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CEO sees Hoshino Resorts REIT as his ticket to worldwide expansion

Bloomberg

Hoshino Resort Co., which has been operating luxury hotels for 109 years, wants to be as well known as Toyota Motor Corp. internationally, and President Yoshiharu Hoshino said Friday’s real estate investment trust debut is a start.

“When I walk on the streets of New York or London, I see Toyota, Nissan and Honda cars driving around, but I don’t spot any Japanese hotels,” Hoshino, 53, said in Tokyo. “It’s my dream to become one of the choices in the international tourism business.”

Hoshino Resorts REIT Inc. will invest in Hoshino’s three hotel brands, which are currently located only in Japan, after raising ¥10.2 billion in an initial public offering. The REIT will buy six hotels for ¥15 billion from the company, Hoshino said.

The REIT started trading at ¥570,000 on the Tokyo Stock Exchange, 12 percent higher than the ¥510,000 IPO price.

Hoshino said that shifting ownership of the hotels to the REIT will allow him to focus on managing the properties as the company expands, including opening hotels overseas. Hoshino Resort will use the IPO proceeds to upgrade its computer system, strengthen its brand and improve hiring, the president said.

Hoshino Resort manages 30 hotels across Japan under its Hoshinoya, Kai and Resonare brands. The company is based in Karuizawa, Nagano Prefecture, known as a summer retreat for Tokyoites similar to the Hamptons on Long Island in New York.

Hoshino said he wants to work with hotel owners and investors to open hotels abroad. The company plans to open its first resort outside of Japan in Bali next year and is scheduled to open its first hotel in a city in 2016, in Tokyo’s Otemachi business district, said Hoshino, who inherited the business from his father in 1991. Both will be under the Hoshinoya brand.

The REIT will eventually own assets including Hoshinoya, the high-end brand that charges as much as ¥120,000 per person a night, the Kai brand that operates Japanese-style hot-spring inns known as “ryokan,” and Resonare resorts that target families, Hoshino said.

The REIT is targeting investors seeking to profit from the growth of Japan’s tourism market, Hoshino said.

The government has set a target to attract 18 million visitors to Japan a year by 2016 from 8.37 million in 2012. The yen’s 12 percent decline this year versus the dollar has helped boost the number of visitors to Japan by 31 percent in May, according to the Japan National Tourism Organization.

“The tourism industry is one of the few industries that is growing in Japan,” Hoshino said. “It’s very important to create such opportunity, so more and more people will have interest in this industry.”

The hotel market accounted for about 70 percent of the ¥22.4 trillion in total spending on tourism in 2011, according to the Japan Tourism Agency. The average daily rate for hotels in Tokyo rose 7.6 percent to ¥15,751 in May from a year earlier, according to data compiled by STR Global, a London-based hotel industry researcher.

The Hoshino group, which has 3,070 employees, plans to expand its Kai brand by acquiring ryokan struggling to survive, Hoshino said. The company plans to increase the number of Kai ryokan to 12 next year from nine and has a goal of boosting the total to 30 “as soon as possible,” he said.

Hoshino group-managed hotels generated about ¥32 billion in revenue last year, he said.

“My goal is to provide a Japanese culture-oriented hospitality company,” said Hoshino. “Japanese culture is well known for its friendliness and hospitality. Wouldn’t it be great to utilize our strength?”

  • tony virili

    A successful IPO will encourage others who can offer a unique Japanese touch in order to differentiate themselves from the major international chains which increasingly look and feel the same.