Yoshiharu Hoshino describes his experience taking over the reins of his century-old family business in 1991 as a “hard landing.”
The fourth-generation hotelier and chief executive officer of Hoshino Resorts Inc., one of Japan’s largest and most well-known operators of luxury hotels and ryokan (traditional inns), inherited his family-run hot spring inn in Karuizawa, Nagano Prefecture, as the nation was reeling from a tectonic economic shift triggered by the collapse of the bubble economy.
“During my father’s time, workers were easy to hire, it was a matter of offering a decent salary,” Hoshino said during a recent interview with The Japan Times.
“But when I took over, the situation had changed drastically — people weren’t interested in working at ryokan and resorts,” he said. “Guests would arrive, but we weren’t able to find people to clean the rooms.”
Hoshino’s struggle in hiring and retaining staff during the recession forced him to focus his efforts on enhancing loyalty and led to the development of a management method centered on multitasking and employee autonomy.
Coupled with his knack for infusing a unique blend of Japanese aesthetics and contemporary design into his projects, the formula proved a success. Today, Hoshino’s company operates 35 resorts across Japan and two more overseas, run by over 2,000 employees. One of his hotels appeared in the news last week when Prime Minister Shinzo Abe invited Ivanka Trump, the daughter of U.S. President Donald Trump, to dinner at Hoshinoya Tokyo, a luxury contemporary ryokan in the Otemachi financial district.
Now Hoshino is taking his own style of hospitality to the next level with a new chain of urban hotels amid an unprecedented tourism boom.
Last month Hoshino Resorts announced the launch of the company’s fourth brand, OMO, and said two new hotels under the brand will be opening next spring in Hokkaido and Tokyo, with more to come.
To date, Hoshino Resorts has operated high-end hotels and ryokan in rural, scenic locations under its flagship Hoshinoya brand, the hot-spring-focused Kai brand, and the western resort-type Risonare brand.
Unlike its existing brands, OMO will primarily operate in cities, targeting travelers looking for budget hotels. Hoshino said the idea for OMO emerged back in 2005 while he was redeveloping a ryokan at a hot-spring resort.
“We encountered a situation where ryokan were losing customers despite a growing inflow of tourists in the area,” he said.
“What was happening was that tourists were using nearby business hotels instead of staying in ryokan,” he said. “We couldn’t afford to neglect that trend.”
According to the Japan Tourism Agency, around 60 percent of hotel guests last year — both Japanese and foreign — stayed in business or budget hotels. That figure is expected to increase as the number of tourists grows. Japan saw 24 million visitors last year, and the government wants that to hit 40 million by 2020, when Tokyo will host the Olympic Games.
For its first OMO project, Hoshino Resorts has been refurbishing the Asahikawa Grand Hotel in Hokkaido that was acquired last year by its publicly traded real estate investment trust, Hoshino Resorts REIT Inc.
As with any Hoshino Resort endeavor, the local staff took the initiative, setting up a committee to review the inn’s operations and coming up with a new raison d’etre. Hoshino said rather than competing with local venues for entertainment, the new hotel plans to provide the best of both worlds by actively introducing guests to eateries, bars and other attractions in the area while providing quality in-house services.
The Asahikawa Grand has since been renamed OMO7, with the number reflecting the grade of the accommodation based on a 10-point scale. Another hotel called OMO5 will open around the same time next spring near Otsuka Station in Tokyo, while another is planned near Shin-Imamiya Station in downtown Osaka.
“Eventually I would like to see an OMO hotel in every city in Japan featured in travel guides,” Hoshino said.
Over the years, Hoshino Resorts has gained wide recognition as an expert resort operator, thanks in part to its innovative organizational and human resources structure.
The company is known for its multitasking employees, who rotate shifts to handle all four operational duties: reception desk, kitchen, restaurant service and housekeeping. Employees are also tasked with creating new services unique to the facility and its locale. Customer satisfaction surveys are carefully analyzed to develop proposals to improve service. Hoshino Resorts says the approach helps keep employees in tune with customers’ needs while enriching job satisfaction and enhancing motivation.
The company also emphasizes maintaining a flat organizational structure, with managerial positions limited to heads of resorts and so-called unit directors in charge of groups responsible for overseeing various service areas. When a managerial post opens, employees can nominate themselves for the position and are selected based on their presentations at groupwide conferences.
Its distinct approach is evident in employee email addresses. Unlike typical corporate email addresses that follow the first name, last name format, staff at Hoshino Resorts are encouraged to incorporate a favorite word or phrase that characterize themselves.
While Hoshino is known for his progressive management style, he comes from a family steeped in tradition.
The 57-year-old recalls growing up in a house adjacent to his family’s hot spring inn in Karuizawa, a scenic mountain resort around 70 minutes from Tokyo by bullet train. As a child, he would bathe in the onsen (hot spring) and was keenly aware that someday he would be responsible for running the ryokan, which first opened its doors in 1914. His grandparents, he said, frequently introduced the young Hoshino to others as yondaime, or the fourth-generation heir to the business.
After graduating from Keio University in Tokyo, Hoshino flew to the United States to study at Cornell University’s School of Hotel Administration. He liked reading works by leadership expert Ken Blanchard, whom he credits for inspiring Hoshino Resorts’ flat management structure.
Following numerous quarrels with his father over how to run the ryokan, Hoshino officially took over the inn when he was 31. His first task was restructuring its operation and improving creditworthiness. He renamed the company Hoshino Resorts Inc. in 1995 to make it sound more attractive to job seekers.
“For the first 10 years I stayed in Karuizawa and focused on recruiting and rebuilding our business,” he said.
His turning point came in 2001, when he agreed to revive a struggling members-only resort in Yamanashi Prefecture designed by Italian architect Mario Bellini.
Hoshino Resorts began by transforming the venue — which it later renamed Risonare Yatsugatake — from an adult-centered resort to one open to families. It lined the main street running through it with restaurants, cafes and craft shops. It also introduced locally made wine — Yamanashi and neighboring Nagano are major regions for wine production — and marketed itself as Japan’s first “wine resort.” The project was a hit, and the resort returned to the black in a few years.
Similar success stories followed in Fukushima Prefecture in 2003 and Hokkaido 2004. And in 2005, Hoshino Resorts redeveloped Hoshino’s family inn and opened Hoshinoya Karuizawa, the first of its flagship Hoshinoya luxury ryokan.
Hoshino’s track record for rejuvenating resorts drew the attention of Goldman Sachs in 2005, which asked the company to handle its ryokan investments in Japan. That freed up Hoshino Resorts to focus solely on running resorts and spawned the idea for Kai, a series of boutique hot spring inns united under a single brand.
Since then, Hoshino Resorts has expanded rapidly.
It now operates six Hoshinoya high-end resorts, including in Kyoto and Okinawa. Kai meanwhile has grown to 14 locations in Japan. Hoshino eventually wants to see the brand grow to around 30. There are also three Risonare hotels and several other inns that don’t belong to any of the three main brands.
Looking ahead, Hoshino wants to introduce the rest of the world to his take on Japanese hospitality.
The company operates two hotels outside Japan, one in Tahiti and the other, Hoshinoya Bali, on the Indonesian resort island.
While acknowledging that operating overseas could be costly and require different know-how, Hoshino emphasized the need to establish footholds for global expansion.
“We will never be able to go out if we don’t get moving now,” he said.
One country he would like to leave a mark on is the U.S.
“It has a giant market and many understand Japanese culture. I hope we can establish an operational base in America one day,” he said.
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The evolution of a century-old business
1914: Hot spring ryokan opens in Karuizawa, Nagano Prefecture.
1991: Yoshiharu Hoshino takes over the inn from his father.
1995: Hoshino renames the company Hoshino Resorts Inc.
2001: Hoshino Resorts begins turnaround of struggling hotel in Yamanashi Prefecture.
2005: Hoshino Resorts rebuilds family inn and opens the modern Hoshinoya Karuizawa.
2013: Hoshino Resorts REIT Inc. goes public on Tokyo Stock Exchange.
2016: Hoshinoya Tokyo opens in Tokyo’s Otemachi district.
2017: Hoshino Resorts launches OMO chain of budget hotels.
Since taking over his family’s century-old ryokan (traditional inn) in 1991, Yoshiharu Hoshino has succeeded in transforming the business into one of Japan’s largest operators of luxury resorts. The Japan Times asked Hoshino about what he does in his free time, how he manages his health and his thoughts on succession.
What are your hobbies?
Skiing. I aim to ski 60 days a year. Last year it was 62 days. During summer I may fly to New Zealand for the slopes. I go ahead and book 60 days in my calendar in advance, and work on the remaining days.
I also read a lot of business books. It’s business or skiing. When there’s a new theory or when an academic I follow — like Ken Blanchard or Michael Porter — releases a new book, I try to take a look.
Do you follow any health regimen?
I only eat one meal a day. Only dinner. I’m the fourth-generation heir to my family business, and none of my predecessors lived to the age of 80. They all died of the same cause: heart attacks caused by hardening of the arteries. They all experienced a rise in cholesterol levels after turning 40. I am no exception. The first and second generations couldn’t quite grasp what caused the problem, but it became clearer during my father’s time. He lived until 79.
Health checks I took after turning 40 indicated higher cholesterol levels, so I began skipping breakfast to lower my calorie intake. That caused a temporary fall in cholesterol levels, but it soon began to climb again, so I began eating late lunches so that I eat less for dinner. Eventually my lunch and dinner blended into a single meal.
Do you have any thoughts on succession?
It does cross my mind. I have a 16-year-old boy who’s going through a rather rebellious period. Like it or not, I think he will have to be involved in the business in some form. The scale of the business, however, has expanded significantly since I took over from my father. That means our human resources are very important, and we need to build a system where our business and culture can be passed on whether someone from the family takes over or not.