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Social Value Creation Report "Lifeline Infrastructure"

Expanding inbound tourism as a force for growth
Hospitality and regional community revitalization attuned to the digital era

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January 21, 2019

As globalization and urbanization advance, the migration of people is on the rise.
The number of international tourists visiting destinations worldwide is increasing rapidly, and countries and cities are now competing to capture the inbound tourists that drive their economies and employment. In cities around the world, initiatives such as airport development and easing of visa requirements are moving forward to attract tourists and business customers. Amid the growing digitalization of services, the utilization of data is vital for enhancing the competitiveness of the tourism industry. In Japan, too, initiatives are underway to realize major international sporting events through 2020 and achieve sustainable growth of the tourism industry thereafter. One of these is an initiative to study the construction of platforms for sharing data among businesses and for improving competitiveness, to strengthen hospitality and to take international visitors' experiences to the next stage. This report introduces NEC's services and initiatives for achieving hospitality in the digital era, demonstrations of seamless inbound tourism experiences built on a platform of user data, and a data utilization platform that supports the achievement of tourism cities that coexist with communities.

Inbound tourism contributes greatly to economic growth and job creation in cities

Generating over 10% of global GDP and creating 1 in 10 jobs

Amid increasingly severe competition among cities spurred by the acceleration of globalization and urbanization, the travel and tourism industry is gaining attention as a driving force behind economic growth and the creation of employment. According to the WTTC*1, Travel & Tourism directly contributed US$2.6 trillion and nearly 119 million jobs worldwide in 2017. Taking its wider indirect and induced impacts into account, the sector contributed 10.4% of the world’s GDP (Gross Domestic Product), and approximately 1 in 10 of all jobs.

Travelers continue to increase across the globe.
According to UNWTO*2, the number of international tourists in 2017 was 1.323 billion (an increase of 6.7% from the previous year) and is expected to increase to 1.8 billion in 2030.

High growth as a travel destination is forecasted for the Asia-Pacific region, against a backdrop of recent economic growth in emerging countries. In countries around the world, initiatives such as airport development, relaxation of visa requirements, and unlimited-ride transportation passes for foreigners are being used to attract tourists and business customers, with economic growth and job creation as goals.

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Digitalization as the key to improving competitiveness in the travel and tourism industry

Digitalization holds the key to strengthening competitiveness in the travel and tourism industry. The ITU*3 reported that the mobile broadband connectivity rate in 2017 was 97.1% in advanced countries and had reached 48.2% in emerging countries. Meeting travelers' wishes to make use of information and services over mobile networks will be at the base of tourism strategies for inbound travel. The 2017 Travel and Tourism Competitiveness Report by the WEF (World Economic Forum) noted that enhancing connectivity is vital for increasing competitiveness in the travel and tourism industry, and that the impacts of mobile services and social media are considerable. The report also points to a positive correlation between the status of ICT readiness and the tourism income that can be obtained per international traveler. To maintain competitiveness through digitalization, the government of France, the world's top travel destination by number of tourists, has launched the DATAtourisme platform that enables information sharing among stakeholders (i.e., parties involved in tourism).

Market values continue to rise for digital businessbased companies that play a vital role in travel and tourism, like Booking.com, a lodging reservation firm, and Airbnb, which operates a vacation rental platform.
The creation of innovations and new services will be accelerated through the digitalization of the travel and tourism industry, and business opportunities will expand.

*1 WTTC (World Travel and Tourism Council), " World Travel & Tourism Council: Travel & Tourism: Global Economic Impact & Issues 2018 - March 2018." All rights reserved.

*2 UNWTO: United Nations World Tourism Organization

*3 ITU: International Telecommunication Union

Japan's initiatives for tourism as a pillar of growth in the digital era

Making tourism a pillar of economic growth in Japan

In Japan, birth rates and population are declining while society is aging, and tourism is viewed as a major pillar for supporting economic growth in its local regions. In March 2016, the Japanese government formulated the Tourism Vision to Support the Future of Japan. This strategy proposes ten reforms under three basic visions: (1) Maximizing the attractiveness of tourism resources in order to make tourism the basis of regional revitalization; (2) Foster innovation in the tourism industry to boost its international competitiveness and develop it into a core industry; (3) Ensure all visitors may enjoy a satisfying, comfortable and stress-free sightseeing experience. A variety of initiatives linking the public and private sectors are currently underway to achieve the Tourism Vision.

According to Japan's 2018 White Paper on Tourism, the number of international tourists to Japan in 2017 increased 19.3% from the previous year to 28.69 million, setting a new high for the fifth consecutive year.
The amount of spending by international tourists to Japan in 2017 increased 17.8% from the previous year to ¥4,416.2 billion, as tourism continues its transformation into a core industry leading growth in Japan's economy. Tourism GDP grew by 23.0%, a top-ranked growth rate on par with that of automobiles, trains, and other transportation equipment.

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Revitalization of regional economies through data centric strategies for tourist destination

Action by DMOs*4, the cornerstone of tourism region development, will be vital for making Japan a world-class tourist destination through further growth in inbound tourism and for meeting the needs of increasing international visitors.
DMOs have spread primarily in the U.S. and Europe. In Japan, too, the Japan Tourism Agency has set a target of forming 100 world-class DMOs by 2020.

The Japan Tourism Agency's definition of a Japanese DMO is an organization that acts as a rudder for regional tourism development, from a standpoint of regional tourism management that fosters pride and attachment toward the region while drawing out its earning potential. Doing so, a DMO coordinates with diverse stakeholders to formulate strategies for achieving regional tourism development based on clear concepts, and is equipped with coordination functions for steadily implementing the strategies. Among a DMO's key roles, the Japan Tourism Agency lists continually collecting and analyzing various types of data, formulating strategies (i.e., branding) under clear strategies based on data, setting KPIs*5, and establishing a PDCA*6 cycle. As digitalization progresses, the transformation of the tourism industry through data utilization into an industry with high international competitiveness and productivity will mark a major step toward achieving sustainable growth in regional economies.

*4 DMO (Destination Management / Marketing Organization): An organization that is knowledgeable about tourism resources and promotes tourism region development in collaboration with the region.

*5 KPI: Key Performance Indicator.

*6 PDCA: Plan, Do, Check, Act.

Issues for further growth of the travel and tourism industry

The importance of sustainable growth, with safety and economic potential

Continued growth aimed at the expansion of economic and employment effects through the tourism industry requires undertaking a number of reforms. The WTTC lists three high-priority points to be addressed by the travel and tourism industry: (1) Security and travel facilitation; (2) Crisis preparedness and response; and (3) Sustainable growth (ensuring that Travel & Tourism growth benefits everyone and positively impacts natural and cultural environment). Moreover, in a 2017 questionnaire by the Japan Tourism Agency on troubles experienced during travel by international tourists to Japan, the most common response (26.1%) was "Communication with staff in facilities, etc.," followed by "Lack of or difficulty in understanding multilingual signs" (21.8%) and "Free Wi-Fi is not available" (21.2%). To make Japan an advanced tourism nation, there is a need to promote improvements in the travel environment to let visitors enjoy stress-free, comfortable travel.

Public and private sector collaboration to resolve visitors' issues

With the Tourism Vision to Support the Future of Japan setting targets of 40 million international tourists spending ¥8 trillion in 2020, a variety of initiatives are moving ahead.
These include comprehensive reviews of tourism-related regulations and systems, in order to achieve the targets and make Japan an advanced tourism nation.

To assess current conditions and issues in receiving fastgrowing inbound tourism and to promptly enact countermeasures, the Tourism Nation Promotion Headquarters under the Ministry of Land, Infrastructure, Transport and Tourism is working to resolve issues by regional block, in collaboration with prefectures, ordinance designated municipalities, related businesses, organizations, and other parties. In a fiscal 2016 initiative, the headquarters organized these into 11 issues and summarized examples of outcomes.
Examples of improving and strengthening multilingual support included increasing the number of multilingual signs and displays, and the enhancement of tourism information for foreigners and multilingual-capable call center services.
Initiatives for the improvement of communications environments included the promotion of public wireless LAN environment improvements, while initiatives for emergency and disaster response included telephone-based medical interpretation service for international visitors and the creation of evacuation guidance manuals. From the perspective of sustainable growth, measures to mitigate road congestion in urban areas and tourism areas are also being pursued.

To achieve the targets of the Tourism Vision from here on out, it will be necessary to leverage digital technology to further expand inbound spending, responding accurately to the needs of individual visitors to Japan and making a shift from consumption of things to consumption of experiences.

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NEC's initiatives to expand inbound tourism and resolve related issues

Improving the experience visitors to Japan with multilingual speech translation service

Smooth communication at sightseeing areas, at shops, on transportation, and in the event of emergency greatly impact the satisfaction of visitors to Japan.
Together with local governments and commercial facilities, NEC is working to improve and strengthen customer service toward people from other countries.
By accumulating usage data to make conversation content and usage conditions visible, NEC's multilingual voice translation service enables data-based services that address the key difficulties of travelers, and facilitates smoother communication with travelers and the provision of more comfortable experiences. Usable with tablets, smartphones, handheld work terminals, and other devices in customer-facing work, the service can be customized with product names and other vocabulary specialized for the type of work.

It is seeing use in rich guidance and shopping support offered to visitors to Japan by DMOs, sports facilities, railway operators, stores, and other facilities. As an example, Odakyu Department Store, a Japanese major department store group, is working to strengthen services for inbound tourists through the use of the service by customer-facing staff. Trial efforts by local governments have also begun.

Contributing to inbound tourism spending through digitalization

In addition to its multilingual support, NEC offers services that leverage digital technology to achieve hospitality for inbound travelers, and that address the difficulties faced by service providers welcoming those visitors. To improve sales to international visitors, it is important to provide a good shopping experience and to resolve shortages of customer-facing staff. NEC contributes to these goals through its J-Tax Free System, a solution for tax exemption procedures that improves the efficiency of document preparation, and through solutions such as a facial authentication system that enables unmanned convenience stores in hotels.

Looking ahead to expanding inbound tourist demand, Japan's government is working to further spread the sharing economy in preparation for shortages of transportation, lodging, and other services. NEC has readied its Sharing Service Platform to support the speedy creation and expansion of the Sharing Economy by companies and local governments. This solution enables the provision of varied sharing services, including utilization of empty rooms, means of transportation, experience-oriented events, and more, while securely managing the personal information of visitors. Furthermore, by connecting with leading-edge AI and IoT technologies, the solution offers further benefits such as income enhancement and more efficient service operation. As an example, it enables the collection of actual behavioral data on international tourists through IoT, allowing more accurate demand forecasting to achieve supply-demand adjustment or pricing optimization. The platform can also be used to revitalize communities through services to local residents and local visitors, in addition to services for international visitors.

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Initiatives to realize hospitality in the digital era

Providing a user data utilization platform for the "IoT OMOTENASHI Cloud"

Aiming to achieve an environment allowing visitors to enjoy stress-free tourism, Japan's Ministry of Internal Affairs and Communications is undertaking a number of demonstration trials for enhancing urban services through the "IoT OMOTENASHI (Hospitality) Cloud" project.

NEC participated in the project in fiscal 2016 and 2017, building an authentication platform using its Open ID Connect-compatible NC7000-3A product.

Achieving trouble-free transportation: A case study of a regional visitor referral service

There is the issue that even if a location is attractive to international visitors, it may remain unvisited if it is not sufficiently known or if means of transportation are inconvenient, creating imbalances in excursions and spending within the region.

As one means of resolving this issue, NEC participated in a demonstration trial in Hiroshima Prefecture in fiscal 2017, engaging in service collaboration centered on transportation businesses to enable smooth excursion within the region. After facilities and local governments prepared attractive experience plans for visitors to Japan, the trial worked to achieve trouble-free transportation with smooth visitor referrals, promoting excursions within the region. Specifically, the project presented visitors with multiple compelling excursion plans via smartphone or other means, and had visitors provide their preferred language, age, allergies, passport information, and other attribute data when making reservations while selecting plans. NEC linked these data items to transportation Smart Cards in the demonstration platform. For example, attribute data and bus boarding information was automatically sent to taxi operators and tourism facilities when a user touched a Smart Card to a ticket sales point before riding a bus.

This allowed the dispatch of taxies timed to the arrival of user’s buses and allowed the facilities, such as hotels, to prepare in advance, achieving smooth pick-up and welcome. The project provided new insights into visitor behavior in cases such as when tourism destinations different from the experience planners' predictions proved to be popular, or when visitors changed their hotel plans. By collaborating with local transportation businesses and other diverse stakeholders to connect visitor information with services, the trial was able to achieve attentive hospitality and discover possibilities for visitor referral and expanded consumption in the region.

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Tourism cities that coexist with regions pioneered by data utilization platforms

Creating new value by connecting services in different domains

To enhance the competitiveness of cities and regions in the tourism industry, it is necessary to collaborate across industries in order to create personalized, comfortable tourism experiences that can be adapted to individual visitors. Providing authentication functions that do not place a burden on users of services will also be important in achieving personalized hospitality. In addition to Smart Cards for transportation, facial recognition and other forms of biometric authentication able to identify individuals are becoming widespread globally, supporting secure and safe tourism experiences.

New problems have cropped up in cities that have seen an influx of tourists in recent years, with tourist density creating obstacles and new burdens on local residents' living conditions. Sustainable tourism industry development requires that local regions develop with a tourism industry that goes hand in hand with improvements to local residents' living conditions. By providing a platform for data utilization and sharing, NEC will seamlessly connect facility, transportation, and other services to the digital world, and will contribute to the improvement of individual visitor satisfaction through enhancement of hospitality services based on data analysis. NEC hopes to address not only the tourism industry but also the improvement of local residents' quality of life and the resolution of local issues, through visualization of regional data and optimization of regional services.

Together with communications environment improvements, multilingual support, and other initiatives that NEC has undertaken in the past, we will work to connect different services through cocreation with stakeholders in regional and local city development, and through means including analysis and provision of data utilization platforms with security and personal data taken into account. Doing so, we will realize hospitality for the digital era.

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NEC hopes to design new social value that leverages ICT together with customers and to work toward a "Brighter World," while placing importance on the pursuit of intrinsic value for society and for customers. If you have any comments or concerns regarding the contents of this report or NEC initiatives, please feel free to contact us.

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