• Kyodo

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The prestigious Suginoi Hotel at the hot spring resort of Beppu, Oita Prefecture, said Thursday it would seek court protection from creditors to keep its doors open in the face of imminent bankruptcy.

The move deals a psychological blow to the Beppu tourism community, which has been watching business steadily decline amid the protracted economic slump.

The Oita fixture, saddled with some 14 billion yen in debt, had been attempting to restructure itself and has contacted several firms interested in supporting its rehabilitation.

The decline in patronage has been exacerbated by the currently harsh operating conditions for the hotel industry, and the company’s cumulative losses now total around 4 billion yen. Some of the losses have been attributed to major capital investments for its large indoor swimming pool and other expensive projects.

In January, the company announced a five-year restructuring plan featuring the elimination of entertainment shows, one of its biggest loss-making ventures. It is also approaching its creditor banks for waived or reduced interest payments on outstanding and fresh loans. The hotel, operated by about 300 employees, will remain open during the rehabilitation, it said.

The 574-room facility overlooking Beppu Bay from Mount Takasaki is one of the oldest in the region, dating back to 1938 when a “ryokan” inn called Suginoi was first established. Renamed Suginoi Hotel in 1965, it more recently served as the venue for the 1997 Japan-South Korea summit.

The number of visitors to Beppu has been steadily declining since reaching a peak of 13.1 million in 1976.

But recent streamlining efforts by Japanese companies have made the situation worse by reducing company-organized trips for employees, especially to well-known hot springs resorts like Beppu. The number of annual visitors is now down to barely 10 million.

“I am not surprised (that the hotel is seeking court protection) because we have been hearing rumors about it,” a customer in Suginoi’s lobby said Thursday.

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