CEO Interview: Hoshino Resorts Wants to Introduce the World to Japanese Hospitality

Yoshiharu Hoshino knows he’s got something special with his family business, and he wants the rest of the world to experience it, too.

The CEO of Hoshino Resorts wants to introduce the rest of the world to his company’s unique take on the traditional Japanese ryokan, or inn, as best evidenced by the company’s ultra-luxe Hoshinoya brand.

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That brand opened its first location in Tokyo last year, after having established itself throughout Japan for the past few years, and Hoshino hopes to expand the brand on a global scale going forward.

What makes the Hoshinoya brand so special is its contemporary take on the traditional ryokan: sleeker and much more modern than what you’d find in most ryokans, but still deeply connected to Japanese culture and to the nature that surrounds the property. It’s a formula Hoshino thinks he can successfully apply to other parts of the world.

In addition to the Hoshinoya brand, Hoshino Resorts also has two other brands — Kai and Risonare. And right now, the company operates two hotels outside of Japan, a property in Bali and another in Tahiti.

And as Hoshino focuses on growing his company worldwide, he’s also been outspoken about a number of issues impacting the hospitality industry in his home country: namely the high demand for accommodations in Tokyo, and the pending legalization of short-term rentals.

Skift recently caught up with Hoshino to ask him about his growth plans, as well as his thoughts on short-term rental regulation in Japan.

Yoshiharu Hoshino, CEO of Hoshino Resorts

Skift: For those of us who aren’t so familiar with Hoshino Resorts, can you tell us more about the company and the properties you have?

Yoshiharu Hoshino: This is a family business for more than 100 years. Actually, this year is our 103rd year in operation. I’m a fourth-generation hotelier in this business, and my brother and I took over this operation in 1991. The year 1991 was a very difficult time for Japan, because everything started going down. The 1980s were very good; the 1990s was not so prosperous a decade for us.

So, instead of developing new hotels, we decided to concentrate on the operation of the hotels, or traditional Japanese inns. As the depression got deeper and deeper, what we did is, we took over many hotels and Japanese traditional ryokan owned by other people, or purchased by investors in ’90s and early 2000s. That’s why we now operate 37 resorts — 35 in Japan and two outside of Japan. Many of them are very traditional Japanese ryokans, and we now have become an operator of hotels and resorts in Japan.

Skift: Hoshino is becoming especially well-known for its Hoshinoya brand of contemporary-style ryokans. What do you think is driving the demand for this brand, or the type of very high-end, luxury experience that it offers?

Hoshino: We’re not only focused on the Hoshinoya brand, but we pay special attention when we are developing a Hoshinoya property. We always think what the essence of the traveling, or the essence of going on the vacation is for our guests, and the basic needs of taking one week off or going to the vacation is that they need an experience that’s different from their routine lifestyles.

We’re trying to transport our guests from a routine daily environment to a very special different environment, so that the experience of staying at a resort is very special and relaxing and comfortable for our guests, because it’s so different from their routine lifestyle.

Two elements are very, very important when we are developing a Hoshinoya. One is, we are very careful when we choose a site. The environment is very important. The hotel and resort itself, they are not so big facilities, but the environment surrounding our facilities is very large, so that the guest can feel that they are very remote from their daily life or cities or towns, and that is very important for Hoshinoya.

At the same time, we are asking our staff to always provide a different food, activities, and experience, to actually create a different experience, as well as different activities in different seasons. Feeling the different seasons is very important in traveling in Japan, because we have a very hot summer and very cold, but very beautiful winter and fall and spring and so on. Traditionally, the resort experience for Japanese people is driven by a desire to go there to experience the different seasons. Food ingredients are different and sceneries are different, so our staff is specialized in creating a different experience in different seasons, and that is very important for the Hoshinoya stay.

Skift: Tokyo is noted for having a scarcity of hotels and I know you just recently opened the Hoshinoya Tokyo there. Do you think that the local government could do more to encourage more hotels, or what do you think would help with adding enough hotels to have the capacity that’s needed, you think, in Tokyo?

Hoshino: As you said, in the Tokyo situation, it is true that we do have a huge demand right now coming to Tokyo, and this will probably continue, probably until 2020 when we sponsor Summer Olympics. But I believe there are so many developments going on in Tokyo to create more hotels, so this situation will go away pretty soon.

Plus, I think this is related to short-term rentals. The government is probably going to legalize, as far as I know, to pass a new law to deregulate the industry in January 2018, next year. This will somehow allow the short-term rentals to be legal. They’re trying to define some small conditions and so on, but I think short-term rentals will be legalized in Japan next year. So, this will help, of course, to create more capacity for the visitors to Tokyo, especially when we are approaching 2020. We are expecting more demand, so the government is trying their best actually to accommodate all the visitors coming to Tokyo.

Skift: How do you feel about the short-term rentals, personally? Do you see it as a threat to your business? What’s your stance?

Hoshino: My view is, I’m in Tokyo, and I’m the only person in the hotel industry in Japan that is supporting the legalization of the short-term rentals in Japan. Many hotel operators are against the idea because they feel that short-term rentals will take their demand away from there. But my position is that short-term rentals are offering a totally different experience, and it is very important for the large cities in Japan or other destinations in Japan to offer variety in the stay experience.

The short-term rental market is very different from the luxury hotel market, of course, and the budget hotels are also important for some segments in the travel industry. It is very important for the areas to become internationally known, the destinations, and providing customer satisfaction to both domestic and international guests. I think we need to have a variety of the hotel types and accommodation types.

Airbnb and the short-term rentals: it’s going to become in my mind, one category of the accommodation types, so we should be able to have that in Japan. That’s my position.

Skift: You’ve also mentioned how you’re expanding Hoshino Resorts beyond just Japan. Can you tell me where you’re expanding to and why?

Hoshino: We are trying to. As operators or investors of the resort hotels, or developers of the resort hotels, we are ready to design or plan and manage the properties for them. Among some developers from China and some from Taiwan, Korea, the Philippines and some Indian countries, I think our name is becoming well-known and those developers and investors are welcoming us to give them proposals.

So, there are a few projects going on right now in Asia, but eventually or in the future, we are very interested in going to the United States of course, and Europe, to offer Japanese hospitality in these countries. I think it is very important for us to create a new category in the hotel industry. At the same time, by introducing a Japanese hospitality in those countries we will help create more inbound demand coming to Japan in the future.

Skift: What do you mean by a new category of hospitality?

Hoshino: Investors and hotel developers are always looking for new categories in hotel industries. Luxury categories were created 20 or 30 years ago, and the boutique hotel category has been created 10 years ago, maybe. With the number of hotels out there, there are always development projects going on in big cities or destinations area in the world. In order to differentiate their investment from existing hotels, investors and the developers are always looking for new concepts and new categories of the hotels that will work in that areas.

For example, I believe that sushi cuisine has become a new category in the food industry in the United States. I think Japanese-style ryokans or traditional Japanese-style hospitality can become a new concept in the hotel industry, and that’s what I mean. That’s what we are interested in talking to your country.

Skift: When you bring that style of Japanese hospitality to other places outside of Japan, how are you going to reinterpret it or reimagine it in different ways, or will you adapt it more for the local tastes? Will you keep things very similar to how it is in Japan?

Hoshino: Yes. I think Japanese ryokans or Japanese-style resort facilities actually needed to make some adjustments in the last 10 or 20 years, just to meet the needs of the Japanese customers coming to our facilities in Japan.

Today, for Japanese people, their lifestyles are very different, and with our traditional way of providing service, they expect us to make some changes in some areas. At the same time, they expect us to maintain some real authentic Japanese element in our facilities. So, what we are doing right now is we are at the same time trying to make adjustments so that the international customers visiting us can also enjoy a hotel experience and onsen, a hot spring experience, and so on.

So I think when we plan new facilities in the United States, I want to make it as authentic as possible. But at the same time, our services and architecture and hotel concept have to be accepted the international travelers in your market, so that’s something we are trying to find out right now, by welcoming more Americans and Europeans and international guests to our facilities in Japan. We are learning a lot and we want to maintain it as authentic as possible, but we are willing to make changes so that we can meet the needs of the customers in foreign countries that we are planning.

Skift: Hospitality is a big industry but there are very few companies that control the majority of it. Do you find that the landscape is just oversaturated with too many brands? Is the fact that the industry keeps consolidating also a challenge? Or do you see it as an opportunity?

Hoshino: My analysis or opinion on this is that the industry, we’ve expanded with too many brands, obviously, and too many brands are not a problem if there are so many market segments. If there are many brands that meet the needs of the different segments, that’s OK. But we expanded or increased that number of brands because of owner-relationship reasons. That really caused the problem we have in our industry right now.

For example, if you have a Park Hyatt for example in one cities, eventually there will be another luxury hotel coming up, and if Hyatt wants to open a new hotel where they already have a Park Hyatt in the same area, they have to come up with a new name for that. Even though those two hotels are targeting the same market, the older hotel owner doesn’t allow the hotel operator to name the new hotel under the same brand.

So to me, that has been the main reason why we’ve increased the hotel brands to so many, and that is creating a confusion in the market. From the customer’s point of view, it’s very difficult for them to understand the differences between the brands, which means that it’s very difficult for them to really choose the hotel that is meeting the best needs of the customers. That’s where the trademark advisor can come in. Customers have to spend time and energy on the website to find out which hotel is best for them when they’re traveling. I think this is a problem for us and it’s time for us to rethink how we can consolidate some brands so that our brands can be trusted by the customers and could be understood by the customers.

That is the situation right now, and owners in the business are starting to understand that situation right now, which means we really have to change before the owners in the business that really losing the trust of the hotel operators in the world. So, we saw some conversation last year between the Marriott and other brands, but I think we will see more of these in the future.