-development training to improve employee retention rates, but the risk remains that it may be unable to secure the necessary talent in a highly competitive labor market.

As the Group primarily deals in overseas products, it is affected by exchange rate fluctuations in foreign-currency-denominated settlements with tour operators. If the yen depreciates further, rising procurement costs could put pressure on profitability. The Group strives to minimize the impact of exchange rate fluctuations on its performance through measures such as forward exchange contracts.

Because the Group recognizes revenue based on the tour execution date, operating revenue and profit tend to concentrate in the July-September period (third quarter), when travelers are more likely to take extended vacations, while other periods tend to see relatively lower results. Due to this seasonal fluctuation, it is difficult to forecast full-year performance based solely on quarterly results, and caution is required when making investment decisions.

The Company is registered as a Type 2 Travel Agency (registered with the Governor of Tokyo, Travel Agency License No. 2-5555, valid until January 17, 2030) for handling certain tours involving transportation arrangements, and this registration must be renewed every five years. If the Company falls under any grounds for registration refusal or revocation under the Travel Agency Act, it could be ordered to have its registration revoked or its business suspended, which could seriously affect business continuity. While there are currently no such applicable facts, continuous compliance with laws and regulations is required.

The Group, which has global business locations in the United States, Southeast Asia, and elsewhere, may face disruptions to its business operations due to the enactment or revision of local laws and regulations or changes in the political situation. In addition to strengthening coordination between the head office and local subsidiaries, the Group seeks to mitigate these risks by sharing information through advisory contracts with local accounting firms and law firms.