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New Year Greetings and Business Update


New Year Greetings and Business Update

As we welcome the New Year of 2024, we would like to express our sincere greetings and gratitude. We deeply appreciate the exceptional support we received throughout the past year.

While "That Thing" claimed the title of the 2023 Buzzword of the Year, the prevailing theme for our events in 2023 was "After 4 Years." Festivals and events across Japan were conducted without restrictions, surpassing pre-pandemic considerations of objectives, presentation, and safety. The pandemic prompted us to reevaluate the norms, providing us with the opportunity to reflect on what we took for granted. A similar transformation occurred within our company, involving diversification, human resource evaluations, and digitalization. Our industry peers, like us, have been tirelessly working on addressing the challenges of "things we want to do but can't." The past three years have laid the foundation for our company's reforms amidst the challenges of the pandemic. We believe that 2024 is the time to see these efforts blossom.

| Turning "Things We Want to Do But Can't" into Reality

In the spirit of revitalization, we plan to launch a craft beer brewery and restaurant in Sengokuhara, Hakone, scheduled to open in the summer of 2024. Additionally, we are in the planning stages for the opening of new lodging facilities and undertaking the management of existing accommodations.

We are proud to introduce "Ryocance," an initiative allowing guests to experience an extended stay at our ryokan, providing an environment where they can enjoy a vacation-like atmosphere. The name "Ryocance" incorporates the word "can" to convey the spirit of "Yes, we can." By offering a space to rediscover the essence of Japan through various activities such as traditions, culture, and cuisine, we aim to enhance the value proposition and generate "multiple-night stay demand." We anticipate increased customer satisfaction through extended stay periods, leading to the creation of new revenue streams and operational efficiency improvements, including reduced check-in/out procedures and cleaning requirements.

Establishing a revenue model centered around creating extended stay demand, we aspire to contribute to the development of Hakone's tourism demand and the overall hospitality and tourism sectors in Japan. (Ryocance HP:

|Investment in Human Capital and Strengthening IT Infrastructure

We are committed to creating workplaces that leave a lasting impression on our customers and provide fulfillment for our staff. The Self-Recommendation Job System is one initiative towards this goal. For instance, if there is a staff member who may have received low ratings in the hospitality sector, they might excel in roles such as dining or guiding. By offering opportunities for self-realization that adapt to dreams, goals, and lifestyle changes, we aim to reduce turnover rates. Additionally, we have embraced internal side jobs. Staff members who wish to work at another accommodation with a different customer base often find it challenging due to logistical issues. However, with side jobs, this process becomes more straightforward. Working at another facility allows staff to appreciate the strengths of their daily workplace and fosters a sense of pride in personal growth. While constructing a human resource evaluation system requires substantial effort, it is crucial to avoid a scenario where staff members feel displaced. We believe in creating a personnel and evaluation system that contributes to a rewarding and comfortable workplace. We take pride in offering wage increases that are among the highest in the industry.

We have been at the forefront of digitizing day-to-day operations in ryokans and implementing customer management systems within the industry. Currently, our focus is on enhancing profitability and efficiency to reduce costs. To achieve this, we are actively building a system that caters to diverse communication methods with customers, aiming to increase our in-house reservation ratio.

Lastly, accommodations rely on "culture," and organizations rely on "talent" as their primary weapons. We hope to contribute to the tourism industry in 2024 by striving to provide guests worldwide with unique "Japanese experiences" that can only be found in ryokans.

We sincerely appreciate your continued guidance and support in the coming year.

Kinnotake Co., Ltd.

Kei Kubosawa
President and CEO