H.I.S. Co., Ltd.: Company Strategy & Performance Analysis
H.I.S. along with its subsidiaries offers travel and tourism services worldwide. The company’s businesses include air ticket reservation, hotel operations, tour services and other travel related businesses. Ciao, Impresso, VACATION, Kaito and Suma yado are some of the major brands through which the company offers its services. The company owns and operates 200 branches in 130 cities worldwide and 303 retail stores in Japan.
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Increase in net working capital
The company maintained a healthy liquidity position, which enabled it to carry its business activities effectively. The company’s net working capital posted a growth of 61.6% from US$743.4 million in 2015 to US$1,200.0 million in 2016. The increase in its net working capital was due to a 7.0% decline in its total current liabilities to US$944.5 million in 2016 from US$1,010.0 billion in 2015. There was a 21.9% increase in the value of current assets from US$1,700.0 million in 2015 to US$2,100 million in 2016. The company also reported a ratio of 2.3 as against 1.7 in 2015. The increasing current ratio indicates that the company has strong financial position and is more capable of meeting its short-term obligations than in the previous year. The company’s cash and cash equivalents increased to US$1,500.0 million in 2016 from US$1,100.0 million in 2015, reflecting an increase of 29.7% over that in 2015.
Decline in the transaction amount of inbound travel to Japan
The company reported a decline in transaction amount of inbound travel, which had an adverse effect on overall travel revenue. The transaction amount of inbound travel in Japan increased from US$101.6 million in 2015 to US$106.6 million in 2016 reporting an increase of 4.9%. However in actual currency it reported a decline of 5.7%. The incidents such as Kumamoto earthquake have affected the travel revenues.
Expansion initiatives to boost its market presence
The company implemented various strategies to expand its presence. These initiatives have the potential to improve the company’s profitability and market position. For instance, H.I.S partnered with the French National Tourism Organization and launched a promotional campaign “Atout France”. In addition, the company worked to enhance high value-added products, including art appreciation tours of two key destinations in France, namely, Palace of Versailles and the Louvre Museum.