TOKYO DOME CORPORATION

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Management Message

Shinji Kushiro

We will continue laying
the foundations for sustainable
growth by steadily implementing Shin-Kijiku “Innovation”
to foster the axis
that best suits a
“century-old company”

President and Representative Director
Tsutomu Nagaoka

Shinji Kushiro

As continuation of our Kidou “Activate” plan, in the Shin-Kijiku “Innovation” plan we will work as a group to firm up our base over the medium to long term, seeking to foster the axis that best suits a “century-old company” that can create sustainable corporate value.

Shin-Kijiku “Innovation” describes how the Tokyo Dome group comes together to work as one, starting with individuals, who look into their own axis, thereafter working together within their departments or groups to align their objectives, which in turn becomes the axis around which the group turns. This is how I explained the Shin-Kijiku “Innovation” concept to employees when we began the first year of this new medium-term management plan. As we start the third year of the plan, we are making steady progress on our eight action plans and we will continue investing for future growth, developing the environment, and devising a growth strategy for this fiscal year ending January 31, 2019.

Rather than aiming for rapid growth and business expansion by acquiring new assets such as real estate, the Tokyo Dome group will endeavor to achieve steady growth by amassing the knowledge and skills we have developed through dealing with the new challenges of Tokyo Dome City as an urban entertainment town and deploying this knowledge outside the group, which will lead to expansion of our businesses. We will further the growth of the entire group by fostering the axis that best suits a “century-old company,” laying the foundations and attracting and developing talented human resources.

I am convinced that establishing a virtuous cycle of this kind over the long term is the way for our group to work together to be a “century-old company” that can create sustained corporate value.

With the basic policy toward achieving optimum distribution of management resources in view of the expected growth of leisure businesses and aiming to be a “century-old company” that can create sustained corporate value, our Shin-Kijiku “Innovation” medium-term management plan (from FY2017 to FY2021) sets out the eight action plans for achieving comprehensive solutions to the eight management issues we have identified. In the Shin-Kijiku “Innovation” plan, we have continued making capital investments to create a rock-solid foundation for generating stable profits and we have reorganized assets after conducting a multi-dimensional feasibility analysis, both of which were also outlined in the previous Kidou “Activate” plan (from FY2012 to FY2016). As a result, for the fiscal year ended January 31, 2018, the second year of the plan, both sales and income exceeded the performance forecasts. As part of measures to improve our financial condition, we expect to retire the outstanding interest-bearing debt of 139.0 billion yen on a consolidated basis by January 31, 2019, two years ahead of the January 31, 2021 target date. Further solidifying our revenue base and firming up our business base to ensure further growth in 2021 and beyond, we will take on challenges for developing human resources capable of promoting new ideas and reinforcing our governance system.

Financial Highlights for FY2018

Millions of yen

FY2018 YoY
Net sales 83,686 -4.6%
Operating income 11,389 -9.5%
Ordinary income 10,057 -6.6%
Net income attributable
to owners of the parent
8,116 +22.3%

We will steadily implement our eight action plans to achieve optimum distribution of management resources and reorganize the group’s management structure in the second year of the Shin-Kijiku “Innovation” plan.

We are currently carrying out eight action plans intended as a comprehensive solution to the management issues identified in Shin-Kijiku “Innovation”: “maintaining and expanding income levels for the Tokyo Dome City business”; “researching and developing new growth strategies and growing existing businesses outside Tokyo Dome City businesses”; “addressing the labor shortage”; “ensuring and maintaining a ‘safety culture’”; “meeting the obligations of the corporate governance code and the stewardship code”; “supporting the 2020 Tokyo Olympic and Paralympic Games and welcoming foreign visitors coming to Japan for the events”; “coping with changes in consumption behavior arising from shifts in demographic trends”; and “reinforcing the group’s management structure.”

Action Plan 1.
We will work on developing the environment for the sustained creation of value at Tokyo Dome City into the future.

Tokyo Dome City is a self-contained “town” in the heart of Tokyo. The environment development plan for Tokyo Dome City under Shin-Kijiku “Innovation” encompasses the concept of the “town” as a whole and has so far involved renovations and other initiatives. These will be carried out as early as possible during the five years of the Shin-Kijiku “Innovation” plan.

In the fiscal year ended January 31, 2018, refurbishment of Tokyo Dome, conceived as a project to commemorate its 80th anniversary, has been proceeding according to plan. Renovations have included adding more excite seats right on the field, improving the 2nd floor infield stands, and converting arena lighting to LEDs to enhance the baseball viewing experience and maintain Tokyo Dome’s brand as a multi-purpose stadium. Now that this stage of the project has been completed as planned, work will focus on improving the environment around the Tokyo Dome stadium.

Spa LaQua has marked its 15th anniversary and was temporary closed for one month in September 2017 to dynamically renovate the facility for the first time since its opening. It has installed a carbonated cypress bath and Finnish sauna in the bath area to fulfill ladies’ desire for beauty. In addition, to cater to visitors’ needs for light meals, the refreshment area features a café and deli section and a new drink counter, as well as expanded treatment & beauty facilities. The new LaQua Living has been added to provide more break space and enhanced relaxation functions.

Since we would like to attract more new and diverse visitors, we have also added new permanent facilities, which were missing in viewing Tokyo Dome City as a town, to fulfill our longing. New cultural facilities such as the TeNQ Space Museum and playful gallery Gallery AaMo have been built, and the CuBAR LOUNGE with a bar counter, an amusement spot for grown-ups, offers a new way to enjoy bowling. All these new facilities are doing well after opening.

The Yellow Building has been refurbished and the ticket sales office for the local horse races, “Offt Kourakuen” has been relocated from the 1st floor to the 6th floor general public area, and the luxury reserved seating area, “LOUNGE SEVEN” has been added on the 7th floor in July 2018, so that fans can enjoy watching horse races in more luxurious settings. For the 1st floor area after it is vacated, we are planning a refurbishment with the aim of improving the environment to ensure sustained value, and for the purpose of improving the functions of Tokyo Dome City.

[Three-year period from January 2016]
Renovation of Tokyo Dome

Conceived to commemorate the 80th anniversary of Tokyo Dome, this refurbishment project is proceeding as planned. As a major multi-purpose complex in the heart of Tokyo besides ballpark, we have improved the venue by providing high value-added products and services, adopting energy-saving and environment-friendly features, and enhancing the complex’s safety features.

[October 2017]
Renovation of Spa LaQua

We carried out the first large-scale refurbishment of Spa LaQua since its opening in 2003. We have aimed to create a luxurious space dedicated to all aspects of women’s beauty with the addition of a “carbonated cypress bath,” and an authentic “Finnish sauna.” Other facilities include an open-air bath, treatment & beauty, and a restaurant and shops featuring healthful foods.

[June-July 2018]
Partial Renovation of the Yellow Building

The Yellow Building has been refurbished and the ticket sales office for the local horse races, “Offt Kourakuen” has been relocated from the 1st floor to the 6th floor general public area. Luxury reserved seating area, “LOUNGE SEVEN” has also been opened on the 7th floor so that fans can enjoy watching horse races in more luxurious settings. Plans are to renovate the 1st floor area vacated by the ticket sales office to improve its function as the main gateway to Tokyo Dome City, as well as to contribute to improving how visitors move around.

Action Plan 2.
We will work on the renovation of Atami Korakuen Hotel.

We have been working on renovating the Atami Korakuen Hotel since our previous Kidou “Activate” medium-term management plan. To address the changing makeup of tourists to Atami, we began by refurbishing the Tower Building in 2016. We are currently proceeding with the overall rebuilding of the Misaki Building which is over 50 years old, from a “Japanese-style hot spring inn” for groups to a “resort hotel” for individual travelers, and the entire complex will be transformed into an oceanfront resort complex slated to open in late March 2019 to accommodate diverse guests’ needs.

The whole area of the new complex, which is part of overall community redevelopment in Atami, will be renamed “Atami Bay Resort Korakuen” and will include “Ocean Spa Fuua,” a new facility, which is one of the largest day-trip hot springs in Atami, featuring an open-air standing-depth bath with stunning views of Sagami Bay. The rest areas in the facility provide just the kind of restful atmosphere, which guests look for in hot spring resorts, where they can stay in their own styles as they please, feeling a sense of spaciousness right by the sea.

In addition, the second floor will be occupied by “Izu-ichi,” a food market made up of restaurant areas and product sales areas offering fresh and healthy local food of Izu, aiming to be the facility with bustling atmosphere, in which visitors can encounter delicious food collected from all over Izu.

[Scheduled for Late March 2019]
Opening of an Oceanfront Resort Complex in Atami

Atami Korakuen Hotel is being refurbished and will be renamed to “Atami Bay Resort Korakuen.” This facility is planned to have an open-air standing-depth bath in “Ocean Spa Fuua” which is located right by the ocean for the guests to experience a sense of spaciousness, and restaurants and shops for fresh and healthy local food of Izu.

* This CG is a representation at the planning stage and may change for construction-related reasons.
Copyright 2018, Takenaka Corporation

Action Plan 3.
We will pursue new businesses and aim to gain new customers inside and outside Tokyo Dome City.

Leveraging the knowhow developed by managing Tokyo Dome City, our flagship enterprise, and the popularity of the attractions there, we will apply our expertise to pursuing new enterprises, including tie-ups with other companies, to attract new customers.

Audio Guide Q, a multilingual voice guidance app we started selling in 2016, is now the official app at “The Little Prince Museum (Musée du Petit Prince de Saint-Exupery à Hakone)” and at the Tokyo Fire Department’s Fire Museum. We have also added a time-limiting function to Audio Guide Q, and going forward, we plan to expand our sales channels to various events taking place both inside and outside Tokyo Dome City.

We also invested in a sports-related IT company, Dankichi Inc., to develop new services. In April 2018, we started providing our new smartphone app “Tokyo Dome Online Baseball Academy.”

[April 2018]
Tokyo Dome Online Baseball Academy Service Goes Live

The Tokyo Dome Baseball Academy, operated at the “Spo-Dori!” indoor sports facility, has collaborated with Dankichi Inc., which provides smartphone apps for sports lessons, and has developed the new “Tokyo Dome Online Baseball Academy” offering one-on-one coaching.

Action Plan 4.
We will seek to maintain and improve the feasibility of existing businesses outside Tokyo Dome City.

With regard to businesses outside Tokyo Dome City, we have explored a multi-brand strategy to build a powerful brand for the retail business and improve profitability, and launched our first Crème et Rouge store in Umeda, Osaka in April 2017 and two new stores in the Tokyo area, in Musashi-Kosugi and Shinjuku, in February 2018.

In addition, we have applied our expertise in running sports and entertainment events to businesses under the designated administrator system for public facilities and have gained favorable reviews from users. We are amassing a positive track record in this area, and have been selected to manage ten sports and physical recreation facilities in Nishi-Tokyo City and the Musashino Forest Sport Centre designated as a venue for competitions during the 2020 Tokyo Olympic Games.

Action Plan 5.
We will work on developing the environment in view of globalization as universalization

Over 28 million foreign travelers came to Japan in 2017, and the number of visitors to Tokyo Dome City is increasing. We would like to make the town more welcoming and enjoyable to everyone, and as part of our outreach to inbound travelers, we made the map of the premises and our official website and mobile website available in multiple languages, and started offering free Wi-Fi at Tokyo Dome City in February 2018. In response to demands for universalization, we have also installed or upgraded elevators and other facilities, and are gradually working to develop the environment in both tangible and intangible ways.

[During the Medium-Term Management Plan Period]
Environment Development at Tokyo Dome City

To accommodate the larger numbers of visitors from overseas coming to Japan in recent years, and to create an enjoyable atmosphere for all visitors to Tokyo Dome City, the map of the premises and our official website and mobile website are now available in English, Chinese and Korean in addition to Japanese. We have also made free Wi-Fi available in addition to installing and upgrading elevators and other facilities.

Action Plan 6.
We will make efforts to maintain a safe and secure environment at all times.

To eliminate discrepancies in information provided with regard to safety and security, and maintain and enhance a level of safety awareness, the Tokyo Dome group has introduced an “Incident Information Management System” to centrally manage all information pertaining to accidents or incidents occurring inside and outside the company and enable all executives and employees to share the information. We are going to endeavor to work through details of a problem to reach a solution as soon as the information is shared. To ensure the safety and security of our facilities at all times, our departments conduct approximately 2,000 drills per year based on various risks and scenarios, including disaster prevention and fire drills, dealing with people having trouble returning home in the event of a disaster, or responding to the J-Alert nationwide warning system, in order to review crisis-handling measures and check coordination with other departments.

Action Plan 7.
We will work on acquiring and developing human resources.

We have created “Tokyo Dome Group Education Center” to ensure ongoing development of personnel highly trained in hospitality, safety, and security. This Center offers seminars and training to group employees, with continuous feedback to improve personnel service standards. The Center’s education program is also well regarded by other companies and we receive requests to conduct seminars or offer training. We will continue focusing on attracting and training personnel to offer the best kind of hospitality to our visitors and guests.

Furthermore, with an eye on rebuilding the group’s management structure, working together and in cooperation with all group companies, we are taking steps to create a group-wide personnel system in charge of hiring, training, and job assignment to ensure smooth, uninterrupted business management of the group.

Action Plan 8.
We will work on rebuilding the group management structure.

Where the group’s management is concerned, risk management is an important topic. In order to ensure that risk management undertaken by individual group companies is applied to the group as a whole and develop a group-wide risk management system, we have changed the rules of the Risk Management Committee and shifted to group-based risk management system. Under this management structure which has entered a new stage, we will contribute to enhancing corporate value by further fortifying the whole group through adopting a multi-faceted approach to taking marketing measures and risk management on a group-wide basis.

The initiatives described above are all part of our grand design for a “century-old company” capable of creating sustained corporate value. As we work toward creating new value for succeeding generations, we will continue steadily implementing the eight action plans of the Shin-Kijiku “Innovation” medium-term business plan.