Business

Hospitality king Tomoyasu Kato sees small-scale boutique resorts as the next big thing

by Alex Martin

Staff Writer

Tomoyasu Kato single-handedly transformed an ailing family business into a sprawling empire of hotels, spas, entertainment venues and a popular chain of udon noodle restaurants. Now he has set his sights on attracting affluent overseas travelers to a series of small-scale luxury resorts he plans to build in various scenic locales across the nation.

Kato, the president and chief executive officer of Kato Pleasure Group, said the rapid growth in inbound travelers presents ample opportunity to lure wealthy foreigners to the Fufu brand of boutique hotels the company is producing in partnership with real estate firm Hulic Co.

By 2020, when Tokyo will be hosting the Olympic Games, he plans to open six new Fufu-brand venues in popular destinations such as Kyoto and Nara.

“Our aim is to produce a Japanese resort that can compete in the global market,” he told The Japan Times a recent interview. Although Japan has seen unprecedented growth in foreign visitors, it has yet to capitalize on accommodating well-heeled tourists, who prefer international hotel brands like the Ritz Carlton and Four Seasons, he said.

Kato Pleasure already operates several small luxury resorts, one being the Atami Fufu, a high-end ryokan (traditional Japanese inn) located 10 minutes from Atami Station in Shizuoka Prefecture. Equipped with private hot-spring baths, the spacious 26-room inn doesn’t come cheap with rooms charging upward of ¥40,000 per person. But Kato said the high occupancy rate indicates the formula works. “Eventually I’d like to see around 20 percent of our guests from overseas,” he said.

Another Fufu hotel is slated to open in 2018 near Lake Kawaguchi, with views looking out over Mr. Fuji. Renowned architect Kengo Kuma is collaborating to design Nara Fufu scheduled to open its doors in 2019 in the old capital, while two more will be up and running the same year in Kyoto and in Nikko, in Tochigi Prefecture. In 2020, Gora Fufu is slated to open in the Hakone hot spring resort in Tokyo’s neighboring Kanagawa Prefecture.

Japan is seeing a hotel construction rush amid an accommodation crunch brought by booming tourism. The nation hosted 13. 4 million visitors in 2014, 19.7 million in 2015 and 24 million last year. Prime Minister Shinzo Abe wants to see that figure hit 40 million by 2020.

Kato, 52, is hardly alone in trying to seize the opportunity.

Hoshino Resorts Inc., well-known for its luxury hotels and ryokan, recently announced its entry into the urban hotel market with a new brand targeting tourists. It is also looking to expand the number of its Kai brand high-end ryokan to 30 over the next few years.

Real estate developer Mori Trust Co. is cooperating with hotel operator Marriott International Inc. to open luxury hotels in resort destinations.

The government passed a new law in June giving the green light to Airbnb-type short-term private lodgings, which will bring a roster of new players interested in grabbing a slice of the sharing-economy pie once the law goes into effect in June next year.

When Kato took over his father’s business at the age of 22, things were bleak.

In the 80s his family ran a clothing shop in Osaka. Kato’s father had also ventured into the hospitality business, operating so-called love hotels and owning a record label, but his failing health led him to go into some ill-advised ventures that turned sour. By the time the young Kato took over, he had to shoulder a load of debt.

He began by sorting out the company’s finances and salvaging existing businesses. He expanded the love hotel business, eventually spinning off the enterprise into a separate company. Kato also branched out into developing and operating resort hotels and hot-spring ryokans.

His first major success, however, came with udon, the thick noodle that’s typically served in soup.

Kato’s father hailed from Kagawa Prefecture, an udon mecca, and had opened a Sanuki udon restaurant in Osaka. That style is popular in the Shikoku region, but the shop failed to distinguish itself within the crowded and intensely competitive culinary world of noodles specialists in Japan. Kato set out to change that by combining the Sanuki-style udon with Osaka-style dashi stock, refining the interior of the shop and improving the quality of service. The restaurant, called TsuruTonTan, was a hit and expanded to other cities in Japan, making its U.S. debut last year with an outpost in Union Square, New York.

Kato’s business has now grown to log an annual revenue of around ¥22 billion, according to the company, and he prides himself for the know-how he and his staff has accumulated over the years from overseeing various enterprises — something he thinks could give him an edge over competitors.

“I think it’s quite rare to find a company that handles such a wide-variety of businesses,” he said.