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As foreign hoteliers invade the Tokyo market, the prestigious Imperial Hotel Ltd. is busy planning a counteroffensive.

And it finds itself in a good position to strike, having recently completed a four-year management restructuring plan.

Isato Yoshimura, the hotel’s president, told The Japan Times in a recent interview that profitability has improved to the point where the hotel can afford annual investments of 4 billion yen.

As the hotel considers new ways of reinforcing the quality of both facilities and services, such modern amenities as computer networks and television sets with thin liquid crystal displays may find their way into the 696 rooms of the hotel’s main complex.

“Comfort, above all, is the most important factor,” Yoshimura said.

Interior renovation is nothing new for the Imperial Hotel. Its main building was constructed in 1970, two years after a complex, designed by renowned American architect Frank Lloyd Wright, was demolished.

Yoshimura acknowledges that the business environment remains harsh. But it is about to become more competitive.

Over the next several years, a number of U.S. and European hotel chains will head for central Tokyo, attracted by falling land prices and a lack of big-name non-Japanese competitors.

For example, Starwood Hotels & Resorts Worldwide Inc. of the U.S., which operates the Westin and Sheraton brand names in Japan, has decided to launch a St. Regis hotel in the Shiodome redevelopment area in 2004 in cooperation with major Japanese developer Mori Trust Corp.

Other hotels expected to be erected by 2006 include the Peninsula in Hibiya — right in the Imperial’s neighborhood — the Mandarin Oriental in Nihonbashi, the Grand Hyatt in Roppongi and the Four Seasons in Yaesu.

Some of these will be built alongside commercial buildings or with amusement facilities to make the most of visitors’ wallets.

“These projects will create demand,” Yoshimura said. “So we are focusing on how we can absorb some of that increase.”

Not so long ago, the Japanese hotel industry was dominated by the so-called Big Three — the Imperial Hotel, Hotel Okura, and Hotel New Otani. But the arrival in recent years of the Westin, Four Seasons and Park Hyatt has shifted the balance of power and led industry experts to dub these inns the New Big Three.

As differentiation and branding become a big part of marketing, the Imperial may have a built-in advantage.

Yoshimura said his hotel is responsible for maintaining the “stately” image it has established over the past century. The 112-year-old hotel has long accommodated top leaders from various countries and international institutions, as well as foreign celebrities ranging from Albert Einstein to Marilyn Monroe.

Under the four-year business plan that was completed at the end of March, the Imperial Hotel cut deep into personnel expenses, while trying not to damage the quality of services, Yoshimura said.

First, the hotel outsourced services provided by employees who do not directly attend to guests, such as dish washers and cleaning staff. Then it introduced a salary system under which employees can apply for posts at certain locations and with lower salaries to avoid having to move to other group hotels.

The hotel posted a pretax group profit of 4.29 billion yen for the business year that ended March 31, 2001, improving from 2.75 billion yen a year earlier and 1.53 billion yen for the year to March 31, 1999. It forecasts a pretax group profit of 4 billion yen for the just-ended business year.

As for annual sales, the hotel estimates 60.4 billion yen for the most recent fiscal year, compare with 60.95 billion yen in sales a year earlier. The hotel rang up sales slightly below 60 billion yen for the two preceding years.

The dropoff in the 2001 business year is mostly due to the lingering effects of the Sept. 11 terrorist attacks in New York and on the Pentagon, Yoshimura said. The incidents cut the number of foreign guests, particularly from the United States, by about 5,000 from October to December.

The lost sales were partly covered by a nearly equal increase in occupancy from domestic businessmen and tourists who visited theaters nearby, he said. These guests paid for group packages, which offer lower rates.

As for the World Cup soccer finals scheduled for June, Yoshimura said the hotel has already received “quite a few” reservations, which will likely push up sales for June alone by 10 percent over the previous year.

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