The company raised US$100m when it fl oated on the Tokyo Stock Exchange last year
BUSINESS SHAKE- UP For Hoshino, however, modernising the onsen-resort industry in Japan involves more than renovating the physical structures and overhauling the customer experience, crucial though these are. Ensuring that the industry not only survives but thrives in a competitive global marketplace also requires a complete shake-up of the underlying business practices. The company measures the success of the resorts in three key areas – customer satis- faction, operating profi t and environmental burden – and numbers are taken seriously. The goal for operating profi t is 20 per cent, while customer satisfaction is based on an internal assessment. For environmental burden, the aim is to reach 24.3 points (out of a maximum of 25), as determined by the Green Purchasing Network – a Tokyo-based organisation that measures eco-friendly operations. While none of the resorts have reached all three targets simultaneously yet, “the vision of [achieving this] is upheld as the benchmark of all managerial decisions,” according to the Hoshino resort website. Included in this is the consistent applica- tion of three operational strategies. The fi rst
Spa Business 1 2014 ©Cybertrek 2014
is the use of regular surveys to assess and raise customer satisfaction levels, while empower- ing staff to make autonomous changes. The second is the optimisation of reservation channels, no longer depending solely on customer phone calls and local travel agencies, but also utilising the resorts’ websites, online travel providers and foreign agencies. The third strategy is the dramatic improvement of labour productivity across the group, by improving working conditions, upskilling staff and ending the industry’s traditional reliance on temporary workers and external contracts. Having developed a new and viable
business model for the onsen resort industry, Hoshino last year took this to the next stage by creating a Real Estate Investment Trust (REIT) – Hoshino Resorts REIT Inc – and listing it on the Tokyo Stock Exchange. With a clear aim of enabling investment in Hoshino resorts while also delivering stable profi ts, the REIT raised JPY10.2bn (US$100m, €73m, £62m) in its initial public offering. It has since gone on to buy six of Hoshino Resorts Inc’s owned resorts for JPY15bn (US$147m, €108m, £90m), with a view to eventually acquiring all of its branded properties.
Next year is another big year for Hoshino. As well as continuing to roll out the Kai brand, the company will open not only Hoshinoya Fuji but also its fi rst overseas resort, Hoshinoya Bali, which will be a departure from its typical model. “Just as ryokans stay true to Japanese methods rather than copying their western counterparts, our resort in Bali will incorporate traditions that the Balinese take pride in,” says Hoshino. Although he won’t reveal details, Hoshino
confirms that the company is looking at opening resorts in other areas of Asia. Meanwhile, in 2016, the company will open its fi rst city resort in Tokyo, with plans for more in other major cities of the world. As for why it is so important for the company to have an urban presence, Hoshino explains: “Hospitality is a major part of Japanese culture. In big cities the world over, Japanese products and services stand out. If someone is considering a new car, they have the option of a Japanese car; if someone is considering what to eat for dinner, they have the option of Japanese food. In the same way, we want to give people considering resort lodging a Japanese choice.” ●
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