Yamaha 2006 Annual Report Download - page 30

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30
Yamaha owns and operates six resorts in Japan stretching from Hokkaido to
Okinawa, with each facility run by a separate operating company. Although this
business has been faced with difficult times in terms of profitability recently, the
nearly two million annual visitors to the resort operations contribute to the
enhancement of the Yamaha brand image.
RELAXING ENVIRONMENTS
Review of Operations Recreation
KiroroTM
Fiscal 2006 performance
Accommodation revenue grew steadily during
fiscal 2006. A drop in revenue from wedding
functions, however, among others, led to an
overall decline in sales. Segment profitability
improved due to a major fall in depreciation
costs, which pushed down SG&A expenses.
Total segment sales declined 1.5% year on
year, to ¥18.0 billion, and the segment posted
an operating loss of ¥1.8 billion, compared with
a loss of ¥2.3 billion in fiscal 2005.
Market trends and business strategy
In recent years, a consumer spending slowdown
in Japan has negatively impacted recreation
operations. Exacerbated by lower skier numbers,
resulting in lower sales, Yamaha adopted
Japanese asset-impairment accounting standards
in fiscal 2005, which helped to reduce
depreciation costs. Yamaha plans to keep all
resorts in operation while selectively rationalizing
those facilities. Restoring profitability remains key.
KiroroTM
The KiroroTM resort, located near Otaru in
Hokkaido, comprises skiing facilities and two
hotels. The environment surrounding the ski
market has been changing in recent times on
account of Japan’s low birthrate, aging
population, modifications to equipment, and fewer
skiers and snowboarders. Yamaha considerably
remodeled one of the resort’s ski runs during the
year, converting a steep, twisting course into a
more comfortable, cruising slope ideal for families.
This helped attract 5% more day skiers from
Hokkaido. The number of hotel guests declined
slightly because of unusually early snowfalls on the
mainland. The focus for KiroroTM remains to boost
hotel occupancy levels by promoting off-season
stays, raising the resort’s profile with travel
agencies, and attracting more conference and
seminar business. Other efforts target boosting
ski-related visitor traffic in the winter through more
convenient facilities and more attractive ski runs.