1. Nick Hentschel, Vice President, Business Development, AmericanTours International, LLC September 9, 2015

2. Key Provisions of the Law  Article 1. This Law is enacted for the protection of the legitimate rights and interests of tourists and tour operators, to regulate the tourism market order, to promote rational use of tourism resources, and to promote the sustainable and healthy development of the tourism industry.  Article 2. This law is applicable to tour, vacation, leisure and other forms of tourism activities within the territory of the People’s Republic of China or if the activities are outside but organized in the territory of People’s Republic of China. While many provisions impact only domestic tourism in China, other key provisions impact US tour operators. While many provisions impact only domestic tourism in China, other key provisions impact US tour operators.

3. Key Provisions of the Law provide safe, healthy, hygienic travel services for tourists.  Article 6. The government of People’s Republic of China shall establish and improve tourism service standards and market rules. Tour operators should follow honest operation, fair competition, social responsibility, and provide safe, healthy, hygienic travel services for tourists.  Article 9. Chinese tourists have the right to choose tourism products and services, and the right to refuse the compulsory transactions of tourism operators. Meaning of compulsory transactions? Meaning of compulsory transactions?  Article 34. Travel agencies organizing tourism activities should order products and services from qualified suppliers. What constitutes a qualified supplier? What constitutes a qualified supplier?

4. Key Provisions of the Law  Article 35. Travel agencies shall not organize a tour at unreasonably low prices to entice tourists, and charge additional fees for payable items or obtain kickbacks and other improper benefits through ways such as arranging shopping or other tourism activities.

5. Article 35 Clarified  Written contract between Chinese Tour Operator and passengers required  Operators prohibited from organizing tourism activities that: Are sold at unreasonably low prices Are sold at unreasonably low prices Lure tourists Lure tourists Receive illegitimate gains such as rebates Receive illegitimate gains such as rebates Influence the itinerary of other tourists Influence the itinerary of other tourists

6. Article 35 Clarified  No unreasonably low prices: A tour price is deemed to be unreasonably low if the price is lower than the service cost or lower than an price generally accepted by the industry A tour price is deemed to be unreasonably low if the price is lower than the service cost or lower than an price generally accepted by the industry  No luring tourists: Travel agencies that hide the actual tour itinerary, providing false information in order to sell the tour Travel agencies that hide the actual tour itinerary, providing false information in order to sell the tour

7. Article 35 Clarified  No illegitimate gains: When travel agencies receive rebates, commissions, and other rewards from vendors by conducting unfair competition or forcing tourists to pay When travel agencies receive rebates, commissions, and other rewards from vendors by conducting unfair competition or forcing tourists to pay  No influencing the itinerary for other tourists: Meaning that reasonable alternate arrangements need to be made for members of a tour group that do not want to participate in shopping or optional tours Meaning that reasonable alternate arrangements need to be made for members of a tour group that do not want to participate in shopping or optional tours

8. Enforcement of Article 35  In cases where the tour operator or agent violates the regulations within Article 35, tourists have the right seek a refund for the cost of the additional fees paid for the tourism activities within 30 days after the end of the travel

9. Key Provisions of the Law  Article 69. Chinese tour operators should fulfill their obligations in accordance with the agreement of the package tour contract and shall not alter travel arrangements without the consent of tourists. In cases where Chinese tour operators entrust the operation of a tour to a receptive tour operator with the appropriate qualifications in a destination, the Chinese and receptive tour operators shall enter into a written contract stipulating the rights and obligations of the Chinese tourist In cases where Chinese tour operators entrust the operation of a tour to a receptive tour operator with the appropriate qualifications in a destination, the Chinese and receptive tour operators shall enter into a written contract stipulating the rights and obligations of the Chinese tourist Chinese tour operators shall pay no less than the cost of the receptive service to the entrusted tour operator in the destination and receptive tour operators shall provide services in accordance with the tour contract Chinese tour operators shall pay no less than the cost of the receptive service to the entrusted tour operator in the destination and receptive tour operators shall provide services in accordance with the tour contract

10. Enforcement of the Law  According to CNTA, in the first half of 2015, there have been 9198 cases of complaints / reports of illegal business activities, with over 20,000 passenger involved  40% of the reported cases related to overseas travel  7259 cases have been investigated and settled  Total compensation provided for the overseas cases equaled 5.35M RMB

11. Enforcement of the Law CNTA has issued public reports twice in 2015  Over busy Chinese New Year travel period, there were 5490 complaints that warranted an investigation 11 travel agencies had business licenses revoked, 34 agencies were required to suspend operations pending rectification 11 travel agencies had business licenses revoked, 34 agencies were required to suspend operations pending rectification  Over the Labor Day travel period in May, CNTA announced 800 complaint cases were received  Two of the cases were met with heavy punishment One of the cases gained media recognition internationally, where a tour guide in Yunnan province berated passengers for not spending enough on shopping One of the cases gained media recognition internationally, where a tour guide in Yunnan province berated passengers for not spending enough on shopping The tour guide’s license was revoked, the travel agency’s business license was suspended for one month, and the owner was fined 50,000 RMB The tour guide’s license was revoked, the travel agency’s business license was suspended for one month, and the owner was fined 50,000 RMB

12. Impact on the Industry  From ATI’s perspective, our operation of Mandarin language tours has not been been heavily impacted This is because ATI never engaged in the practices that the law protects against This is because ATI never engaged in the practices that the law protects against  Cautious approach from clients in China regarding the sale of optional tours Example of Universal Studios Example of Universal Studios

13. Impact on the Industry  Protective approach, selling optional tours prior to departure from China Intended to protect against US suppliers or their tour leaders selling optional tours after arrival in an aggressive or even coercive manner Intended to protect against US suppliers or their tour leaders selling optional tours after arrival in an aggressive or even coercive manner By selling before departure in China, Chinese operators / agents are better able to control the passenger experience By selling before departure in China, Chinese operators / agents are better able to control the passenger experience However, this does not mean that optional tours are not being sold in the US, or that this is not still being done in a deceptive and coercive way However, this does not mean that optional tours are not being sold in the US, or that this is not still being done in a deceptive and coercive way

14. Continued Need for Improvement, Self-regulation by our Industry  Ensuring customers get what they believe have paid for Experiencing the essential and authentic aspects of a given destination Experiencing the essential and authentic aspects of a given destination ○ For example, staying far outside of Los Angeles then have to pay extra for a city tour to experience Hollywood, Beverly Hills, and the beach We still see many very basic tours being sold at unreasonably low prices, where profits are clearly being made on the back end through the sale of optional tours that are not really optional We still see many very basic tours being sold at unreasonably low prices, where profits are clearly being made on the back end through the sale of optional tours that are not really optional

15. Continued Need for Improvement, Self-regulation by our Industry  These kinds of deceptive practices violate China’s tourism law, likely US consumer protection laws, as well as general human decency  These practices are not sustainable  If the Chinese Government remains dedicated to enforcing the tourism law, fining violators and suspending their business operations, Chinese operators will need to carefully select their suppliers overseas  As the Chinese government makes the names of violators public, which we understand will be the case with a black list being published by CNTA later this year, Chinese consumers will be better able make decisions on who to book their travel through

16. Continued Need for Improvement, Self-regulation by our Industry  Consistent enforcement by the Chinese Government combined with changes in consumer behavior based on increased transparency and better information, will make deceptive and dishonest practices by tour operators less accepted, and less common  As a service industry that should be dedicated to the passenger experience, by bringing visitors to the USA, we should be building a bridge between our two nations  Following the “Rules of the Road” set out by NTA is not only good for building this bridge, building the Brand USA in China, it is also good for business in the long run

17. Thank you. Any questions? September 9, 2015 Nick Hentschel, Vice President, Business Development, AmericanTours International, LLC