KNT-CT Holdings, one of the leading travel agents in Japan, announced its drastic business reform to survive the COVID-19 crisis, as it worsened its capital adequacy rate to 1.4% in the second quarter of FY2020. KNT-CT will focus on profitable Club Tourism and the corporate business in the Tokyo area as core businesses and drastically shift the individual and group leisure travel business to online distribution. Through the reform, KNT-CT aims to cut one-third of all 7,000 employees by the end of March 2025.
Termination of package tour brand 'Mate' and 'Holiday'
The business structure reform includes termination of package tour brands of ‘Mate’ for domestic travel and ‘Holiday’ for overseas travel by the end of March 2021. KNT-CT, instead, will shift its individual leisure travel business to dynamic package on its online platform by starting selling dynamic package products for domestic travel in October 2020 and for overseas travel in April 2021.
In accordance with the business shift, two-thirds of 138 retail stores for individual consumers nationwide will be closed by the end of March 2022, and customer services on the online platform will be enlarged.
The group travel business will be consolidated into specialty business fields, such as education trip or local communication business, and Kinki Nippon Tourist Corporate Business and KNT-CT Global Travel will be integrated to strengthen the MICE business in April 2021. Twenty-five group travel offices will be closed by the end of March 2022.
Amid its selection and concentration approach, KNT-CT will further enhance the Club Tourism business with about 7 million members by launching ‘New Club 1000 project,’ in which hobby or preference-based communities and new local clubs in tie-ups with local DMOs will be created. Through the efforts, Club Tourism aims to acquire 1 million paid members as a new revenue sources.
A large-scale job cut
KNT-CT has decided to cut one-third of all 7,000 employees by the end of March 2025 through regular retirements, early retirements or reduction of recruitments. A cost-reduction goal is about 20 billion JPY by the end of FY2022, adding reductions of executive compensation, retail stores, offices and paper tour pamphlets.
For the full year of FY2020 ended March 31 2021, KNT-CT has forecasted operating loss of 25 billion JPY and net loss of 17 billion JPY.