Fujita Kanko| 9722 |

Transcription

R
LAST UPDATE【2016/6/8】
Research Report by Shared Research Inc.
Shared Research Inc. has produced this report by request from the company discussed in the report. The
aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide
an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data
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Shared Research Report
INDEX
Executive Summary --------------------------------------------------------------------------------------------------- 3
Key financial data ----------------------------------------------------------------------------------------------------- 4
Recent updates --------------------------------------------------------------------------------------------------------- 5
Highlights ----------------------------------------------------------------------------------------------------------------------- 5
Trends and outlook --------------------------------------------------------------------------------------------------- 6
Quarterly trends and results----------------------------------------------------------------------------------------------- 6
Full-year company forecasts --------------------------------------------------------------------------------------------- 13
Outlook ------------------------------------------------------------------------------------------------------------------------ 17
Business ----------------------------------------------------------------------------------------------------------------- 21
Business overview ---------------------------------------------------------------------------------------------------------- 21
Overview by segment ----------------------------------------------------------------------------------------------------- 23
Market and value chain --------------------------------------------------------------------------------------------------- 37
Strengths and weaknesses ----------------------------------------------------------------------------------------------- 43
Historical performance --------------------------------------------------------------------------------------------- 44
Income statement ---------------------------------------------------------------------------------------------------------- 48
Balance sheet ---------------------------------------------------------------------------------------------------------------- 49
News and topics------------------------------------------------------------------------------------------------------- 53
Other information---------------------------------------------------------------------------------------------------- 55
History -------------------------------------------------------------------------------------------------------------------------- 55
Major shareholders --------------------------------------------------------------------------------------------------------- 56
Returns to shareholders--------------------------------------------------------------------------------------------------- 56
Corporate governance and top management -------------------------------------------------------------------- 56
Employees -------------------------------------------------------------------------------------------------------------------- 57
Profile --------------------------------------------------------------------------------------------------------------------------- 58
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02/59
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FUJITA KANKO ＞ Executive Summary
Executive Summary
Hospitality company operating hotel, wedding, and resort businesses
Fujita Kanko Inc. was established in 1955 as a spin-off of the tourism division of Fujita Kogyo (currently Dowa Holdings).
Its segments are WHG (hotels; 44% of FY12/15 sales); Resort (10% of sales); and Luxury & Banquet (mainly weddings and
banquets; 41% of sales).
In the core WHG segment the company operates the Washington Hotel brand, which targets business travelers, and the
Hotel Gracery brand, which caters to tourists. Most of the 30 plus hotels under the WHG umbrella are operated using
either leasing or franchise models. In Tokyo’s 23 wards and designated city centers, Fujita Kanko adopts the leasing
model, where it operates hotels but does not own the land or buildings. This allows for low upfront expenses and a
flexible location strategy. In all other areas it uses the franchise model, where it licenses its brand to local operators and
provides hotel operational guidance.
In the Resort segment the company operates resorts and leisure facilities, including Hakone Hotel Kowakien and Hakone
Kowakien Yunessun, a hot spring theme park. In the Luxury & Banquet segment, the company operates wedding and
banquet facilities, luxury hotels, and golf courses, with Hotel Chinzanso Tokyo and Taikoen in Osaka positioned as key
assets.
WHG’s hotel business to drive growth, accelerating development
In February 2015, the company released a five-year plan through FY12/19. In the plan, it aims to accelerate development
through new hotel openings and renovations in the hotel business of the WHG segment. In FY12/19, the final year of the
plan, Fujita Kanko targets recurring profit of JPY4.8bn (JPY1.4bn in FY12/14), ROA of at least 4% (1.4% in FY12/14), and
ROE of at least 10% (1.9% in FY12/14). In FY12/15, profits fell year-on-year due to major renovation and rebuilding work,
as well as new project launches, but the company aims to grow earnings through sales growth and improved margins.
In Q1 FY12/16 sales were JPY14.9bn (+3.6% YoY), operating loss was JPY953mn (operating loss of JPY784mn in Q1
FY12/15), recurring loss was JPY1.1bn (loss of JPY927mn), and net loss attributable to the parent’s shareholders was
JPY1.2bn (loss of JPY897mn). Operating profit before depreciation, the company’s preferred management benchmark,
was JPY370mn, up JPY51mn from a year earlier. Overall sales increased YoY due to a sharp rise in the average price per
room in the accommodation division though the wedding division incurred a fall in sales due to a decrease in customers.
The main reason for the operating loss was lower occupancy levels accompanying major renovations at the Shinjuku
Washington Hotel.
Strengths and weaknesses
Shared Research thinks that the company’s strengths are the brand name and expertise stemming from the Chinzanso
Hotel, which received a five star rating from Michelin Japan; a high ratio of rooms in Greater Tokyo, where inbound tourist
demand is growing; and its holdings of historic buildings. In our view the company’s weaknesses are relationships with
asset owners, which makes renovations difficult; the slumping wedding business, a core business for the company; and a
weak balance sheet. (See Strengths and weaknesses section.)
03/59
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FUJITA KANKO ＞ Key financial data
Key financial data
Income Statement
(JPYmn)
Total Sales
YoY
FY12/06
FY12/07
FY12/08
FY12/09
FY12/10
FY12/11
FY12/12
FY12/13
FY12/14
FY12/15
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Est.
70,786
71,171
67,394
61,295
64,249
57,371
60,498
62,109
64,250
63,981
70,000
-0.4%
9.4%
-
0.5%
-10.7%
5.5%
2.7%
3.4%
7,460
8,196
5,710
4,414
5,651
4,522
4,598
5,275
5,576
4,446
YoY
-
9.9%
-30.3%
-22.7%
28.0%
-20.0%
1.7%
14.7%
5.7%
-20.3%
GPM
10.5%
11.5%
8.5%
7.2%
8.8%
7.9%
7.6%
8.5%
8.7%
6.9%
4,301
5,245
2,549
1,380
2,140
1,318
877
1,205
1,365
39
1,000
-
21.9%
-51.4%
-45.9%
55.1%
-38.4%
-33.5%
37.4%
13.3%
-97.1%
2464.1%
Gross Profit
Operating Profit
YoY
OPM
Recurring Profit
YoY
RPM
Net Income
YoY
Net Margin
-5.3%
-9.0%
4.8%
FY12/16
6.1%
7.4%
3.8%
2.3%
3.3%
2.3%
1.4%
1.9%
2.1%
0.1%
1.4%
3,690
5,018
2,485
1,395
1,828
1,042
630
1,169
1,390
-172
800
-
36.0%
-50.5%
-43.9%
31.0%
-43.0%
-39.5%
85.6%
18.9%
-
-
-
-
-
2.3%
2.8%
1.8%
1.0%
1.9%
2.2%
-0.3%
1.1%
3,709
2,280
1,810
579
227
-3,544
368
878
531
32
300
-
-38.5%
-20.6%
-68.0%
-60.8%
-
-
138.6%
-39.5%
-94.0%
837.5%
5.2%
3.2%
2.7%
0.9%
0.4%
-6.2%
0.6%
1.4%
0.8%
0.1%
0.4%
122,074.24
122,074.24
122,074.24
122,074.24
122,074.24
122,074.24
122,074.24
122,074.24
122,074.24
122,074.24
32
19.60
15.56
4.98
1.96
-29.84
3.07
7.33
4.43
0.27
2.50
5.00
5.00
5.00
5.00
5.00
4.00
4.00
4.00
4.00
4.00
4.00
248.32
237.71
192.99
207.06
200.58
167.75
176.82
231.17
230.04
223.85
Per Share Data
Number of Shares
EPS
Dividend Per Share
Book Value Per Share
Balance Sheet (JPYmn)
Cash and Equivalents
Total Current Assets
2,700
3,502
6,620
7,375
8,265
6,961
5,071
5,044
5,944
4,142
10,147
10,378
12,616
13,089
13,973
12,277
10,672
10,911
12,051
11,722
Tangible Fixed Assets, net
61,484
59,774
59,125
60,429
58,107
59,054
58,933
59,189
55,112
58,805
Other Fixed Assets
32,083
28,202
22,769
23,966
24,739
23,947
26,679
33,626
32,778
33,049
340
265
338
417
384
640
741
1,060
939
1,154
104,055
98,620
94,850
97,903
97,204
95,918
97,027
104,787
100,881
104,732
19,294
18,478
21,032
15,596
13,012
13,232
12,298
13,019
11,321
12,656
21,356
Intangible Assets
Total Assets
Short-Term Debt
Total Current Liabilities
28,899
28,236
30,001
23,491
21,136
21,201
21,717
22,038
22,288
Long-Term Debt
20,647
17,560
17,771
25,852
28,458
28,432
28,544
28,594
26,141
32,157
Total Fixed Liabilities
45,937
42,390
42,081
50,030
52,413
54,463
53,950
54,855
50,817
56,363
Total Liabilities
74,836
70,627
72,082
73,521
73,549
75,665
75,668
76,893
73,106
77,719
Net Assets
29,218
27,993
22,767
24,381
23,654
20,253
21,358
27,894
27,774
27,012
39,941
36,038
38,803
41,448
41,470
41,664
40,842
41,613
37,462
44,813
Operating Cash Flow
6,145
7,112
4,263
3,487
4,317
3,158
3,886
4,367
3,663
-415
Investment Cash Flow
4,610
-1,802
-3,359
-4,786
-2,827
-5,015
-4,407
-4,643
1,901
-8,184
-10,732
-4,510
2,212
2,027
-601
552
-1,371
220
-4,671
6,748
ROA
3.4%
5.0%
2.6%
1.4%
1.9%
1.1%
0.7%
1.2%
1.4%
-0.2%
ROE
13.1%
8.1%
7.2%
2.5%
1.0%
-
1.8%
3.6%
1.9%
0.1%
Equity Ratio
27.8%
28.1%
23.7%
24.6%
24.0%
21.0%
21.8%
26.4%
27.3%
25.6%
Interest-Bearing Debt
Cash Flow Statement (JPYmn)
Financing Cash Flow
Financial Ratios
Source: Shared Research based on company data
Figures may differ from company data due to differences in rounding methods
04/59
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FUJITA KANKO ＞ Recent updates
Recent updates
Highlights
On June 8, 2016, Shared Research updated the report following interviews with Fujita Kanko Inc.
On May 9, 2016, the company announced earnings results for Q1 FY12/16; see the results section for details.
On April 21, 2016, the company announced the closure of Hotel Toba Kowakien, managed by consolidated subsidiary
Toba Resort Services Co. Ltd., and resulting extraordinary losses.
Reasons of closure
The facilities of Hotel Toba Kowakien have become outdated after 50 years in operation. As a result, sales and profits from
the hotel operation have been sluggish in recent years. The company has decided to terminate operations at the facilities.
It will evaluate plans for new openings in the Toba area, including renovating the property of this hotel.
Schedule:
Resolution at the board meeting: April 21, 2016
Planned hotel closing:
September 30, 2016
Accounting measures:
Based on the decision, the company will book extraordinary losses of JPY462mn including impairment and other losses in
Q1 FY12/16. The company will announce any necessary revisions to full-year consolidated company forecasts.
On the same day, the company announced opening of a hotel in Taipei, Taiwan, in 2019. It will be its second directly
managed hotel in Asia, following one scheduled to open in 2018 in Seoul, South Korea.
Outline of the newly planned hotel:
Location:
Da’an district, Taipei, Taiwan
Planned opening:
2019
Facility outline:
19 ground floors, of which the hotel will occupy the 3rd floor and above, 248 guest rooms
(26sqm), one restaurant
For previous corporate releases and developments, see the News and topics section.
05/59
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FUJITA KANKO ＞ Trends and outlook
Trends and outlook
Quarterly trends and results
Quarterly earnings
(JPYmn)
Sales
YoY
FY12/14
Q2
Q3
16,152
15,216
3.1%
2.1%
Q4
18,208
1.8%
Q1
14,337
-2.3%
FY12/15
Q2
Q3
15,912
15,594
-1.5%
2.5%
Q4
18,138
-0.4%
Q1
14,860
3.6%
465
229.8%
3.2%
1,030
6.3%
7.0%
-564
-
1,644
-2.4%
10.2%
1,153
14.3%
7.1%
491
-27.3%
1,046
6.3%
6.9%
1,130
10.8%
7.4%
-84
-
2,421
-1.8%
13.3%
897
-16.3%
4.9%
1,522
9.3%
377
-18.9%
2.6%
1,162
12.8%
8.1%
-784
-
1,031
-37.3%
6.5%
1,092
-5.3%
6.9%
-61
-
888
-15.1%
5.7%
1,069
-5.4%
6.9%
-182
-
2,150
-11.2%
11.9%
1,084
20.8%
6.0%
1,066
-30.0%
233
-38.2%
1.6%
1,186
2.1%
8.0%
-953
-
-726
-593
-
3.0%
634
-17.7%
3.9%
338
-
-99
-829
-
8.4%
1,581
17.6%
8.7%
1,615
26.6%
-927
-897
-
89
-86.0%
0.6%
73
-78.4%
-345
-213
-
5.9%
1,011
-36.1%
5.6%
1,069
-33.8%
NPM
Cumulative
Sales
YoY
Q1
14,674
7.5%
2.1%
Q2
30,826
5.2%
Q3
46,042
4.1%
8.9%
Q4
64,250
3.4%
Q1
14,337
-2.3%
0.5%
Q2
30,249
-1.9%
Q3
45,843
-0.4%
Gross Profit
YoY
465
229.8%
2,109
15.6%
3,155
12.3%
5,576
5.7%
377
-18.9%
1,408
-33.2%
GPM
SG&A Expenses
YoY
3.2%
1,030
6.3%
6.8%
2,183
10.4%
6.9%
3,313
10.5%
8.7%
4,210
3.4%
2.6%
1,162
12.8%
SG&A / Sales
Operating Profit
YoY
7.0%
-564
-
7.1%
-73
-
7.2%
-157
-
6.6%
1,365
13.3%
OPM
Recurring Profit
YoY
-726
-
-92
-
-191
-
RPM
Net Income
YoY
-593
-
-255
-
-
-
Gross Profit
YoY
GPM
SG&A Expenses
YoY
SG&A / Sales
Operating Profit
YoY
Q1
14,674
7.5%
OPM
Recurring Profit
YoY
RPM
Net Income
YoY
NPM
FY12/16
Q2
-
#
FY12/16
% of 1H 1H Est.
45.7%
32,500
Q3
-
Q4
-
-
-
-
-1,121
-1,165
-
-
-
-
5.9%
Q4
63,981
-0.4%
Q1
14,860
3.6%
Q2
-
Q3
-
Q4
-
2,296
-27.2%
4,446
-20.3%
233
-38.2%
-
-
-
4.7%
2,254
3.3%
5.0%
3,323
0.3%
6.9%
4,407
4.7%
1.6%
1,186
2.1%
-
-
-
8.1%
-784
-
7.5%
-845
-
7.2%
-1,027
-
6.9%
39
-97.1%
8.0%
-953
-
-
-
-
-
1,000
2.1%
1,390
18.9%
-927
-
-838
-
-1,183
-
0.1%
-172
-
-1,121
-
-
-
-
-
2464.1%
1.4%
800
-1,084
-
2.2%
531
-39.5%
-897
-
-824
-
-1,037
-
32
-94.0%
-1,165
-
-
-
-
-
-565.1%
1.1%
300
-
0.8%
-
-
-
0.1%
-
-
-
-
7.4%
-
-1,200
-
-1,200
-1,000
% of FY
21.2%
FY Est.
70,000
-
9.4%
837.5%
0.4%
06/59
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Quarterly earnings by segment
Quarterly earnings
Quarterly (JPYmn)
Sales
YoY
WHG Business
YoY
Resort Business
YoY
Luxury & Banquet Business
YoY
Other
Elimination/Other
Operating profit
YoY
WHG Business
YoY
Resort Business
YoY
YoY
Other
Elimination/Other
Cumulative (JPYmn)
External sales
YoY
WHG Business
YoY
Resort Business
YoY
YoY
Other
Elimination/Other
Operating profit
YoY
WHG Business
YoY
Resort Business
YoY
YoY
Other
Elimination/Other
% of total
Quarterly
% of sales
WHG Business
Resort Business
Other
% of OP
WHG Business
Resort Business
Other
Cumulative
% of sales
WHG Business
Resort Business
Other
% of OP
WHG Business
Resort Business
Other
Q1
14,674
7.5%
6,032
1,702
6,162
1,479
-701
-564
-82
-64
-348
-79
9
Q1
14,674
7.5%
6,032
1,702
6,162
1,479
-701
-564
-82
-64
-348
-79
9
Q1
FY12/14
Q2
Q3
16,152
15,216
3.1%
2.1%
6,308
6,671
1,599
2,585
7,483
5,091
1,488
1,588
-726
-719
491
-84
-27.3%
217
429
-113
640
450
-1,095
-66
-63
3
5
Q2
Q3
30,826
46,042
5.2%
4.1%
12,340
19,011
3,301
5,886
13,645
18,736
2,967
4,555
-1,427
-2,146
-73
-157
135
564
-177
463
102
-993
-145
-208
12
17
FY12/14
Q2
Q3
Q4
18,208
1.8%
6,856
1,707
8,849
1,585
-789
1,522
9.3%
537
-87
1,161
-113
24
Q4
64,250
3.4%
25,867
7,593
27,585
6,140
-2,935
1,365
13.3%
1,101
376
168
-321
41
Q1
14,337
-2.3%
6,315
4.7%
1,665
-2.2%
5,521
-10.4%
1,501
-665
-784
72
-160
-618
-81
3
Q1
14,337
-2.3%
6,315
4.7%
1,665
-2.2%
5,521
-10.4%
1,501
-665
-784
72
-160
-618
-81
2
Q4
Q1
FY12/15
Q2
Q3
15,912
15,594
-1.5%
2.5%
6,567
7,571
4.1%
13.5%
1,394
1,942
-12.8%
-24.9%
7,152
5,209
-4.4%
2.3%
1,419
1,540
-620
-668
-61
-182
-105
507
18.2%
-233
246
-61.6%
497
-847
10.4%
-220
-93
0
5
Q2
Q3
30,249
45,843
-1.9%
-0.4%
12,882
20,453
4.4%
7.6%
3,059
5,001
-7.3%
-15.0%
12,673
17,882
-7.1%
-4.6%
2,920
4,460
-1,285
-1,953
-845
-1,027
-33
474
-16.0%
-393
-147
-121
-968
-301
-394
3
8
FY12/15
Q2
Q3
FY12/16
Q1
14,860
3.6%
7,024
11.2%
1,603
-3.7%
5,466
-1.0%
1,430
-663
-953
-168
-182
-493
-106
-1
Q1
14,860
3.6%
7,024
11.2%
1,603
-3.7%
5,466
-1.0%
1,430
-663
-953
-168
-182
-493
-106
-1
FY12/16
Q4
Q1
Q4
18,138
-0.4%
7,526
9.8%
1,493
-12.5%
8,359
-5.5%
1,443
-683
1,066
-30.0%
337
-37.2%
-154
1,075
-7.4%
-193
1
Q4
63,981
-0.4%
27,979
8.2%
6,494
-14.5%
26,241
-4.9%
5,903
-2,636
39
-97.1%
811
-26.3%
-301
107
-36.3%
-587
9
41%
12%
42%
10%
39%
10%
46%
9%
44%
17%
33%
10%
38%
9%
49%
9%
44%
12%
39%
10%
41%
9%
45%
9%
49%
12%
33%
10%
41%
8%
46%
8%
47%
11%
37%
10%
15%
11%
62%
14%
Q1
44%
-23%
92%
-13%
Q2
-511%
-762%
1304%
75%
Q3
35%
-6%
76%
-7%
Q4
-9%
20%
79%
10%
Q1
172%
382%
-815%
361%
Q2
-279%
-135%
465%
51%
Q3
32%
-14%
101%
-18%
Q4
18%
19%
52%
11%
Q1
41%
12%
42%
10%
40%
11%
44%
10%
41%
13%
41%
10%
40%
12%
43%
10%
44%
12%
39%
10%
43%
10%
42%
10%
45%
11%
39%
10%
44%
10%
41%
9%
47%
11%
37%
10%
15%
11%
62%
14%
-185%
242%
-140%
199%
-359%
-295%
632%
132%
81%
28%
12%
-24%
-9%
20%
79%
10%
4%
47%
14%
36%
-46%
14%
94%
38%
2079%
-772%
274%
-1505%
18%
19%
52%
11%
Business segments reclassified in FY12/15. FY12/14 figures under new classification show retrospectively adjusted figures
07/59
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Q1 FY12/16 results
▶
▶
▶
▶
Sales:
JPY14.9bn (+3.6% YoY)
Operating loss:
JPY953mn (loss of JPY784mn in Q1 FY12/15)
Recurring loss:
JPY1.1bn
(loss of JPY927mn)
Net loss attributable to
parent’s shareholders:
JPY1.2bn (loss of JPY897mn)
Operating profit before depreciation, the company’s preferred management benchmark, was JPY370mn, up JPY51mn
from a year earlier.
Overall sales increased YoY due to a sharp rise in the average price per room in the accommodation division in the WHG
segment though the wedding division incurred a fall in sales due to a decrease in customers. The main reason for the
operating loss was lower occupancy levels accompanying major renovations at the Shinjuku Washington Hotel.
The company planned for a temporary decline in earnings as it aggressively stepped up investments in FY12/16.
Specifically, in Q1, it had expected the decrease in profits because of the impact from renovating the Shinjuku
Washington Hotel. Despite decreased profits in Q1, however, the company stated both sales and profits exceeded
projections in all segments. The accommodation division in the WHG segment in particular outperformed.
In April 21, 2016, the company announced its decision to open a new hotel in Taipei, Taiwan, in 2019. As a result, the
company will increase guestrooms by 2,126 rooms (1,168 rooms already in business; 958 rooms on schedule to be
opened). This means the company will achieve more than 70 % of the 3,000 guestrooms to be added under its
medium-term plan, leaving just 874 rooms to be added for it to achieve its target.
WHG segment
WHG Business (JPYmn)
Sales
Operating profit
OPM
Sales breakdown
Accommodation
Restaurant・banquet・other
Q1 FY12/15
6,315
72
1.1%
Q1 FY12/16
7,024
-168
-2.4%
Diff
709
-241
-
4,826
1,489
5,711
1,313
885
-175
Sales were JPY7.0bn (up JPY709mn YoY), but the segment incurred operating loss of JPY168mn (deterioration of
JPY241mn YoY) affected by the major renovations at the Shinjuku Washington Hotel.
In the WHG segment, the company has Washington Hotels in Asahikawa, Sendai, Urawa, Akihabara, Shinjuku, Tokyo Bay
Ariake, Isezakicho Yokohama, Sakuragicho Yokohama, Kansai Airport, Hiroshima, Canal City Fukuoka, and Nagasaki. It has
Hotel Gracery locations in Sapporo, Ginza, Tamachi and Shinjuku, and Hotel Fuijta properties in Fukui and Nara.
Fujita Kanko plans to accelerate development in the WHG segment to drive growth. It also aims to make its existing
properties more competitive. During Q1, in addition to the ongoing renovations at the Shinjuku Washington Hotel, the
company replaced interior decoration and furniture in guestrooms mainly at high floors of the Sakuragicho Yokohama
Washington Hotel. As a way to enhance the quality of the hotel to meet customer needs, the hotel increased 12 family
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rooms at the bayside, where guests can overlook the seascape of the Yokohama Minatomirai area. The Hotel Gracery in
Ginza and in Tamachi, and the Tokyo Bay Ariake Washington Hotel also refurbished guestrooms and replaced furnishings.
As a new service of the company group’s member organization card, “Fujita Kanko Group Members’ Card WAON,” the
company started the point payment service at its WHG facilities, in a bid to improve customer convenience. In May 2016,
it will roll out a priority reservation service for members for bookings up to 72 hours before arrival as part of measures to
lock in customers. Although the company plans to announce the service in May 2016, a preliminary offering of the service
in March and April 2016 resulted in a roughly 30% YoY increase in member reservations.
With regards to earnings by division, the accommodation division saw the average price per room sharply surpass the
year-before figure, as overseas guest count stayed at high levels mainly at the Hotel Gracery Shinjuku. As a result, sales in
the division were JPY5.7bn, up JPY885mn YoY. In the restaurant and banquet division, however, the company reported
decreased sales due to business restructuring at the Hotel Fujita Fukui.
In this segment, Fujita Kanko presented a cautious plan in light of the renovation of all rooms at its core hotel, Shinjuku
Washington Hotel (from April 2015 to March 2016). In the Shinjuku area, however, in addition to Shinjuku Washington
Hotel, in April 24, 2015 the company opened Hotel Gracery Shinjuku, whose performance exceeded its projections. The
average daily rate (ADR) in regional hotels also significantly outperformed the company’s projections, with its hotels in
Sapporo, Urawa, Ariake, Kansai airport, Nara, Fukuoka and Nagasaki recording a more than 10% YoY increase in ADR.
ADR and occupancy rate in accommodation division in WHG segment
ADR
Accommodation
Occupancy rate
YoY diff.
vs plan diff.
18.4%
5.4%
19.2%
3.6%
7.0%
0.8%
16.2%
8.9%
Total
Capital area (incl. two hotels in Shinjuku)
Capital area (excl. two hotels in Shinjuku)
Local area
YoY diff.
vs plan diff.
-3.0%
0.6%
-3.4%
1.2%
-3.7%
-0.9%
-2.5%
-0.4%
Renovations at the Shinjuku Washington Hotel were completed on schedule in March 2016; therefore, the number of
available guestrooms has sharply increased since April 1, 2016, and the company expects a profit improvement starting in
Q2. The renovations enhanced the sense of quality at the Shinjuku Washington Hotel, and the company will focus on
increasing the average price per room rather than the occupancy rate. As such, it expects a 14% YoY increase in ADR in
full-year FY12/16.
Annual number of guestrooms available at Shinjuku Washington Hotel’s main building vs. last year
FY12/15
FY12/16
Q1
Full-year
Q1
Full-year
Approx. 110,000 rooms
In Kyushu area, Fujita Kanko operates three properties: two Washington Hotels in Fukuoka (423 rooms) and Nagasaki (300
rooms) as well as an inn, Yufuin Ryokuyu, in Oita (10 rooms). Although the Yufuin Ryokuyu was damaged by earthquakes
in the Kumamoto, Kyushu, region, in April 2016, it reopened at the end of the same month. The Yufuin Ryokuyu and the
Nagasaki Washington Hotel were negatively impacted as they are located in tourist spots, but the Washington Hotel in
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Fukuoka appears to be seeing increased demand associated with post-disaster restoration efforts.
Resort segment
Resort Business (JPYmn)
Sales
Operating profit
OPM
Sales breakdown
Accommodation
Day trip・leisure
Other
Q1 FY12/15
1,665
-160
-9.6%
Q1 FY12/16
1,603
-182
-11.4%
Diff.
-62
-21
-
1,179
419
67
1,182
350
70
3
-68
3
Segment sales JPY1.6bn (down JPY62mn YoY) and operating loss was JPY182mn (deterioration of JPY21mn from a year
before), due to a rise in costs to prepare for a redevelopment project in the Hakone area.
Properties in the segment include Hakone Hotel Kowakien, Hakone Kowakien Yunessun, B&B Pension Hakone, Ito
Kowakien, Hotel Toba Kowakien, Shimoda Aquarium, and Yufuin Ryokuyu.
In the accommodation division, sales were JPY1.2bn, up JPY3mn YoY. The division is recovering from a series of volcanic
warnings for Hakone Owakudani in 2015. The average price per room at core property Hakone Hotel Kowakien surpassed
the year-before level as it attracted many individual tourists. In February 2016, Ito Kowakien (Shizuoka) refurbished some
guestroom floors to integrate them under a mixture of classic Japanese and modern tastes. In March 2016, Ito Ryokuyu
renewed guestroom equipment in a bid to attract more individual tourists by enhancing the quality of the rooms.
In the Resort segment, sales were JPY350mn, down JPY68mn YoY. There were continuing effects of a partial suspension of
the Hakone Ropeway, a main tourist route in Hakone. (The Ropeway operations were entirely resumed on April 23,
2016.) At Hakone Kowakien Yunessun, mainly family users decreased.
In the resort segment, the company had expected a weak performance at the accommodation division due to the impact
of volcanic warnings in Hakone in 2015, but the division performed steadily. In the day trip and leisure division, weekend
demand continued to recover although weekday demand remained weak. Pricing measures to stimulate demand led to
higher-than-expected sales, but profits underperformed because of the significant cost burden. That said, owing to the
stronger-than-expected performance at the accommodation division, the overall segment saw both sales and profits
surpass the company’s plans.
Main data in accommodation division and day trip division in resort segment
Accommodation
Hakone Hotel Kowakien
Day trip
Hakone Kowakien Yunessun
ADR
YoY diff.
vs plan diff.
3.2%
4.9%
Number of visitors
YoY diff.
vs plan diff.
-19.2%
8.0%
Occupancy rate
YoY diff.
vs plan diff.
-2.7%
7.2%
Average amount per visitor
YoY diff.
vs plan diff.
9.1%
-3.2%
Fujita Kanko announced the closure of the Hotel Toba Kowakien as of September 30, 2016, due to aging facilities. The
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company posted an extraordinary loss of JPY462mn in Q1, resulting from impairment losses following the closure of the
hotel. According to the company, while it is expecting a slight decline in sales owing to the closure of hotels, there will be
almost no profit impact.
Luxury & Banquet (L&B) segment
Luxury & Banquet Business (JPYmn)
Sales
Operating profit
OPM
Sales breakdown
Wedding
Accommodations
Restaurants
Banquet・Golf・other
Q1 FY12/15
5,521
-618
-11.2%
Q1 FY12/16
5,466
-493
-9.0%
Diff.
-55
124
-
2,227
544
985
1,764
2,120
577
951
1,817
-107
32
-33
53
Sales were JPY5.5bn (a drop of JPY55mn YoY) and operating loss was JPY493mn (improvement of JPY124mn).
Properties in the Luxury & Banquet segment include Hotel Chinzanso Tokyo, Taiko-en, Hotel Azur Takeshiba, The South
Harbor Resort, Remercier Motoujina, Marryaid, Camellia Hills Country Club, Noto Country Club, Fujita Kanko Koei, and
Visualife.
In the wedding division, sales were JPY2.1bn (down JPY107mn). Sales fared well at Taikoen (Osaka), where Hoseiden, a
Shinto wedding hall, was opened in October 2015. But overall sales decreased partly because Convivion Minami Aoyama,
a complex of an apartment and wedding hall in Tokyo, was closed in December 2015.
In the banquet division, sales were JPY1.4bn, up JPY42mn YoY. Both the number of users and average unit price exceeded
the year-before levels as parties of companies and various events performed favorably.
In the accommodation division, sales were JPY577mn, up JPY32mn YoY. At Hotel Chinzanso Tokyo, the average price per
room sharply increased due to ongoing renovations (started in October 2014 as part of a four-year plan to renovate a
total of 260 guestrooms).
Sales and profits exceeded the company’s projections in the L&B segment. The wedding division in Taikoen in Osaka
helped to boost in sales. At the Hotel Chinzanso Tokyo, meanwhile, ADR at the accommodation division saw a 5% YoY
increase, below the company’s projections. The wedding division also experienced a 7.5％ YoY decline in users. With
regards to costs, the company took successful cost control measures centering on the Hotel Chinzanso Tokyo, which
helped boost overall segment profits.
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Main data at Hotel Chinzanso Tokyo
Accommodation
Hotel Chinzanso Tokyo
Wedding
ADR
Occupancy rate
YoY diff.
vs plan diff.
5.0%
-5.2%
YoY diff.
vs plan diff.
-1.7%
-0.7%
Number of weddings
Number of customers
YoY diff.
vs plan diff.
-5.7%
-1.8%
YoY diff.
vs plan diff.
-7.5%
-1.1%
For previous historical results, see the Historical performance section.
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Full-year company forecasts
Consolidated earnings
(JPYmn)
Sales
YoY
CoGS
Gross Profit
YoY
GPM
SG&A
SG&A / Sales
Operating Profit
YoY
OPM
Recurring Profit
YoY
RPM
Net Income
YoY
FY12/14 Act.
1H
30,826
5.2%
28,717
2,109
15.6%
6.8%
2,183
7.1%
-73
-0.2%
-92
-0.3%
-255
-
2H
33,424
1.9%
29,957
3,467
252.3%
10.4%
2,029
6.1%
1,438
5.9%
4.3%
1,482
10.1%
4.4%
786
-38.8%
FY
64,250
3.4%
58,674
5,576
98.5%
8.7%
4,210
6.6%
1,365
13.3%
2.1%
1,390
18.9%
2.2%
531
-39.5%
FY12/15 Act.
1H
30,249
-1.9%
28,841
1,408
-33.2%
4.7%
2,254
7.5%
-845
-2.8%
-838
-2.8%
-824
-
2H
33,732
0.9%
30,694
3,038
-12.4%
9.0%
2,154
6.4%
884
-38.5%
2.6%
666
-55.1%
2.0%
856
8.9%
FY
63,981
-0.4%
59,535
4,446
-20.3%
6.9%
4,407
6.9%
39
7.7%
0.1%
-172
-0.3%
32
9.2%
FY12/16 Est.
1H
32,500
7.4%
-1,200
-3.7%
-1,200
-3.7%
-1,000
-
2H
37,500
11.2%
FY
70,000
9.4%
2,200
148.9%
5.9%
2,000
200.3%
5.3%
1,300
51.9%
1,000
2464.1%
1.4%
800
1.1%
300
837.5%
Earnings by segment
(JPYmn)
Sales
WHG Business
Resort Business
Other
Adjustment
Total
Operating Profit
WHG Business
Resort Business
Other
Adjustment
Total
Recurring Profit
Net Income
FY12/14
Act.
FY12/15
Act.
FY12/16
Est.
FY12/15
Act. (YoY)
FY12/16
Est. (YoY)
25,867
7,593
27,585
6,140
-2,935
64,250
27,979
6,494
26,241
5,903
-2,636
63,981
32,800
7,200
26,800
3,200
70,000
8.2%
-14.5%
-4.9%
-3.9%
-0.4%
17.2%
10.9%
2.1%
-45.8%
9.4%
1,101
376
168
-321
41
1,365
811
-301
107
-587
9
39
1,450
-50
300
-700
1,000
-26.3%
-36.3%
-97.1%
78.8%
180.1%
2464.1%
1,390
531
-172
32
800
300
-94.0%
837.5%
▶
▶
▶
▶
Sales:
JPY70.0bn (+9.4% YoY)
Operating profit:
JPY1.0bn
Recurring profit:
JPY800mn (loss of JPY172mn in FY12/15)
Net income:
JPY300mn (+9.4x FY12/15)
(+25.6x FY12/15)
Fujita Kanko expects every segment to post increased sales and profits due to the favorable market environment, and
increased contributions from new buildings and renovations.
In FY12/16, the second year of Fujita Kanko’s medium-term plan, the company plans on aggressive investments, similar to
FY12/15. The company also aims to enter the next phase of stabilizing profits and expansion.
In FY12/16 Fujita Kanko expects a tailwind of continued increase in foreign visitors to Japan. It also projects risks including
shifts in the Chinese economy, a rise in US interest rates, political tensions with neighboring countries, and increased
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concerns of terrorism, which could discourage travel. In order to continue attracting customers, the company sees
increasing the quality of its facilities, food, and services as a key management priority. It aims to increase the value added
in its existing businesses to address diverse customer needs in line with its medium-term plan.
WHG segment forecasts
The company forecasts sales of JPY32.8bn (+17.2% YoY), and operating profit of JPY1.5bn (+78.8%). It expects average
price per room to increase by 9.6% YoY (actual values not released) (area breakdown: +10.0% in Greater Tokyo and
+5.5% in regional hotels). The company also expects an increase in the number of guestrooms available due to
year-round contribution from Hotel Gracery Shinjuku, opened in the previous year, and completed renovations of all
rooms in the Shinjuku Washington Hotel’s main building by spring 2016.
The company planned to resume operations of the Shinjuku Washington Hotel main building in April 2016, following the
major renovation work launched in April 2015. As a result, the hotel’s annual number of guests are expected to rise to
400,000 (280,000 in the previous year), and average price per room is anticipated to rise 14% YoY (actual values not
released). In addition, the full-year operation of Hotel Gracery Shinjuku (opened in April 2015) should become a key
contributor to consolidated earnings from FY12/16, giving the company roughly 2,600 rooms in the Shinjuku area.
The company aims to expand the WHG network, with the April 2016 opening of Hotel Gracery Naha (198 rooms) and the
July 2016 opening of Hotel Gracery Kyoto Sanjo (97 rooms; scheduled to expand by128 rooms in May 2017). The
company will operate the Washington Hotel and Hotel Gracery brands under the name “WHG Hotel” from April 2016.
The company aims to boost customer satisfaction by offering cooked-to-order breakfasts at hotels under the Washington
Hotel and Hotel Gracery brands. It also plans to make its group membership card more user-friendly. It aims to roll out a
priority reservation service for members to strengthen customer loyalty.
Resort segment forecasts
The company forecast segment sales of JPY7.2bn (+10.9% YoY), and an operating loss of JPY50mn (operating loss of
JPY301mn in FY12/15). The company expects the adverse impact of volcanic warnings at Hakone, the main earnings drag
in the previous year, to persist through Q1. The company plans to enhance the customer drawing power of Hakone
Kowakien and raise room prices. It plans to raise room prices at its core Hakone Hotel Kowakien by 4.0% YoY (actual
amount not released) assuming occupancy rates on par with the previous year, at 80%. It anticipates 20.2% YoY growth
in guest numbers (actual amount not released) at Yunessun and Mori No Yu hot spring properties.
In winter 2015 seismic activity at Hakone Owakudani quieted, so the company expects a gradual recovery in domestic
tourists visiting the Hakone region in FY12/16. The area is the largest tourism destination in Greater Tokyo, and is popular
with visitors from both Japan and overseas. The company began rebuilding on the former site of the Hakone Kowakien
Yunessun Inn in October 2014, and expects to open the new accommodation facility, Hakone Kowakien Tenyu (150
rooms), in spring 2017. At the same time the company is working to draw customers with seasonal Western and Japanese
foods and diverse attractions.
The company is also developing its Ryokuyu line of luxury ryokans, or Japanese-style inns, at Ito (Shizuoka) and Yufuin
(Oita). The company has positioned the Ryokuyu brand to drive quality of the Resort business, and is considering rolling
out more Ryokuyu resorts. The company plans to develop a variety of formats to capture demand from the growing
number of foreign visitors and older domestic tourists.
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Luxury & Banquet (L&B) segment forecasts
The company expects segment sales of JPY26.8bn (+2.1% YoY) and operating profit of JPY300mn (+180.1%). The decline
in the number of young people and changing lifestyles are leading to a sluggish wedding market. The company aims for
the banquet and accommodation divisions to offset this, and is boosting the appeal of Hotel Chinzanso Tokyo. Through
room renovations, it aims to increase average price per room by 7.0% from the previous year, and occupancy rates by
1.0pp. In the wedding division, the company plans to increase competitiveness by refurbishing its medium and large
halls, and boost margins by expanding beverage and service income.
FY12/16 is the third year of the company’s four-year room renovation program for Hotel Chinzanso Tokyo. In FY12/15, the
company added seven rooms by converting wedding halls to guestrooms, bringing the total to 267 rooms. In the
wedding division, the company renovated wedding facilities to further increase customer appeal. It also collaborated with
digital art organization teamLab to offer a new style of civil ceremonies. The hotel was awarded five Red Pavilions by the
Michelin Guide Tokyo 2016, retaining its top rating from the previous year. It also plans to further expand its food and
service offerings.
At Taiko-en, Shinto weddings account for around 40% of all weddings. To strengthen its offerings of Japanese style
weddings, the company renovated the banquet room to allow ceremonies to be held in the temple garden (Hoseiden).
The company has also entered the restaurant business, including opening a Japanese restaurant in Taipei, Taiwan in
January 2016.
Drawing visitors to Japan, overseas development
The number of visitors to Japan continues to rise. To capture this demand, the company plans to continue inviting travel
agents to overseas workshops and boosting visibility through marketing initiatives (such as the Japanese restaurant
opened in Taipei). Fujita Kanko also aims to expand overseas. In FY12/18 it plans to open a hotel in Seoul, Korea, and
search for potential business locations, primarily in Asia.
Cultivating diverse personnel, improving employee satisfaction
Customer needs are evolving as society ages, inbound visitors to Japan increase, and labor laws change. In response to
these shifting needs, company is working to improve workplace environments and training programs.
Shareholder returns
In line with its basic policy of maintaining stable dividends, the company forecast a dividend of JPY4.0 in FY12/16 (JPY4.0
in FY12/15).
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Company forecasts versus results
Initial CE vs. Results
(JPYmn)
Sales (Initial CE)
Sales (Results)
Operating Profit (Initial CE)
Operating Profit (Results)
Recurring Profit (Initial CE)
Recurring Profit (Results)
Net Profit (Initial CE)
Net Profit (Results)
FY12/10
Cons.
67,500
64,249
-4.8%
3,200
2,140
-33.1%
2,800
1,828
-34.7%
1,200
227
-81.1%
FY12/11
Cons.
64,500
57,371
-11.1%
2,500
1,318
-47.3%
2,100
1,042
-50.4%
600
-3,544
-690.7%
FY12/12
Cons.
63,000
60,498
-4.0%
2,000
877
-56.2%
1,700
630
-62.9%
800
368
-54.0%
FY12/13
Cons.
62,000
62,109
0.2%
1,300
1,205
-7.3%
1,000
1,169
16.9%
500
878
75.6%
FY12/14
Cons.
64,500
64,250
-0.4%
1,300
1,365
5.0%
1,100
1,390
26.4%
500
531
6.2%
FY12/15
Cons.
64,200
FY12/16
Est.
70,000
-0.3%
-1,300
1,000
-1,500
800
-500
300
-
-
63,981
39
-
-172
32
-
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Outlook
Medium-term plan (released February 2015)
In February 2015, Fujita Kanko released its medium-term plan for the five years through FY12/19.
In the plan, the company aimed to accelerate development through new hotel openings and renovations in WHG’s hotel
business. It aims to strengthen the foundation and place the group on a growth path while responding to the changing
environment. Through steady progress in rolling out the plan, the company aims for recurring profit of JPY4.8bn
(JPY1.4bn in FY12/14), ROA of at least 4% (1.4%), and ROE of at least 10% (1.9%) in FY12/19. In FY12/15, profits fell YoY
due to major renovation and rebuilding programs, and new project launches, but the company expects to grow earnings
through sales growth and improved profitability. The company has used operating profit before depreciation as a key
indicator since FY12/14, as most of its investment is upfront costs. The target FY12/19 operating profit before
depreciation is JPY12.0bn, roughly double FY12/14 levels.
Numerical targets in medium-term plan
FY12/14
Act.
64.3
6.0
1.4
1.4
FY12/15
Est.
64.2
4.0
-1.3
-1.5
FY12/17
Target
75.5
9.0
2.8
2.3
FY12/19
Target
88.0
12.0
5.3
4.8
ROA
ROE
Capital investment (cash basis)
Depreciation
1.4%
1.9%
3.6
3.8
14.0
4.0
7.5
5.0
More than 4%
More than 10%
5.4
5.8
Interest-bearing debt
37.5
-
-
Less than 50.0
(JPYbn)
Sales
Operating profit before depreciation
Operating profit
Recurring profit
Strategy
The number of foreign visitors to Japan rises every year. Major events including the 2019 Rugby World Cup and the 2020
Tokyo Olympics and Paralympics should lead to further increases in domestic accommodation demand. Fujita Kanko aims
to capture this demand, and is engaged in aggressive investment: It is accelerating openings of accommodation facilities
and restaurants, and working to boost the quality of its existing businesses. In FY12/15, the company marked its 60th year
since founding. Fujita Kanko plans for further growth through steadily rolling out strategies under its medium-term plan. It
plans to become a leading tourism company, as Japan increases its presence on international tourism. Its three key
strategies:
▶
▶
▶
Increase and expand added value of existing businesses by addressing diverse needs
Increase its appeal to foreign visitors and develop overseas business
Train diverse personnel and improve workplace environment
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Schedule toward new growth phase in medium-term plan
FY12/15
2014
Plan
Upfront
investment
Aggressive investment
frontloading
Recovery
Stabilization and
expansion of revenue
Re-growth
Making the new core profitable
Current medium-term management plan
FY12/17
2015
FY12/19
2016
2017
2018
2019
2020～
Capital investment (Medium-term management plan),(Cashbased) * Announced
14.0
-
7.5
-
5.4
5 year total
50.0
Capital investment (Actual and forecast)
(Cash-based)
8.1
14.5
-
-
-
5 year total
50.0
Recurring profit (Medium-term management plan, planned
amount)* Announced
-1.5
-
2.3
-
4.8
Recurring profit (Actual and forecast)
-0.1
0.8
-
-
-
（JPYbn）
Numerical targets by segment
FY12/14
FY12/15
FY12/17
FY12/19
Act.
Est.
Target
Target
(JPYbn)
WHG Business
Resort Business
Sales
25.9
26.3
31.9
Operating profit
1.1
-1.0
1.4
2.3
Sales
7.6
7.4
8.3
10.6
Operating profit
0.4
0.1
0.7
1.3
27.6
27.6
31.3
3.4
Operating profit
0.2
0.4
1.2
1.9
Sales
3.2
2.9
4.0
5.8
Operating profit
-0.3
-0.8
-0.6
-0.3
Sales
64.3
64.2
75.0
88.0
1.4
-1.3
2.8
5.3
Luxury & Banquet
Business
Sales
Other and
adjustments
Total
37.6
Operating profit
WHG segment strategy
FY12/19 forecasts: sales, JPY37.6bn (+45% versus FY12/14) and operating profit, JPY2.3bn (2x FY12/14). The company
plans to accelerate development of this segment, positioned as the growth driver. In FY12/15, earnings temporarily
declined due to upfront expenses. However, the company planned to accelerate growth through increasing
competitiveness at existing facilities and aggressively developing new facilities. It targets FY12/19 operating profit to be
around double FY12/14 levels.
Accelerating new hotel openings
The company aims to increase guest rooms from FY12/14 levels by 3,000 in FY12/19 (+30% versus FY12/14). Already on
the opening schedule: Hotel Gracery Shinjuku (970 rooms, April 2015), Hotel Gracery Naha (198 rooms, spring 2016),
Hotel Gracery Kyoto Teramachi (tentative name; 97 rooms, fall 2016), Seoul Namdaemun New Hotel Gracery (335 rooms,
summer 2018). Of the 3,000 rooms to be added under the plan, 1,600 rooms in four hotels are already confirmed. The
company prioritizes cities with potential tourism demand, as well as those with potential demand from business travelers.
The company intends to open hotels in areas with potential domestic tourism, targeting leisure travelers and foreign
visitors. It is also considering operating models other than its core leasing model, and aims to open 10 hotels in Japan and
abroad (including those already scheduled to open).
The previous statements are from February 2015, when the medium-term plan was announced. The Hotel Gracery Kyoto Sanjyo (expanded) is
scheduled to open in May 2017. In January 2016, the company decided to develop the Kisarazu Washington Hotel (tentative name, 150
rooms, franchise). Hotel Gracery Shinjuku opened on schedule in April 2015.
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Boosting competitiveness
▶
▶
▶
Renovate guestrooms at existing hotels in Greater Tokyo, starting with Shinjuku Washington Hotel
Further penetration of WHG brand
Recruit and train staff for overseas markets
Resort segment strategy
FY12/19 forecasts: sales, JPY10.6bn (+40% versus FY12/14), and operating profit, JPY1.3bn (3.5x FY12/14). In this
segment, the company is focusing on the redevelopment of the Hakone district and the upper-middle to high-end
demographic. The company expects profits to fall temporarily due to major investments in key property Hakone
Kowakien, but then to expand following the launch of new accommodation facilities in Hakone in FY12/17.
Large-scale investment in Hakone Kowakien
▶
▶
Opening accommodation facilities, with open-air baths at all rooms in 2017
Considering additional construction of facilities within the garden
Additional launches in resort locations
▶
▶
Opening more small and medium luxury Japanese inns, after Yufuin Ryokuyu
Looking to open at locations other than at its asset properties; aiming to launch five accommodation facilities during
period of medium-term plan
Luxury & Banquet (L&B) segment strategy
FY12/19 forecasts: sales, JPY34.0bn (+23% versus FY12/14) and operating profit, JPY1.9bn (12x). In this segment, the
company aims to develop the luxury business using the Hotel Chinzanso Tokyo brand. It aims to improve earnings by
raising prices (by improving product quality), and growing sales (by expanding its business areas).
Transforming Chinzanso from a wedding to a hotel brand
The company aims to distinguish itself from leading international luxury hotels by leveraging the traditional Japanese
atmosphere of Chinzanso.
Aggressively rollout restaurant business
▶
▶
Open Japanese restaurants overseas under the Chinzanso brand
Explore opening restaurants in Japan (medium-term plan calls for five restaurant openings in Japan and overseas)
Expanding the wedding business
The company aims to bolster wedding-related businesses. It purchased all shares in Kawano, a company which conducts
wedding ceremonies in Hiroshima, and has guesthouses in two locations (medium-term plan calls for five wedding facility
locations, including those of Kawano).
Overseas strategy
The company plans to leverage its hotels in Asia to strengthen its offerings to inbound tourists to Japan. The company
plans to open more hotels overseas to bolster its network.
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Bolster offerings to inbound tourists
▶
▶
▶
Establish bases in Asia, where inbound tourism to Japan is expected to increase
Maximize diverse domestic hotel portfolio to appeal to individual travelers
Boost customer appeal, primarily in resorts, to stabilize occupancy rates
Opening properties overseas
▶
▶
▶
Open hotel in Namdaemun, Seoul in summer 2018
Consider opening accommodation facilities in Asia, such as Bangkok and Jakarta
Open Japanese restaurants overseas
Personnel strategy
Overview
Fujita Kanko sees staff as key to distinguishing itself from competitors. It is working to bolster training, promote work-life
balance, and encourage diversity to improve employee satisfaction. It hopes this will increase employee retention rates
and service quality, leading to increased sales, productivity, and customer satisfaction. In October 2015, the company set
up a training center inside the Yokohama Isezakicho Washington Hotel, to standardize development and training. It says
this is also helping when launching operation of new hotels.
Bolstering training
Improved training is occurring at both the head office and each business. Initiatives at headquarters:
▶
▶
▶
▶
▶
▶
▶
Middle management training
Employee exchange training for new recruits and young employees
Self-development support for sub-managers
Increased leadership personnel and through review of new recruits
Improved teaching materials for foreign employees
Technical training
Skill competitions such as for cooking, customer service, bed-making, sign language, and flower arranging
Fostering a work-life balance
In each division the company is working to foster a work-life balance to improve employee retention. This includes
reducing overtime and opening childcare communities.
Promoting diversity
The company is working to create a healthy corporate culture by holding diversity talks, promoting women, and
employing persons with disabilities and senior citizens.
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FUJITA KANKO ＞ Business
Business
Business overview
Hospitality company operating hotel, wedding, and resort businesses
Fujita Kanko Inc. was established in 1955 as a spin-off of the tourism division of Fujita Kogyo (currently Dowa Holdings).
It operates hotel, wedding, and resort businesses. The Fujita Kanko group is made up of the company, 25 consolidated
subsidiaries, two affiliates, and one associated company.
The company is a pioneer in the hospitality industry. Under its corporate umbrella are Hotel Chinzanso Tokyo (famous for
its Japanese garden), Kowakien (a large hot springs and hotel facility in Hakone), and the Washington Hotel Group (major
chain of hotels for business travelers). The tourism division of the company’s forerunner Fujita Kogyo started operating
Hakone Kowakien in 1949. The Washington Hotel was started in 1973, the dawn of the era of hotels for business travelers.
In 1992, the company became a Four Seasons Hotel franchisee, and opened the Four Seasons Hotel Chinzanso Tokyo, the
first foreign-affiliated luxury hotel in Japan. At end 2012, the company terminated the contract with the Four Seasons
Hotel group due to differences in management direction. In 2013, it was relaunched as Hotel Chinzanso Tokyo, which is
renowned for its luxury service and is the only Japanese hotel with five Michelin stars.
WHG (Washington Hotel and Hotel Gracery) segment drives earnings
Segments
Business segments are WHG (hotels; 44% of FY12/15 sales), Resort (10%; of sales), and Luxury & Banquet (mainly
weddings; 41% of sales).
WHG: core segment
In the core WHG business, the company operates two hotel brands: Washington Hotels for business travelers, and Hotel
Gracery hotels for tourists. There are more than 30 hotels under WHG; these are operated primarily under the leasing or
the franchise models. Generally, hotels can be operated under direct management, where the operator owns the land
and buildings; the leasing model, where the operator leases land and buildings; the management contract model, where
management is out-sourced; and the franchise model, where the operator licenses its brand to local franchisees and
provides operational guidance. In Tokyo’s 23 wards and the centers of major cities, Fujita Kanko uses the leasing model,
which allows for low upfront expenses and a flexible location strategy. In other areas it uses the franchise model.
Resort segment and Luxury & Banquet segment
In Resort the company operates resort hotels and leisure facilities. Key assets are Hakone Hotel Kowakien and hot spring
theme park Hakone Kowakien Yunessun. In the Luxury & Banquet business, the company offers wedding and banquet
facilities, luxury hotels, and golf courses. Key assets are Hotel Chinzanso Tokyo and Taiko-en in Osaka, which both have
large Japanese gardens.
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Fujita Kanko facilities by segment
WHG Business Group
Rooms
Hotel【10,381 rooms（scheduled to open＋908 rooms）】
1 Fujita Kanko Washington Hotel Asahikawa
260
2 Sendai Washington Hotel
223
3 Iwaki Washington Hotel（MC)
148
4 Urawa Washington Hotel
140
5 Akihabara Washington Hotel
369
6 Shinjuku Washington Hotel Main Building
1,279
7 Shinjuku Washington Hotel Annex Building（MC)
337
8 Tokyo Bay Ariake Washington Hotel
830
181
9 Chiba Washington Hotel（MC)
10 Yokohama Sakuragicho Washington Hotel
553
11 Yokohama Isezakicho Washington
399
12 Kansai Airport Washington Hotel
504
13 Hiroshima Washington Hotel
266
423
14 Canal City FukuokaWashington Hotel
15 Nagasaki Washington Hotel
300
16 Aomori Washington Hotel（FC）
228
17 Hachinohe Washington Hotel（FC）
215
18 Tsuruoka Washington Hotel（FC）
110
19 Yamagata Nanokamachi Washington Hotel（FC）
213
20 Yamagataeki Nishiguchi Washington Hotel（FC）
100
21 Aizu Wakamatsu Washington Hotel（FC）
154
22 Koriyama Washington Hotel（FC）
184
23 Tsubame Sanjo Washington Hotel（FC）
103
24 Tachikawa Washington Hotel（FC）
170
25 Takaraduka Washington Hotel（FC）
135
26 Sasebo Washington Hotel（FC）
190
27 Hotel Fujita Fukui
354
28 Hotel Fujita Nara
117
29 Hotel Gracery Sapporo
440
30 Hotel Gracery Shinjuku
970
31 Hotel Gracery Ginza
270
32 Hotel Gracery Tamachi
216
33 Hotel Gracery Naha (opens on 7 Apr. 2016)
198
34 Hotel Gracery Kyoto Sanjyo(opens on 1 July. 2016)
97
128
35 Hotel Gracery Kyoto Sanjyo(Annex)（opens in May. 2017）
36 Kisarazu Washington Hotel（tentative）(FC)（opens in December. 2017） 150
335
37 Korea Seoul Namdaemun Sin Hotel（opens in Summer 2018）
Resort Business Group
Hotel 【755 rooms（scheduled to open＋ 150 rooms）】
1 Hakone Hotel Kowakien
2 B&B Pension Hakone
3 Hakone Kowakien　Miyama Furin
4 Ito Kowakien
5 Hotel Toba Kowakien
6 Yufuin Ryokuyu
7 Hotel Yamanami
8 Towada Hotel
9 Yugawara Onsen Chitose
10 Green Pal yugawara
11 Hakone Kowakien Ten-yu（opens in Spring. 2017）
Restaurants�
1 Akashia-Tei
2 Soba-Kihinkan(opens on 1 March. 2016)
Leisure
1 Hakone Kowakien Yunessun
2 Hakone Kowakien Mori No Yu
3 Shimoda Aquarium
Members-Only Resort Hotel
Hotel【460 rooms】
1 Wisterian Life Club Verde no Mori
2 Wisterian Life Club Hakone
3 Wisterian Life Club Atami
4 Wisterian Life Club Usami
5 Wisterian Life Club Toba
6 Wisterian Life Club（Nojiriko）
7 Wisterian Life Club（Prominent Kurumayama Kougen）
Luxury & Banquet Business Group
Rooms Hotel【389 rooms】
224 1 Hotel Chinzanso Tokyo
224 2 Hotel Azur Takeshiba
13
55 Wedding/Banquet
107 1 Taikoen
10 2 ouen
26 3 The South Harbor Resort
50 4 Remercier Motoujina
38 5 Marryaid
19
150 Restaurants
1 Civic Sky Restaurant Chinzanso
2 University of Tokyo Ito International Research Center Restaurant
3 Shikonkan Chinzanso
4 JET STREAM
5 CORNET
6 Kinsui TAIPEI by HOTEL CHINZANSO TOKYO
Rooms
267
122
Leisure
1 Camellia Hills Country Club
2 Noto Country Club
Overseas branch
1 Shanghai
2 Seoul
3 Taipei
4 Bangkok
5 Jakarta
Note: in the WHG business, FC denotes franchise; MC, management contract; others are leased
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Overview by segment
Segment data under old and new classifications
Old segment (JPYmn)
External sales
YoY
Washington Hotel Business
YoY
% of sales
Kowakien Business
YoY
% of sales
Chinzanso and Taiko-en Business
YoY
% of sales
Other
Operating sales
YoY
YoY
% of sales
Kowakien Business
YoY
% of sales
YoY
% of sales
Other
OPM
Kowakien Business
FY12/12
FY12/13
FY12/14
60,498
5.5%
24,107
9.2%
39.8%
7,233
11.6%
12.0%
25,867
1.5%
42.8%
3,291
877
-33.5%
417
47.5%
230
215.1%
26.2%
250
-83.0%
28.5%
-20
1.4%
1.7%
3.2%
1.0%
62,109
2.7%
25,346
5.1%
40.8%
7,691
6.3%
12.4%
25,632
-0.9%
41.3%
3,440
1,205
37.4%
589
41.2%
48.9%
535
132.6%
44.4%
276
10.4%
22.9%
-195
1.9%
2.3%
7.0%
1.1%
64,250
3.4%
27,383
8.0%
42.6%
7,593
-1.3%
11.8%
25,754
0.5%
40.1%
3,520
1,365
13.3%
1,056
79.3%
77.4%
376
-29.7%
27.5%
99
-64.1%
7.3%
-166
2.1%
3.9%
5.0%
0.4%
New segment (JPYmn)
External sales
YoY
WHG Business
YoY
% of sales
Resort Business
YoY
% of sales
YoY
% of sales
Other
Operating sales
YoY
WHG Business
YoY
% of sales
Resort Business
YoY
% of sales
YoY
% of sales
Other
OPM
WHG Business
Resort Business
FY12/14
FY12/15
64,250
3.4%
25,867
40.3%
7,593
11.8%
27,585
42.9%
3,205
1,365
13.3%
1,101
80.7%
376
27.5%
168
12.3%
-280
2.1%
4.3%
5.0%
0.6%
63,981
-0.4%
27,979
8.2%
43.7%
6,494
-14.5%
10.1%
26,241
-4.9%
41.0%
3,267
39
-97.1%
811
-26.3%
2079.5%
-301
-771.8%
107
-36.3%
274.4%
-578
0.1%
2.9%
-4.6%
0.4%
Business segments reclassified in FY12/15. FY12/14 figures for new classifications show retrospectively adjusted figures.
Overview
Fujita Kanko has three business segments: WHG (hotels), Resort, and Luxury & Banquet (L&B; weddings and banquets). It
is aggressively investing in all three segments with the aim of raising room prices.
Sales are increasing in the WHG business due to rising occupancy rates and room charges against the backdrop of
burgeoning inbound tourist demand. In FY12/15, earnings declined due to large-scale renovations at flagship Shinjuku
Washington Hotel, and costs related to preparations for the launch of major hotel, Hotel Gracery Shinjuku. The renovation
work at the Shinjuku Washington Hotel is scheduled for completion in spring 2016, which should set the stage for
earnings growth.
After WHG, the Resort segment had been the second earnings driver through FY12/14. However, occupancy rates
dropped due to heightened volcanic alerts in Hakone and rebuilding hotels in the Kowakien area. In FY12/15 the segment
posted a loss. Customers were returning following the volcanic activity subsiding, and earnings should recover with the
opening of a new hotel in FY12/17.
In the Luxury & Banquet business, conditions remain difficult. As people wait to get married, and the declining birthrate
lowers the youth population, ceremonies are becoming smaller. The company is reviewing its cost structure as well as
ways to capture wedding demand in local regions to revamp this segment.
Under its medium-term plan released in February 2015, Fujita Kanko implemented a company-wide restructuring in line with its strategy. As a
result, it changed its segmentation from FY12/15. The former Washington Hotel business became the WHG business; the Kowakien business
became the Resort business; and the Chinzanso and Taiko-en business became the Luxury & Banquet (L&B) business. There were no major
changes, but some hotels were assigned to different segments.
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WHG segment
Old segment (JPYmn)
Sales
YoY
% of sales
Operating profit
YoY
% of sales
OPM
Sales breakdown
Accommodations
YoY
% of sales
Other (elimination)
YoY
% of sales
Number of guest ('000)
FY12/12
FY12/13
FY12/14
24,107
9.2%
39.8%
7,233
11.6%
12.0%
1.7%
25,346
5.1%
40.8%
7,691
6.3%
12.4%
2.3%
27,383
8.0%
42.6%
7,593
-1.3%
11.8%
3.9%
17,258
71.6%
6,849
28.4%
2,803
17,416
0.9%
68.7%
7,930
15.8%
31.3%
2,888
19,484
11.9%
71.2%
7,899
-0.4%
28.8%
3,052
New segment (JPYmn)
WHG Business
Sales
YoY
% of sales
Operating profit
YoY
% of sales
OPM
Sales breakdown
Accommodations
YoY
% of sales
Other (elimination)
YoY
% of sales
FY12/14
FY12/15
25,867
40.3%
7,593
11.8%
4.3%
27,979
8.2%
43.7%
6,494
-14.5%
10.1%
2.9%
19,448
75.2%
6,419
24.8%
3,052
22,344
14.9%
79.9%
5,635
-12.2%
20.1%
3,201
WHG segment drives sales and profits
WHG segment overview
The WHG segment (hotel business operations) is the largest contributor to Fujita Kanko’s sales and profits. It accounted
for 43.7% of sales in FY12/15. Segment operating profit exceeded Fujita Kanko’s total operating profit, because the Resort
business booked losses due to the eruption of Mt. Hakone. In the WHG segment the company has Washington Hotels in
Asahikawa, Sendai, Urawa, Akihabara, Shinjuku, Tokyo Bay Ariake, Isezakicho Yokohama, Sakuragicho Yokohama, Kansai
Airport, Hiroshima, Canal City Fukuoka, and Nagasaki. The company also has Hotel Gracery hotels in Sapporo, Ginza,
Tamachi, and Shinjuku, and Hotel Fujita hotels in Fukui and Nara. In FY12/15 there were 10,399 guestrooms in this
segment.
WHG segment brands: Washington Hotel (business travelers) and Hotel Gracery (tourists)
In the WHG segment the company operates two hotel brands: Washington Hotels for business travelers, and Hotel
Gracery, aimed at tourists.
The WHG brand, established in FY12/14, combines the Washington Hotel (WH) and Hotel Gracery (HG) brands.
Washington Hotels are hotels for business travelers based primarily in Greater Tokyo and expanding properties
nationwide. Fujita Kanko was the first to enter this “business hotel” industry, and developed the business model for
running such hotels. Fujita Kanko was one of the top three business hotel operators, along with the Sunroute Hotel and
Tokyu Inn.
Hotel Gracery is an upmarket brand launched in 2008 to capture demand in the tourism and leisure market. Aiming to
differentiate with Washington Hotels, these hotels have a higher proportion of twin rooms and enhanced concierge
functions.
As of end FY12/15, there were 32 WHG hotels. Of these, 26 were Washington Hotels, four were Hotel Gracery properties,
and two were Hotel Fujita hotels. In addition, two partner hotels shared membership cards and reservation systems
(Makuhari, Chiba and Kanazawa, Ishikawa).
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Washington Hotel and Hotel Gracery overview
Brand
Overview
Washington Hotel
Hotel chain for business travelers established in 1973. Operates primarily under the
leasing model in urban areas where demand is strong, and the franchise model in regional
areas. 26 hotels as of end FY12/15. Plans to open one more hotel by FY12/17.
Hotel Gracery
Upmarket hotel brand launched in 2008 aimed at capturing tourist demand. Aims to
differentiate from the Washington Hotel brand with a higher proportion of twin rooms
and strengthened concierge functions. Four hotels as of end FY12/15. Plans to open three
more by 2017.
WHG segment: earnings
In FY12/15, 80% of segment sales were from accommodation, with the remaining 20% from restaurants and banquets. In
FY12/15, the company renovated all rooms of flagship hotel Shinjuku Washington Hotel, and in April 2015 it opened the
second-largest property in its portfolio in terms of number of rooms, Hotel Gracery Shinjuku. As a result, occupancy rates
were level with the year before due to strong accommodation demand, and average price per room increased due to
renovations and the new hotel opening.
The breakdown of costs was not released, but the company’s main costs are large investments in properties, and
personnel costs are generally fixed. As a result sales growth is key to profit growth. In FY12/09 following the global
financial crisis, average price per room fell, but with the tailwind of rising inbound tourism demand, in FY12/12
occupancy rates recovered to levels from before the financial crisis, and price per room also turned around. In FY12/15
WHG segment results exceeded company forecasts.
WHG business: Occupancy rates and average price per room
Source: Company data
Leasing model in major cities; franchise in regional areas
Hotels in WHG segment
In the hotel industry there are several business models: direct management, where the operator owns the land and
building; the leasing model, where the land and building are leased; the management contract model, where
management is out-sourced; and the franchise model, where it licenses its brand to local operators and provides hotel
operational guidance. Of the 32 hotels in WHG’s portfolio as of end FY12/15, 3 were under management contract, 11
were franchisees and the remaining 18 were run under the leasing model.
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Characteristics of key hotel operating formats
Real estate
Manager
Operator
Brand
owner
Direct
Hotelier
Key characteristics/
Examples
hotel company earnings
Hotelier
Hotelier
Hotelier
management
Company owns land and
Classic Japanese hotels such as
buildings and
Hotel Okura, Hotel New Otani,
manages/operates
Imperial Hotel and railroad
affiliated hotels
Leasing
Landowner
Hotelier
Hotelier
Hotelier
Land and buildings leased
Many Greater Tokyo hotels. In
from owner and hotel
some cases subsidiaries and
managed and operated. Initial
affiliates lease parent company
investment is limited, but lease
assets to operate hotel business
payments to owner necessary
Management
Landowner
contract
Operating
Hotelier
Hotelier
company
Only involved in operating
Many international hotels
hotel. Revenue is commission
on sales.
Franchise
Landowner
Landown
Landowner
Hotelier
er
Franchise joining fees from
Companies linked up with
franchisee hotels and royalties
international brands and regional
based on sales
hotels
Source: Shared Research
Regional characteristics of operating model
The company operates under the leasing model in Tokyo’s 23 wards and the centers of major cities, where it expects
sustainable demand. In other areas it uses the franchise model. Under the leasing model, the company usually opens
hotels with a basic twenty-year leasing contract, expecting to recoup its investment in 7-10 years. Under the leasing
model, it does not own land or buildings, allowing for flexible location strategy. For franchises in regional areas, the local
owner is often a prominent individual; a benefit when promotion and hiring. In major cities is becoming difficult to obtain
land so the company does not plan to exclusively use the leasing model. Fujita Kanko may consider long-term lease
interests and REITs in addition to property purchases.
High occupancy rates and average price per room for Hotel Gracery Shinjuku (opened April 2015)
Opening Hotel Gracery
Hotel Gracery Shinjuku (opened in April 2015; operated by Fujita Kanko), has performed better than expected due to
burgeoning demand. In this hotel 70% of rooms can accommodate two or more guests. Further, the company was able
to launch operations quickly by using staff from the Shinjuku Washington Hotel (when it was under renovation), and
make all rooms available for occupancy from July 2015. Installing specialized reception desks for foreign tourists, and a
concierge desk, meant that the company was able to attract individual foreign tourists, who generally pay higher room
charges than tour groups. Concierge training has leveraged expertise from Chinzanso, the luxury hotel. This appears to
be part of the group’s strategy to increase value added.
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Occupancy rates at Hotel Gracery Shinjuku
Share of inbound tourists: April-December 2015
Average price per room versus forecasts (2015)
55% of guestrooms in Greater Tokyo, with potential for high room charges and occupancy rates
WHG segment: share of rooms by region and brand
Shared Research estimates that 55.0% of WHG segment guestrooms are in the Greater Tokyo region, which includes
Chiba, Saitama, Tokyo, and Kanagawa, and 45.0% are in the rest of the country. The Washington Hotel brand accounts for
82% of guestrooms, and Hotel Gracery 18%. By FY12/17, following a series of hotel openings, Hotel Gracery properties
should account for over 20% of guestrooms.
WHG segment: prices for rooms in Greater Tokyo versus other regions
Shared Research calculates that WHG’s standard room prices in Greater Tokyo are much higher than in other regions:
around 40% higher for single rooms and nearly 30% for twin rooms (single: JPY13,205 in Greater Tokyo, JPY9,439 in other
regions; twin: JPY22,035 in Greater Tokyo, JPY17,371 in other regions). The company does not release average market
room rates, but the price differences between rooms in Greater Tokyo and those in other regions can be seen to be at
similar levels.
According to the company, its new hotels offer more added value (such as larger guest rooms) than its existing
properties. Hotel Gracery has more new hotels than its other brands, so average room prices are higher at Hotel Gracery
than Hotel Washington for single and twin rooms. Also, Hotel Gracery has a higher percentage of twin rooms than
Washington Hotel, leading to a disparity between Hotel Gracery and Washington Hotel when using weighted average
prices of the two hotels’ single and twin rooms.
Breakdown of guestrooms (FY12/15) and standard price per room
By area
Greater Tokyo
Other areas
By hotel brand
Washington Hotel
Hotel Gracery
Nationwide total
Total rooms
% of total
5,714
4,667
55.0%
45.0%
8,485
1,896
-
81.7%
18.3%
-
Sales per room (JPY)
Single
Twin
13,205
22,035
9,439
17,371
Single
Twin
10,164
18,408
17,543
26,786
11,512
19,938
Source: Shared Research based on company materials
Note: standard price per room are based on the company’s published rates (FY12/15). The standard single and twin price per room are weighted
averages made by multiplying total number of guestrooms for each hotel. The data does not take into account the share of single and twin rooms in
individual hotels, and is published for reference purposes only.
WHG segment: ratio of WHG hotels in Greater Tokyo vs nationwide figures
According to the Ministry of Health, Labour and Welfare’s fiscal 2014 Report on Public Health Administration and Services,
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Japan had a total of roughly 3.1mn guestrooms in hotels and ryokans (traditional Japanese inns). Of these, approximately
265,000, or 8.6%, were in Greater Tokyo (which includes Chiba, Saitama, Tokyo, and Kanagawa). For hotels alone, there
were roughly 1.7mn rooms, with 174,000 in Greater Tokyo, or 10.4% of the total. In Greater Tokyo, accommodation
demand is strong so price per room are higher than in other regions. As 55% of its rooms are in Greater Tokyo, Fujita
Kanko can benefit from an increase in average price per room and occupancy rates in line with burgeoning inbound
tourist demand.
Standard room rate schedule
Rooms
Hotel
Fujita Kanko Washington Hotel Asahikawa
Sendai Washington Hotel
Iwaki Washington Hotel（MC)
Urawa Washington Hotel
Akihabara Washington Hotel
Shinjuku Washington Hotel Main Building
Shinjuku Washington Hotel Annex Building（MC)
Tokyo Bay Ariake Washington Hotel
Chiba Washington Hotel（MC)
Yokohama Sakuragicho Washington Hotel
Yokohama Isezakicho Washington
Kansai Airport Washington Hotel
Hiroshima Washington Hotel
Canal City FukuokaWashington Hotel
Nagasaki Washington Hotel
Aomori Washington Hotel（FC）
Hachinohe Washington Hotel（FC）
Tsuruoka Washington Hotel（FC）
Yamagata Nanokamachi Washington Hotel（FC）
Yamagataeki Nishiguchi Washington Hotel（FC）
Aizu Wakamatsu Washington Hotel（FC）
Koriyama Washington Hotel（FC）
Tsubame Sanjo Washington Hotel（FC）
Tachikawa Washington Hotel（FC）
Takaraduka Washington Hotel（FC）
Sasebo Washington Hotel（FC）
Hotel Fujita Fukui
Hotel Fujita Nara
Hotel Gracery Sapporo
Hotel Gracery Shinjuku
Hotel Gracery Ginza
Hotel Gracery Tamachi
National average
By area
Metropolitan area
Other area
By brand
Washington Hotel
Hotel Gracery
Standard room rate (JPY)
260
223
148
140
369
1,279
337
830
181
553
399
504
266
423
300
228
215
110
213
100
154
184
103
170
135
190
354
117
440
970
270
216
10,381
Single
8,316
13,392
7,800
9,720
13,824
11,880
11,880
13,500
7,100
9,828
7,020
12,000
11,880
10,152
8,100
8,316
6,200
7,128
7,800
8,300
8,392
6,588
6,696
10,260
8,208
7,776
7,344
8,500
13,500
20,520
15,984
14,361
11,512
Twin
16,200
21,600
15,200
19,980
24,624
18,360
21,600
22,680
14,400
21,600
15,984
20,000
23,760
18,576
14,040
15,444
13,400
11,880
14,500
18,000
16,443
14,256
12,971
17,280
17,712
14,256
14,580
15,000
23,220
30,240
24,732
21,108
19,938
5,714
4,667
13,205
9,439
22,035
17,371
8,485
1,896
10,164
17,543
18,408
26,786
Note: Standard price per room are based on the company’s published rates (FY12/15). The standard single and twin price per room are weighted
averages made by multiplying total number of guestrooms for each hotel. The data does not take into account the share of single and twin rooms in
individual hotels, and is published for reference purposes only. The shaded portion shows hotels in the Greater Tokyo region.
Strategy: theme rooms appealing to the five senses to strengthen branding
WHG segment: initiatives to spread brand image
The company put Washington Hotel (WH) and Hotel Gracery (HG) under the single WHG brand in FY12/14. It aims to
enhance the brand and accelerate hotel openings under WHG. It has set its sights not only on Japan but also overseas.
Fujita Kanko has developed many business hotel chains under the Washington Hotel brand, but it did not have a unified
branding strategy. With the launch of WHG, the company aims to highlight the differences in Washington Hotel and
Hotel Gracery brands, and improve customer satisfaction.
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Washington Hotel and Hotel Gracery: target customers
The company aims for Washington Hotels to be the top choice for business travelers. It aims for Hotel Gracery to
particularly cater to women, both on and off the job. To this end, Washington Hotels are equipped with technology to
improve convenience and comfort. Fujita Kanko is accelerating the rollout of hotels in major cities nationwide and in the
Greater Tokyo area, where it expects solid demand from business travelers. For Hotel Gracery the company is expanding
services such as providing tourist information through concierges and accelerating hotel openings where it projects
tourism demand growth.
The largest property in the WHG business is the recently renovated 1,279-room Shinjuku Washington Hotel, followed by
newly constructed 970-room Hotel Gracery Shinjuku. The company is working to standardize interiors and furnishings of
both the Shinjuku Washington Hotel (targeting businesspeople) and the Hotel Gracery Shinjuku (targeting tourists)
brands. According to the company, Hotel Gracery is introducing the same aroma in all of its lobbies, and the company
plans to offer the same breakfast menu at all of its hotels. In these ways, it aims to facilitate penetration of the WHG brand
and increase added value.
Original room designs
The company aims to create original rooms when building new hotels. The Akihabara Washington Hotel, which Fujita
Kanko relaunched in FY12/10, was a hit with train fans due to its location, as the company could offer rooms with views of
the railroad. “Railroad rooms” with model railroad displays are proving extremely popular. In Hotel Gracery Shinjuku,
opened in April 2015, the company collaborated with building owner Toho Co., Ltd. (TSE1: 9602) to create
Godzilla-themed rooms with Godzilla models, as well as “Godzilla View” rooms where windows look out on a life-sized
Godzilla head. These rooms are proving extremely popular and the company says it is hoping to boost the hotel’s
occupancy rates. The company intends to include local flavors when developing new hotels.
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Railroad room of Akihabara Washington Hotel “Kuhane 1304”
Hiroshima Washington Hotel “Hiroshima room”
Hotel Gracery Shinjuku, opened in April 2015
View from Godzilla room
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Resort segment
Old segment (JPYmn)
Kowakien Business
Sales
YoY
% of sales
Operating profit
YoY
% of sales
OPM
Sales breakdown
Resort Hotels
YoY
% of sales
Leisure
YoY
% of sales
Other (elimination)
YoY
% of sales
FY12/12
FY12/13
FY12/14
7,233
11.6%
12.0%
230
215.1%
26.2%
3.2%
7,691
6.3%
12.4%
535
132.6%
44.4%
7.0%
7,593
-1.3%
11.8%
376
-29.7%
27.5%
5.0%
4,880
5,320
9.0%
69.2%
2,079
1.9%
27.0%
291
-6.8%
3.8%
5,138
-3.4%
67.7%
2,152
3.5%
28.3%
302
3.8%
4.0%
67.5%
2,040
28.2%
312
4.3%
New segment (JPYmn)
Resort Business
Sales
YoY
% of sales
Operating profit
YoY
% of sales
OPM
Sales breakdown
Accommodations
YoY
% of sales
Leisure
YoY
% of sales
Other (elimination)
YoY
% of sales
FY12/14
FY12/15
7,593
6,494
-14.5%
10.1%
(301)
-771.8%
-4.6%
11.8%
376
27.5%
5.0%
5,137
67.7%
2,152
28.3%
304
4.0%
4,587
-10.7%
70.6%
1,614
-25.0%
24.9%
293
-3.6%
4.5%
Relatively high margins, contributing to consolidated earnings (excluding one-time drag on profits)
Resort segment overview
In the Resort segment the company operates resort hotels and leisure facilities, including Hakone Hotel Kowakien and hot
spring theme park Hakone Kowakien Yunessun. Properties include Hakone Hotel Kowakien, Hakone Kowakien Yunessun,
B&B Pension Hakone, Ito Kowakien, Hotel Toba Kowakien, Shimoda Aquarium, and Yufuin Ryokuyu.
Resort segment earnings
Of the three segments the Resort segment contributed least to sales. In FY12/15, the segment’s contribution to sales fell
to 10.1% due to rebuilding facilities from FY12/14 (Kowakien area, slated for completion in spring 2017), as well as
volcanic alerts raised for Mt. Hakone. The Resort segment booked an operating loss. Excluding these one-off factors, OPM
was relatively high. Per the company, customers have started to return since volcanic alerts were lifted in winter 2015.
Hakone Kowakien FY12/15 sales: vs. previous year and forecast
Hakone Kowakien sales: vs. previous year and forecast
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Hakone Kowakien Yunessun (hot spring theme park)
Redevelopment of Kowakien area: target affluent demographic with open-air baths in all rooms, opening spring 2017
The company launched the Resort business in Hakone in 1948, centered on Hakone Hotel Kowakien and Hakone
Kowakien Yunessun. Domestic and international customer needs are diversifying amid shifts in the tourism and leisure
markets and an increase in visitors to Japan. In light of these changes, Fujita Kanko embarked on a redevelopment
program for its Hakone properties from FY12/14.
As part of these initiatives, in fall 2014, the company closed Hakone Kowakien Yunessun (opened in 1963) and the
neighboring Keikoku Area (Yuutopia), and was constructing new accommodation facilities on the site with completion
slated for spring 2017 (Hakone Kowakien Tenyu). The new facilities, 2.5x the size of Yunessun Inn, will feature two large
baths, all of the 150 rooms will have open-air baths attached. The facilities will also focus on providing luxury services to
add value to the hotel.
The company purchased property adjoining Hakone Kowakien in April 2015 called Horaien. It is apparently considering
building another accommodation facility within Kowakien. Hakone Kowakien is popular with the families and tour groups.
Through the current redevelopment plans, the company intends to increase value added at Hakone Kowakien and target
the upper-middle to high-end demographic.
Artist’s impression of Hakone Kowakien Tenyu and construction site
HakoneKowakien Tenyu
Hakone Kowakien
Yunessun
B&B Pantheon Hakone
Mori No Yu
Soba-Kihinkan
Miyama Furin
Horaien
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Luxury & Banquet segment
Old segment (JPYmn)
FY12/12
Sales
YoY
% of sales
Operating profit
YoY
% of sales
FY12/13
FY12/14
25,867
1.5%
42.8%
250
-83.0%
28.5%
25,632
-0.9%
41.3%
276
10.4%
22.9%
25,754
0.5%
40.1%
99
-64.1%
7.3%
1.0%
1.1%
0.4%
OPM
Sales breakdown
Wedding
YoY
% of sales
Restaurants
YoY
% of sales
Accommodations
YoY
% of sales
Other (elimination)
YoY
% of sales
New segment (JPYmn)
Sales
YoY
% of sales
Operating profit
YoY
% of sales
FY12/14
FY12/15
27,585
42.9%
168
12.3%
26,241
-4.9%
41.0%
107
-36.3%
274.4%
0.6%
0.4%
11,903
43.2%
5,526
20.0%
4,938
17.9%
3,146
11.4%
1,273
4.6%
794
2.9%
12,384
4.0%
47.2%
5,174
-6.4%
19.7%
4,186
-15.2%
16.0%
2,439
-22.5%
9.3%
1,333
4.7%
5.1%
721
-9.2%
2.7%
OPM
Sales breakdown
11,135
43.0%
-
4,486
17.3%
3,014
11.7%
-
7,231
28.0%
10,787
-3.1%
42.1%
-
11,161
3.5%
43.3%
-
4,654
3.7%
18.2%
3,044
1.0%
11.9%
-
4,631
-0.5%
18.0%
3,111
2.2%
12.1%
-
7,146
-1.2%
27.9%
6,850
-4.1%
26.6%
Wedding
YoY
% of sales
Banquet
YoY
% of sales
Restaurants
YoY
% of sales
Accommodations
YoY
% of sales
Golf
YoY
% of sales
Other (elimination)
YoY
% of sales
Responding to the shrinking wedding market: cost cuts and regional expansion
Luxury & Banquet segment overview
In the Luxury & Banquet segment, the company offers wedding and banquet facilities, luxury hotels and golf courses,
with the flagship assets of Tokyo’s Hotel Chinzanso Tokyo and Taiko-en in Osaka. Segment sales contribute the most after
the WHG segment, but contribution to profits is languishing due to the shrinking wedding market.
Segment properties include Hotel Chinzanso Tokyo, Taiko-en, Hotel Azur Takeshiba, The South Harbor Resort, Remercier
Motoujina, Marryaid, Camellia Hills Country Club, Noto Country Club, Fujita Kanko Koei, and Visualife.
The breakdown of segment sales in FY12/15 was weddings, 47%; banquets, 20%; restaurants, 16%; accommodation, 9%
and golf, 5%.
Luxury & Banquet (L&B) segment: wedding division
The wedding division accounts for half of segment sales, Hotel Chinzanso Tokyo and Taiko-en, but it is shrinking due to a
decline in the number of weddings (fewer young people) and the trend toward smaller ceremonies (increased focus on
nuclear family). In January 2015, the company purchased 100% of the shares in Kawano (Hiroshima), which handles
weddings and operates two guest houses. Through the consolidation of Kawano, the company was able to post 4% YoY
growth in the division. While Kawano is a local business, it also books sales commissions on referrals for furniture for
newlyweds, and its average revenue per ceremony is in line with Chinzanso. Fujita Kanko sees a need for guest houses in
regional towns and cities, and plans to capture wedding demand in these regions utilizing Kawano’s business model. In
key Hotel Chinzanso Tokyo, the company aims to reduce operating costs by reviewing the size and layout of its banquet
halls and increase per-guest charges.
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Luxury & Banquet segment: accommodation division
In FY12/15, sales in the accommodation division fell 22.5% YoY. The main reason was the December 2014 closure and
sale of the aging Kyoto Kokusai Hotel. Excluding this impact, sales were up by JPY263mn from the year before. The core
asset in this division is Hotel Chinzanso Tokyo. In FY12/92 the company opened a Four Seasons franchise hotel in
Chinzanso. It extended a ten-year contract once, but due to differences in management approaches Fujita Kanko
terminated the franchise agreement in FY12/12. The company opened Hotel Chinzanso Tokyo under direct management
following the termination of the contract. The company is renovating the rooms in stages. The company said it has been
able to raise average rates thanks to the renovations. Many customers are from Europe and the US, and the company aims
to increase value added to accommodate the burgeoning demand from foreign visitors. When it was a franchisee of the
Four Seasons Hotels and Resorts, despite sharing a location, there was not much coordination due to differences in
management policies. The company aims to improve coordination between the divisions.
Newly renovated room: Hotel Chinzanso Tokyo
Taiko-en
Taiko-en: Japanese style banquet hall on the banks of the Yadogawa
Overseas
The company has five offices in Asia (Seoul, Shanghai, Taipei, Bangkok, and Jakarta). The Singapore office previously
covered Bangkok and Jakarta, but the company opened regional offices in spring 2015 anticipating an increase in visitors
from these countries due to relaxed visa requirements.
The main goal of overseas offices is to promote branding (attract inbound tourists, particularly FIT* or individual travelers)
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and expand the network, including accommodation facilities. In FY12/15, overseas visitors accounted for 1.1mn overnight
guests at Fujita Kanko facilities (29% of all guests), and the company plans to boost this share further.
FIT (Foreign Individual Tourist): Travel where individuals arrange everything from tickets to hotels. As group rates are not applicable,
accommodation rates for individual travelers tend to be relatively higher.
Fujita Kanko’s overseas locations
Five bases in Asia
Factors influencing earnings
Profit Margins
(Thousand Yen)
Sales
CoGS
CoGS-to-sales
Gross profit
GPM
SG&A
SG&A-to-sales
Operating Profit
OPM
EBITDA
EBIDTA margin
Net margin
Financial Ratios
ROA
ROE
Total Asset Turnover
Working Capital(JPY‘000)
Current Ratio
Quick Ratio
OCF / Current Liabilities
Net Debt / Equity
OCF / Total Liabilities
Cash Cycle (days)
Changes in Working Capital
FY12/06
Cons.
70,786
63,326
89.5%
7,460
10.5%
3,159
4.5%
4,301
6.1%
7,486
10.6%
5.2%
FY12/07
Cons.
71,171
62,975
88.5%
8,196
11.5%
2,951
4.1%
5,245
7.4%
8,463
11.9%
3.2%
FY12/08
Cons.
67,394
61,684
91.5%
5,710
8.5%
3,161
4.7%
2,549
3.8%
5,898
8.8%
2.7%
FY12/09
Cons.
61,295
56,881
92.8%
4,414
7.2%
3,034
4.9%
1,380
2.3%
4,851
7.9%
0.9%
FY12/10
Cons.
64,249
58,598
91.2%
5,651
8.8%
3,511
5.5%
2,140
3.3%
5,556
8.6%
0.4%
FY12/11
Cons.
57,371
52,849
92.1%
4,522
7.9%
3,204
5.6%
1,318
2.3%
4,727
8.2%
-6.2%
FY12/12
Cons.
60,498
55,900
92.4%
4,598
7.6%
3,721
6.2%
877
1.4%
4,441
7.3%
0.6%
FY12/13
Cons.
62,109
56,834
91.5%
5,275
8.5%
4,070
6.6%
1,205
1.9%
4,700
7.6%
1.4%
FY12/14
Cons.
64,250
58,674
91.3%
5,576
8.7%
4,211
6.6%
1,365
2.1%
5,138
8.0%
0.8%
FY12/15
Cons.
63,981
59,535
93.1%
4,446
6.9%
4,407
6.9%
39
0.1%
4,077
6.4%
0.1%
3.4%
13.1%
0.65
2,829
35.1%
22.2%
0.19
127.5%
0.1
15.5
-386
5.0%
8.1%
0.70
2,899
36.8%
23.1%
0.25
116.2%
0.1
13.9
70
2.6%
7.2%
0.70
2,499
42.1%
37.0%
0.15
141.4%
0.1
14.1
-400
1.4%
2.5%
0.64
2,317
55.7%
48.9%
0.13
139.8%
0.0
13.9
-182
1.9%
1.0%
0.66
1,940
66.1%
58.2%
0.19
140.4%
0.1
11.5
-377
1.1%
0.59
1,919
57.9%
51.2%
0.15
171.3%
0.0
11.6
-21
0.7%
1.8%
0.63
1,937
49.1%
41.9%
0.18
167.5%
0.1
11.0
18
1.2%
3.6%
0.62
2,297
49.5%
42.5%
0.20
131.1%
0.1
11.7
360
1.4%
1.9%
0.62
2,484
54.1%
47.4%
0.17
113.5%
0.1
12.9
187
-0.2%
0.1%
0.62
2,850
54.9%
45.4%
-0.02
150.6%
0.0
14.7
366
Figures may differ from company data due to differences in rounding method
Until FY12/14
The company’s earnings and financial position are strongly influenced by market developments. In the core hotel
business main expenses are upfront investments in properties, and personnel costs are largely fixed, so sales growth is key
to earnings growth.
The global financial crisis in September 2008 triggered falling occupancy and average price per room in the company’s
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core hotel business, leading to a slump in sales and earnings. In FY12/11, the March 2011 Great East Japan earthquake
sparked a further slump in sales. As a result, the company’s medium-term plan from FY12/12 to FY12/14 focused on
selection and concentration in its businesses and bolstering its product. The company avoided major investments. Instead
it worked to strengthen earnings in its existing businesses via a hotel scrap-and-build program.
Due to the tailwind from rising inbound tourist demand, sales are rising. Occupancy rates have been above pre-global
financial crisis levels since FY12/12, and average price per room have also turned up after bottoming in FY12/12. In
addition, Tokyo will host the 2019 Rugby World Cup and the 2020 Summer Olympics, boosting tourism. In view of these
factors, the company expects the market environment to remain solid in the lead-up to the 2020 Tokyo Olympics and
Paralympics, and has been working to renovate existing facilities and build new ones.
FY12/15 and FY12/16 onward
In FY12/15, sales were flat YoY, and operating profit declined by 97%. This was due to one-time factors: a decline in
occupancy rates at Hakone Kowakien (key property in the leisure business) due to volcanic alerts raised for Mt. Hakone,
and upfront costs for the WHG segment under the company’s medium-term plan. However, occupancy rates at Hakone
Kowakien are recovering as volcanic activity returns to normal levels. Also, the upfront investment program in the WHG
segment is drawing to a close. As a result, from FY12/16 company’s finances are set to improve.
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Market and value chain
Market overview
Domestic guest numbers continue to increase
Domestic guest numbers
According to the Japan Tourism Agency, domestic guest numbers are in an uptrend. According to preliminary figures for
2015, guest numbers were up 22.4% from 2010, when new statistical standards were introduced, to 505mn. The YoY
growth rate was 6.7% in 2015, significantly outpacing the 2014 YoY growth
of 1.6%. This breaks down to 439mn by
Japanese guests (+2.4% YoY) and 66mn by non-Japanese (+48.1%). Further, foreign guests accounted for 13.1% of the
total number, +3.7pp YoY. Note that accommodation charges tend to be lower the nearer the accommodation date.
Meanwhile, foreign visitors who have to travel a long distance tend to make reservations at an early stage, so they are
contributing to rising average price per room. Therefore, the increase in foreign guests is a factor helping the Japanese
accommodation market to expand.
Annual number of guests
Source: Japan Tourism Agency materials
Note: Establishments with fewer than 10 employees also surveyed from April 2010
Note: 2015 figures are preliminary
Inbound tourists boost growth in accommodation demand
Inbound tourist numbers
An increase in the number of overseas visitors to Japan is boosting non-Japanese guests. In 2015, there were 19.7mn
inbound tourists to Japan, +47.1% YoY. This growth rate was an historical record, eclipsing the previous record of 40.4%
growth in 1970, the year of the Osaka Expo. The Japan Tourism Agency points to a mixture of factors that have started
paying off in the past two or three years: relaxed visa requirements, continuous promotional activities, growth in the
middle-class demographic in nearby countries, and yen depreciation.
The Japan Tourism Agency expects the number of inbound visitors to be over 20mn in 2016. However, the agency thinks
that the unprecedented growth rate seen in 2015 is unlikely to continue indefinitely, and expects the growth rate to taper
off somewhat. Still, cumulative January and February 2016 figures released in March 2016 show an estimated 43.7% YoY
growth to 3.7mn, so the boom remains intact.
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Number of foreign visitors to Japan
(mn people）
20.0
18.0
16.0
14.0
12.0
10.0
19.7
8.0
13.4
6.0
4.0
2.0
0.0
5.2
6.1
6.7
7.3
8.4
8.4
6.8
8.6
6.2
8.4
10.4
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Shared Research based on Japan Tourism Agency materials
Asia driving visitor numbers, with solid growth from Europe and Asia as well
Trends in foreign visitors to Japan by country
A breakdown of foreign visitors to Japan by country shows a 107.3% YoY increase in visitors from China to 5mn. Also,
Korea breached the 4mn milestone for the first time and Taiwanese visitors topped 3mn. Visitors from other Asian
countries are also in an uptrend; growth in foreign visitors to Japan is coming primarily from Asia. Furthermore visitors
from the US exceeded 1mn for the first time ever and the aggregate of North America and Europe broke through 2mn, so
the number of visitors to Japan from relatively far-off regions is showing solid growth. There was a good balance of visitors
to Japan from all around the world.
Fujita Kanko has offices in five countries in Asia and is working hard to attract foreign visitors. According to the company
there is a relatively high proportion of Asian guests in its Washington Hotel, Hotel Gracery, and Hotel Chinzanso Tokyo
brands, although the number of European and American visitors has risen in recent years. As a result, whichever area
shows an increase, the company stands to benefit.
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Visitors to Japan by country in December 2015 (estimates)
Country/Area
('000 people)
Total
Dec. 2014
Total
Total
Dec. 2015
Growth rate
Jan. to Dec. 2014
Jan. to Dec. 2015
Growth rate
1,236.1
1,773.1
43.4%
13,413.5
19,737.4
47.1%
South Korea
270.9
415.7
53.4%
2,755.3
4,002.1
45.3%
China
190.0
347.1
82.7%
2,409.2
4,993.8
107.3%
Taiwan
212.0
265.8
25.4%
2,829.8
3,677.1
29.9%
Hong Kong
106.2
157.4
48.2%
926.0
1,524.3
64.6%
Thailand
76.3
93.5
22.6%
657.6
796.7
21.2%
Singapore
47.8
67.0
40.1%
228.0
308.8
35.5%
Malaysia
39.3
50.3
28.0%
249.5
305.5
22.4%
Indonesia
23.7
29.3
23.5%
158.7
205.1
29.2%
Philippines
21.8
32.7
50.0%
184.2
268.3
45.7%
Vietnam
7.9
10.3
29.7%
124.3
185.4
49.2%
India
6.0
6.7
10.8%
88.0
103.2
17.3%
Australia
37.6
49.4
31.4%
302.7
376.2
24.3%
US
73.5
89.9
22.2%
891.7
1,033.2
15.9%
Canada
17.7
22.0
24.3%
182.9
231.4
26.5%
UK
16.9
19.4
14.7%
220.1
258.5
17.5%
France
13.0
14.3
10.2%
178.6
214.3
20.0%
Germany
8.9
10.2
14.2%
140.3
162.6
15.9%
Italy
6.8
8.4
23.7%
80.5
103.2
28.1%
Russia
3.9
3.9
-0.6%
64.1
54.4
-15.1%
3.3
4.9
46.8%
60.5
77.2
27.5%
52.4
74.9
43.1%
681.7
856.1
25.6%
Spain
Others
2020 Tokyo Olympics should further drive market expansion
In 2020 Tokyo will host the Summer Olympics and Paralympics. The Japan Tourism Agency expects these athletic
meetings to have economic ripple effects as shown below.
Estimates of economic impact
Calculated by
Economic impact
(influence on production)
Employees created
Tourism
Tokyo 2020 Bid Committee
(June 2012)
Approx. JPY2.96tn
Approx. 152,000 people
（Tokyo: approx.84,000,
other areas: approx.68,000）
Mizuho Research Institute Ltd.
(September 2013）
Approx. JPY2.5tn
Approx. 210,000 people
①Consumption by spectators: JPY207.4bn
②Number of tourists (including 800,000 foreign
tourists): 5,050,000 tourists
The Mori Memorial Foundation
Institute for Urban strategies
(January 2014）
Approx. JPY19.4tn
Approx. 1,210,000 people
①Increase in foreign visitors to Japan (rise in
consumption): JPY157bn
②Increase in construction of lodging
(rise in investment in construction): JPY395bn
-
The Japan Tourism Agency has released analysis of inbound tourist trends following previous Olympic events. According
to the agency, there is a tendency for inbound tourism demand to keep rising in countries that host the Olympics and
Paralympics for some years after the announcement of the host city. While Japanese price per room are on an uptrend,
they are still inexpensive compared to major countries overseas. For example, according to TripAdvisor, New York price
per room are 1.5x those in Tokyo and those in London are 1.2x. The increase in foreign tourists will help close this gap
and is likely to lift the floor of price per room.
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Trends in inbound tourism after announcements of host cities for Olympics and Paralympics
Price per room in major countries ranked from most expensive
Ranking
1
2
3
4
5
6
7
8
9
10
Country
US
UK
Switzerland
France
Canada
Japan
Hong Kong
Denmark
Sweden
Norway
City
New York
London
Zurich
Paris
Toronto
Tokyo
Hong Kong
Copenhagen
Stockholm
Oslo
Room rate (JPY) Rate of divergence
53.3%
43,105
34,025
21.0%
33,717
19.9%
30,270
7.7%
3.1%
28,997
28,116
0.0%
-11.8%
24,787
-13.9%
24,194
23,245
-17.3%
22,381
-20.4%
Source: Shared Research based on TripAdvisor rankings, “TripIndex World Hotel Stays 2015”
Note: average room charges for 10 most popular four-star and five star hotels in TripAdvisor’s popularity index in 48 world cities
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Competition
Major domestic hotel groups
Group
Hotel group name
Characteristics
Big three business hotel operators
Okura Hotels
Holdings company, largest shareholder in JAL Hotels.
New Otani
Boasts domestic hotel with highest number of rooms (Tokyo).
Imperial Hotel
Trailblazer for Japanese hotels. Also has a steady source of earnings in leasing buildings.
Hilton Worldwide
Under umbrella of Blackstone Fund (America). Arrived in Japan in 1963, has expanded to over 90 countries.
InterContinental Hotels Group
Parent company based in UK. Mainly deals in franchise and management contracts, has expanded to around 100 countries.
Accor Hotels
Parent company based in Paris, France. Has expanded to 92 countries.
Marriott International
Hotel chain boasting the highest amount of sales in the US; also owns the Ritz Carlton chain. Has expanded to 80 countries.
Hyatt Hotels and Resorts
Parent company based in Chicago, Illinois. Came to Japan in the 1980s. Has expanded to 50 countries.
Starwood Hotels and Resorts Worldwide
Large-scale US hotel chain. Has expanded to around 100 countries.
The Peninsula Hotels
Owned by Hong Kong capital.
Mandarin Oriental Hotel Group
Shangri-La Hotels and Resorts
Prince Hotels & Resorts
Largest domestic hotel chain; merged with Kokudo in 2006. Absorbed Seibu Railway's hotel industry.
Keio Plaza Hotels
Hotel chain run by Keio Corporation. Established Japan's first superhigh-rise hotel in Nishi-Shinjuku.
Tokyu Hotels
Part of the Tokyu Group. Operates six chains, including the high-end Capitol Hotel Tokyu and the Tokyu Inn business hotel chain.
Hankyuu-Hanshin-Daiichi Hotel Group
Absorbed the bankrupt Daiichi Hotel and expanded into Tokyo. Also developed Remm, a new specialized hotel brand.
International brands
Railroad affiliated companies
Airline affiliated companies
Developer companies
Business hotel operators
JR Hotel Group
Runs the Metropolitan and Metts chains in Eastern Japan, the Associa chain in Tokai, and the Granvia and Viainn chains in Western Japan.
Kintetsu Miyako Hotels
Fully-consolidated subsidiary of Kintetsu. Business focused on Miyako Hotel brand and on management outsourcing.
Sotetsu Holdings
Manages Sotetsu Hotel and Sotetsu Inn chains. Acquired Sunroute in September 2014.
JAL Hotels
Solely operates Nikko Hotels International and Hotel JAL City. Okura Hotels is its largest shareholder.
IHG ANA Hotels Group Japan
Joint venture company between IHG and ANA. Runs the InterContinental, ANA Crowne Plaza, and ANA Hotel chains.
Fujita Kanko
Operates high-end hotels and banquet halls, leisure facilities, and business hotels. Main branches include Hotel Chinzanso
Tokyo, Taiko-en, Washington Hotel, Hakone Kowakien.
Mitsui Fudosan Hotel Management
Manages Mitsui Garden Hotels.
Royal Park Hotels and Resorts
Part of Mitsubishi Estate. Focusing on developing its specialized hotel brand THE.
Palace Hotel
A prestigious hotel located in front of the Imperial Palace, aiming to attract high-end customers. Jointly manages office buildings.
Hoshino Resort
Developed Hoshinoya, Kai, and Risonare resort hotels. Participated in management of IHG ANA City Hotels in July 2015.
Royal Hotels
Developed Rihga Royal Hotel, etc. Kansai Zaikai holds a stake, and Mori Trust is a major shareholder.
APA Group
Developed APA Hotels chain, found across Japan. Also opererates condominium and resort businesses.
Route Inn Hotels
Expanding via opening of new hotels and M&A activities. Also operates city hotels (high-end hotels) and resorts.
Toyoko Inn
Has hotels across Japan. Built around the concept of a train station inn.
Source: Shared Research based on the Japan Company Handbook industry map and others
Among those operating domestic hotels are international brands, railroad affiliated companies and independents. At the
top of the domestic luxury hotel sales rank are the railroad affiliated hotels, the Imperial Hotel, Hotel Okura and Hotel New
Otani. Fuijta Kanko ranks among the top 10, at number eight. Under the company’s umbrella is the Hotel Chinzanso
Tokyo, the only Japanese hotel with a five star rating from Michelin. Under the WHG brand it operates the Washington
Hotel business hotel chain and the leisure/tourism oriented Hotel Gracery as well as resort hotels. It appears that the WHG
brand competes on price and facilities with Domiin (operated by Kyoritsu Maintenance Co., Ltd., TSE1: 9616), Mitsui
Garden Hotel (Mitsui Fudosan Co., Ltd., TSE1: 8801) and the Richmond Hotel brand. Meanwhile Hotel Chinzanso Tokyo,
which has historic buildings and an extensive Japanese garden, is conscious of the price points of international luxury
hotels, but argues that it has a unique presence. For the resort hotels, the company says that competitive conditions vary
according to the resort area.
Sales rankings in hotel industry
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Ticker
9024
4681
9005
9008
9042
9722
9708
9713
9616
6097
9723
6076
9704
9720
9695
Company
Seibu Holdings (Hotel/leisure)
Resorttrust
TOKYU CORPORATION (Hotel/leisure)
Hotel Okura
Keio Corporation (Leisure/service)
New Otani
Hankyu Hanshin Holdings (Hotel)
Fujita Kanko
Imperial Hotel
RIHGA ROYAL HOTELS
Kyoritsu Maintenance (Hotel)
Palace Hotel
Nippon View Hotel
THE KYOTO HOTEL
Amaze
AGORA Hospitality Group
Hotel New Grand
Hotel New Akao
Kumamoto Hotel Castle
THE KAMOGAWA GRAND HOTEL
Fiscal Year-End
March
March
March
March
March
March
March
December
March
March
March
December
April
December
November
December
November
December
March
March
FY2013
162.5
116.8
91.9
68.2
63.6
63.1
63.0
62.1
53.1
45.3
43.3
25.6
17.6
10.4
9.3
7.0
5.5
3.9
3.7
3.6
FY2014
167.3
120.4
95.5
71.2
66.3
63.5
62.3
64.2
53.7
44.6
46.8
27.1
18.1
10.5
10.6
7.5
4.9
4.0
3.5
3.7
YoY
3.0%
3.1%
3.9%
4.4%
4.2%
0.6%
-1.1%
3.4%
1.1%
-1.5%
8.1%
5.9%
2.8%
1.0%
14.0%
7.1%
-10.9%
2.6%
-5.4%
2.8%
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Comparison with competitors
(JPYmn)
Segment
Sales
Operating profit
OPM
Segment asset
Depreciation
Amortization of goodwill
Impairment loss
Increase in tangible/intangible
fixed assets
Consolidated
Sales
Operating profit
OPM
Segment asset
Depreciation
Amortization of goodwill
Impairment loss
Increase in tangible/intangible
fixed assets
Borrowings from other banks
Cash and deposits
Current ratio
Current assets
Current Liabilities
Kyoritsu Maintenance (9616)
13/3
14/3
15/3 3 year average 13/12*
Hotel Business
WHG Business
39,143
43,475
46,929
43,182
25,346
2,842
3,830
4,736
3,803
589
7.3%
8.8%
10.1%
8.8%
2.3%
45,655
48,613
57,084
50,451
16,226
2,000
1,778
1,873
1,884
478
3
2
11
5
51
1,461
3,285
99,472
6,521
6.6%
122,259
2,986
4
184
105,216
7,490
7.1%
131,995
2,850
4
123
5,736
6,277
57,650
17,622
79.3%
30,852
38,892
67,550
24,707
91.8%
37,473
40,819
Fujita Kanko (9722)
14/12
15/12 3 year average
25,867
1,101
4.3%
17,252
633
187
27,979
811
2.9%
21,475
857
2
26,397
834
3.2%
18,318
656
80
2,373
1,209
898
3,757
1,955
110,212
8,217
7.5%
139,750
3,128
75
104,967
7,409
7.1%
131,335
2,988
4
127
62,109
1,205
1.9%
104,787
3,495
165
64,250
1,365
2.1%
100,881
3,773
1,248
63,981
39
0.1%
104,732
3,998
40
36
63,447
870
1.4%
103,467
3,755
40
483
6,007
4,323
4,055
8,050
5,476
56,825
16,115
66.1%
31,457
47,590
60,675
19,481
79.1%
33,261
42,434
41,613
5,044
49.5%
10,911
22,038
37,462
5,944
54.1%
12,051
22,288
44,813
4,142
54.9%
11,722
21,356
41,296
5,043
52.8%
11,561
21,894
Note: FY12/13 figures for Fujita Kanko are for the Washington Hotel segment
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Strengths and weaknesses
Strengths
◤
Chinzanso brand name and expertise: The company’s Chinzanso Hotel used to be a franchisee of Four Seasons
Hotels and Resorts. It is the only Japanese hotel to have been awarded five stars by Michelin and has the expertise to
provide luxury services. The company is working to boost added value of its WHG hotels, and for this we believe
that the brand name and expertise of Chinzanso will be an advantage.
◤
High ratio of rooms in Greater Tokyo, where demand from inbound tourists is expected: In FY12/15, over
55% of guest rooms in the main WHG segment were in Greater Tokyo. This compares to the nationwide share of
hotel rooms in Greater Tokyo of just over 10%. Tokyo and other major cities stand to see inbound tourism demand
grow. As a result, having a large share of rooms in Greater Tokyo is an advantage for Fujita Kanko.
◤
Holdings of historic buildings: On the grounds of the company’s Hotel Chinzanso Tokyo, Taiko-en, and Hakone
Kowakien, there are many historic buildings. Hotel Chinzanso has a three-story pagoda built in the Muromachi
period (14th to 16th century), as well as a residence that is a registered tangible cultural property. In the hotel and
leisure industry, where differentiation is difficult, historic buildings can attract guests and make a hotel stand out.
Weaknesses
◤
Relationships with asset owners under the leasing model: As the company operates hotels mainly under the
leasing model in the WHG segment, it generally does not own assets but leases them from other companies (with
one exception). This improves asset efficiency and reduces risks, but for major building renovations the company
needs the agreement of the asset owner, which requires time.
◤
Sluggish core wedding business: The wedding business, which accounts for nearly half of Luxury & Banquet sales
(and some 20% of overall company sales) is struggling. Wedding demand is shrinking due to a decline in the
number of young people due to a falling birthrate, later marriages, and a trend toward smaller ceremonies resulting
from lifestyle changes, such as more focus on the nuclear family. The company aims to improve earnings by raising
prices through expanded ancillary services, expanding to regional areas, and reviewing its cost structure. However,
the segment appears vulnerable to this shrinking market in the long term.
◤
Weak balance sheet: While the company appears to have hidden assets on its books, in FY12/15 the company’s
capital adequacy ratio was only 25.6%. The current ratio was 54.9% and it averaged just 52.8% over the past three
years.
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FUJITA KANKO ＞ Historical performance
Historical performance
FY12/15 results
▶
▶
▶
▶
Sales:
JPY64.0bn
(-0.4% YoY)
Operating profit:
JPY39mn
(-97.1% YoY)
Recurring loss:
JPY172mn
(profit of JPY1.4bn in FY12/14)
Net income:
JPY32mn
(profit of JPY531mn in FY12/14)
Operating profit before depreciation, the company’s preferred management benchmark, was JPY5.1bn, down JPY853mn
from the previous year.
The WHG segment drove overall group results. Average price per room increased by more than JPY1,000 due to the
opening of Hotel Gracery Shinjuku, as well as investments to renovate guestrooms at existing hotels, and the number of
overseas guests increased. However overall consolidated sales declined partly because major renovation work at the
Shinjuku Washington Hotel reduced occupancy levels. The drop in consolidated sales also stemmed from a sharp decline
in the number of guests at Hakone Hotel Kowakien and Hakone Kowakien Yunessun, as the volcanic alerts for Hakone
Owakudani were raised. Sales also declined given the closure of the Kyoto Kokusai Hotel the previous year.
Profits fell sharply year-on-year. Earnings were pulled down by renovations at the Shinjuku Washington Hotel, expenses
from new initiatives including set-up costs prior to the opening Hotel Gracery Shinjuku, and investment related to buying
shares in Kawano Co., Ltd.
Note: FY12/15 was the first year of the company’s new medium-term plan. The plan projected a temporary profit decline
during the investment period. Operating profit and recurring loss recovered by JPY1.3bn each, more than initially
expected.
WHG segment
WHG Business (JPYmn)
Sales
Operating profit
OPM
Visitors ('000 people)
FY12/14
25,867
7,593
4.3%
3052
FY12/15
27,979
6,494
2.9%
3201
Dif.
2,112
-1,099
149
YoY
8.2%
-14.5%
4.9%
Sales were JPY28.0bn (+2.1bn YoY), and operating profit was JPY811mn (-JPY290mn YoY). There were temporary
expenses including set-up costs prior to the opening of Hotel Gracery Shinjuku and lower occupancy rates at the Shinjuku
Washington Hotel due to major repair work.
In the WHG segment, the company has Washington Hotels in Asahikawa, Sendai, Urawa, Akihabara, Shinjuku, Tokyo Bay
Ariake, Isezakicho Yokohama, Sakuragicho Yokohama, Kansai Airport, Hiroshima, Canal City Fukuoka, and Nagasaki. It has
Hotel Gracery hotels in Sapporo, Ginza, Tamachi and Shinjuku, and Hotel Fuijta properties in Fukui and Nara.
Fujita Kanko plans to accelerate development in the WHG segment to drive growth. It also aims to make its existing
properties more competitive. In April 2015, it opened the 970-room Hotel Gracery Shinjuku. Also in April 2015, the
company began major renovations of Shinjuku Washington Hotel, renovating all of the 1,297 rooms in the main hotel
building in phases over the course of one year. Fujita Kanko made rooms available to guests as soon as each room
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renovation was complete.
In October 2015, the company opened a training center inside the Yokohama Isezakicho Washington Hotel, which has
reproductions of reception desks and guest rooms. The company plans to train all staff at this center (previously done
separately at each hotel) under a uniform program to increase training quality and speed, leading improved service
quality and customer satisfaction.
In the accommodation division, sales declined due to renovation work at the Shinjuku Washington Hotel. Still, division
results were firm, as the company continued to attract overseas guests, primarily from Asia. In addition to an increase in
average price per room, guestroom occupancy rates also remained high. As a result, the number of guests was 3.2mn, up
149,000 YoY.
Resort segment
Resort Business (JPYmn)
Sales
Operating profit
OPM
Sales breakdown
Accommodation
Leisure
Other (including elimination)
FY12/14
7,593
376
5.0%
FY12/15
6,494
-301
-4.6%
Dif.
-1,099
-677
-
YoY
-14.5%
-
5,137
2,152
304
4,587
1,614
293
-550
-538
-11
-10.7%
-25.0%
-3.6%
Segment sales were JPY6.5bn (down JPY1.1bn YoY) due to the volcanic alerts raised for Hakone Owakudani. The company
booked a segment loss of JPY301mn, down JPY678mn YoY.
Properties in the segment include Hakone Hotel Kowakien, Hakone Kowakien Yunessun, B&B Pension Hakone, Ito
Kowakien, Hotel Toba Kowakien, Shimoda Aquarium, and Yufuin Ryokuyu.
In the accommodation division, sales at core property Hakone Hotel Kowakien posted year-on-year growth from January
to April 2015. From May 2015, however, a series of volcanic warnings for Hakone Owakudani resulted in a sharp drop in
guest numbers. Warning levels returned to normal in November 2015 and performance was on a recovery trend, but the
business was significantly affected, especially during the peak summer season. The construction of the new
accommodation facility, Hakone Kowakien Tenyu, scheduled to open in spring 2017, and the closure of Hakone Kowakien
Yunessun Inn in October 2014 also affected earnings, and sales were down JPY550mn YoY to JPY4.6bn.
In the Resort segment, Hakone Kowakien Yunessun was also affected by the increased volcanic alerts for Hakone
Owakudani, and there was a sharp drop-off in guests, particularly for the families. Sales were down JPY538mn YoY to
JPY1.6bn.
Luxury & Banquet (L&B) segment
Luxury & Banquet Business (JPYmn)
Sales
Operating profit
OPM
Sales breakdown
Wedding
Banquet
Restaurants
Accommodations
Golf
Other (including elimination)
FY12/14
27,585
168
0.6%
FY12/15
26,241
107
0.4%
11,903
5,526
4,938
3,146
1,273
794
12,384
5,174
4,186
2,439
1,333
721
Dif.
-1,344
-61
-
YoY
-4.9%
-36.3%
-
481
-352
-752
-707
60
-73
4.0%
-6.4%
-15.2%
-22.5%
4.7%
-9.2%
Sales were JPY26.2bn (a drop of JPY1.3bn YoY) partly due to the closure of the Kyoto Kokusai Hotel. Segment operating
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profit was JPY107mn (a fall of JPY61mn).
Properties in the Luxury & Banquet segment include Hotel Chinzanso Tokyo, Taiko-en, Hotel Azur Takeshiba, The South
Harbor Resort, Remercier Motoujina, Marryaid, Camellia Hills Country Club, Noto Country Club, Fujita Kanko Koei, and
Visualife.
In the wedding division, sales were JPY12.4bn (+JPY481mn). Sales fell at Hotel Chinzanso Tokyo and Taikoen due to fewer
ceremonies, but the consolidation of Kawano (shares purchased in January 2015), led to consolidated sales growth. In July
2015, the company opened “Hotel Chinzanso Tokyo For Wedding Ginza,” its first wedding facility not in a hotel, in Ginza
(Tokyo). The company said it aimed to meet customers’ needs with the enhanced convenience and services available at
the salon.
In the accommodation division, at Hotel Chinzanso Tokyo the first phase of renovations (started in October 2014 as part
of a four-year plan to renovate a total of 260 guestrooms) was finished. Average price per room rose due to the
renovations, but the closure of the Kyoto Kokusai Hotel in December 2014 weighed on sales, which fell JPY707mn YoY to
JPY2.4bn. Excluding the impact of the Kyoto Kokusai Hotel closure, sales in the accommodation division increased
JPY262mn YoY.
Sales in the restaurant division were down JPY752mn YoY to JPY4.2bn, pulled down by the Kyoto Kokusai Hotel closure.
FY12/14 results
▶
▶
▶
▶
Sales:
JPY64.3bn
(+3.4% YoY)
Operating profit:
JPY1.4bn
(+13.3%)
Recurring profit:
JPY1.4bn
(+18.9%)
Net income:
JPY531mn
(-39.6%)
In FY12/14, accommodation demand increased in the Greater Tokyo area in particular due to rising numbers of foreign
visitors. The company renovated and refurbished over 1,200 guestrooms across the group, including at Tokyo Bay Ariake
Washington Hotel, Hotel Chinzanso Tokyo, and Hakone Hotel Kowakien. Sales grew on the back of full-year operation of
new properties opened the previous year and increased room charges. On the operating expense front, depreciation
expenses rose due to investment in guestroom renovations, as did removal expenses. There were also startup costs
related to the setup of the new Hotel Gracery Shinjuku. Yen depreciation and inclement weather led to increased raw
material prices and utilities charges rose, but the company worked to control costs by operating more efficiently. Both
operating and recurring profit rose as a result. The company adopted a new management benchmark, operating profit
before depreciation, from FY12/14. This came in at JPY6.0bn, +10.4% YoY.
The company booked JPY1.8bn in extraordinary profit from the transfer of the site of the Kyoto Kokusai Hotel and sale of
investment securities. The company also booked extraordinary losses of JPY1.7bn, including losses related to the closure
of Hakone Kowakien Yunessun Inn. As a result, net income declined YoY.
FY12/13 results
▶
▶
Sales:
JPY62.1bn
(+2.7%YoY)
Operating profit:
JPY1.2bn
(+37.3%)
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▶
▶
Recurring profit:
JPY1.2bn
(+85.4%)
Net income:
JPY878mn
(+138.2%)
FY12/13 featured an active investment program as the company laid the groundwork for future growth. In January 2013 it
launched Hotel Chinzanso Tokyo; in September it opened a guest house (Oen) at its Taiko-en Osaka property; it opened
Washington Hotels in Hiroshima (October), and Sendai (December). Sales rose due to brisk business in the
accommodation and restaurant divisions as well as the impact of new hotel openings. Operating expenses included capex
and advertising costs related to integrating operations of Hotel Chinzanso Tokyo, and opening expenses for the
Hiroshima and Sendai Washington Hotels. In order to enhance service quality, the company spent more on hiring
personnel and training, but operating and recurring profits grew thanks to higher sales.
The company posted extraordinary profits of JPY1.6bn resulting from a consolidated subsidiary settling a rent dispute with
a landlord. The company made provisions for a loss on discontinued operations accompanying its transfer of a water
supply business in the Toba district to the city of Toba, leading to extraordinary losses of JPY2.0bn. As a result, net income
declined.
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Income statement
Income Statement
(JPYmn)
Total Sales
YoY
CoGS
Gross Profit
YoY
GPM
SG&A
SG&A / Sales
FY12/08
FY12/09
FY12/10
FY12/11
FY12/12
FY12/13
FY12/14
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
67,394
61,295
64,249
57,371
60,498
62,109
64,250
63,981
-5.3%
61,684
-9.0%
56,881
4.8%
58,597
-10.7%
55,900
4,598
5,710
4,414
5,651
4,522
-30.3%
-22.7%
28.0%
-20.0%
8.5%
3,161
4.7%
7.2%
3,032
4.9%
8.8%
3,510
5.5%
5.5%
52,848
7.9%
3,203
5.6%
1.7%
7.6%
3,720
6.1%
2.7%
58,674
5,275
5,576
14.7%
8.5%
4,070
6.6%
Operating Profit before Depreciation
Balance
Operating Profit
3.4%
56,833
5.7%
8.7%
4,210
FY12/15
-0.4%
59,534
4,446
-20.3%
6.9%
4,407
6.6%
6.9%
5,995
5,141
4,630
5,102
2,549
1,380
2,140
1,318
877
1,205
1,365
39
YoY
-51.4%
-45.9%
55.1%
-38.4%
-33.5%
37.4%
13.3%
-97.1%
OPM
3.8%
2.3%
3.3%
2.3%
1.4%
1.9%
2.1%
0.1%
Non-Operating Income
750
895
628
585
639
725
853
771
Non-Operating Expenses
814
880
940
861
887
761
828
983
2,485
1,395
1,828
1,042
630
1,169
1,390
-172
YoY
-50.5%
-43.9%
31.0%
-43.0%
-39.5%
85.6%
18.9%
RPM
3.7%
2.3%
2.8%
1.8%
1.0%
1.9%
2.2%
-47
-150
79
Recurring Profit
Extraordinary Income (loss)
-857
63
Pre-tax Profits
1,628
Income Taxes
-164
-
-866
-4,648
681
1,458
962
-3,606
583
1,019
1,469
509
892
696
100
187
110
911
450
Implied Tax Rate
-10.1%
61.2%
72.3%
-2.8%
32.1%
10.8%
62.0%
Minority Interests
-17
-13
37
-162
27
30
27
26
1,810
579
227
-3,544
368
878
531
32
-20.6%
-68.0%
-60.8%
-
-
138.6%
-39.5%
-94.0%
2.7%
0.9%
0.4%
-6.2%
0.6%
1.4%
0.8%
0.1%
Net Income
YoY
Net Margin
88.4%
Sales
【Old segment 1】
Bridal & Luxury Hotel Business
27,537
24,726
27,362
25,260
-
-
-
-
Hotel Gracery and Washington Hotel Business
25,526
22,819
23,674
22,037
-
-
-
-
Resort Business
14,399
13,701
13,361
10,230
-
-
-
-
2,295
1,977
1,772
1,658
-
-
-
-
-2,364
-1,929
-1,920
-1,816
-
-
-
-
Other Businesses
Whole company/elimination
【Old segment 2】
-
-
-
25,476
25,867
25,632
25,754
-
WHG Hotel Business
-
-
-
22,068
24,107
25,346
27,383
-
Kowakien Business
-
-
-
6,483
7,233
7,691
7,593
-
Service Expertise Business
-
-
-
7,225
7,408
7,477
7,519
-
Other Businesses
-
-
-
221
196
216
324
-
-
-
-
-4,105
-4,314
-4,255
-4,324
27,979
【Current segment】
WHG Business
-
-
-
-
-
-
25,867
Resort Business
-
-
-
-
-
-
7,593
6,494
-
-
-
-
-
-
27,585
26,241
Other Businesses
-
-
-
-
-
-
6,140
5,903
Adjustment
-
-
-
-
-
-
-2,936
-2,636
1,397
1,274
1,631
1,418
-
-
-
-
762
-408
-77
-480
-
-
-
-
Operating Profit
【Old segment 1】
Bridal & Luxury Hotel Business
Hotel Gracery and Washington Hotel Business
Resort Business
512
666
744
448
-
-
-
-
-173
-197
-185
-96
-
-
-
-
50
46
26
28
-
-
-
-
-
-
-
1,476
250
276
99
-
WHG Hotel Business
-
-
-
-477
417
589
1,056
-
Kowakien Business
-
-
-
73
230
535
376
-
Service Expertise Business
-
-
-
470
291
182
166
-
Other Businesses
-
-
-
-269
-347
-405
-366
-
-
-
-
45
34
27
34
-
WHG Business
-
-
-
-
-
-
1,101
811
Resort Business
-
-
-
-
-
-
376
-301
-
-
-
-
-
-
168
107
Other Businesses
-
-
-
-
-
-
-321
-587
Adjustment
-
-
-
-
-
-
40
10
Other Businesses
【Old segment 2】
【Current segment】
Note: When releasing its medium-term plans in FY12/12 and FY12/15, the company announced changes to its segmentation. The initial
segmentation applies to FY12/11 and before. The second segmentation applies to figures until FY12/14 (FY12/11 figures are retroactively adjusted).
The current segmentation applies to figures from FY12/15 (FY12/14 figures are retroactively adjusted).
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Balance sheet
FY12/08
FY12/09
FY12/10
FY12/11
FY12/12
FY12/13
FY12/14
FY12/15
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cash and Equivalents
6,620
7,375
8,265
6,961
5,071
5,044
5,944
4,142
Accounts Receivable
3,528
3,254
3,202
3,159
3,283
3,494
3,651
3,875
Inventories
632
593
563
517
544
574
570
558
Deferred Tax Assets
346
332
321
245
243
275
436
1,178
1,529
1,599
1,679
1,429
1,563
1,554
1,486
2,016
-39
-64
-57
-34
-32
-30
-36
-47
12,616
13,089
13,973
12,277
10,672
10,911
12,051
11,722
Buildings and structures
91,883
93,278
92,780
92,648
93,368
94,751
93,315
92,219
Accumulated depreciation
49,591
51,692
53,507
54,284
55,646
57,463
58,279
56,907
42,292
41,586
39,273
38,364
37,722
37,288
35,036
35,312
12,480
12,707
13,148
13,379
14,267
15,438
16,304
17,254
Accumulated depreciation
9,490
10,151
10,706
11,175
11,650
12,201
12,643
11,740
Tools, furniture and fixtures (net)
2,990
2,556
2,442
2,204
2,617
3,237
3,661
5,513
10,029
12,571
12,576
14,745
14,686
14,688
12,302
12,983
27
27
69
1,151
Balance Sheet
(JPYmn)
ASSETS
Other Current Assets
Allowance for Doubtful Accounts
Total Current Assets
Buildings
Buildings and structures
Land
Construction in progress
Golf courses
Other
Total Tangible Fixed Assets
9
69
133
242
2,773
2,773
2,773
2,773
2,773
3,787
3,689
3,747
959
1,066
1,070
1,098
17,980
59,125
60,429
58,107
59,054
58,933
59,189
55,112
58,805
Software
201
158
119
203
576
889
802
667
Other
137
259
265
437
165
171
137
487
338
417
384
640
741
1,060
939
1,154
Investment Securities
10,772
12,596
12,287
11,337
13,655
22,627
21,942
21,472
Deferred Tax Assets
4,481
3,899
3,507
3,766
3,733
1,077
716
1,134
Other
7,516
7,471
8,945
8,844
9,291
9,922
10,120
10,443
Total Investments and Other Assets
22,769
23,966
24,739
23,947
26,679
33,626
32,778
33,049
Total Fixed Assets
82,234
84,814
83,231
83,641
86,355
93,876
88,830
93,010
Total Assets
94,850
97,903
97,204
95,918
97,027
104,787
100,881
104,732
Total Intangible Fixed Assets
LIABILITIES
Accounts Payable
1,661
1,530
1,825
1,757
1,890
1,771
1,737
1,583
Short-Term Debt
21,032
15,596
13,012
13,232
12,298
13,019
11,321
12,656
7,308
6,365
6,299
6,212
7,529
7,248
9,230
7,117
30,001
23,491
21,136
21,201
21,717
22,038
22,288
21,356
Long-Term Debt
17,771
25,852
28,458
28,432
28,544
28,594
26,141
32,157
Other
24,310
24,178
23,955
26,031
25,406
26,261
24,676
24,206
42,081
50,030
52,413
54,463
53,950
54,855
50,817
56,363
38,803
41,448
41,470
41,664
40,842
41,613
37,462
44,813
72,082
73,521
73,549
75,665
75,668
76,893
73,106
77,719
Other Current Liabilities
Total Current Liabilities
Total Long-Term Liabilities
Total Interest-Bearing Debt
Total Liabilities
NET ASSETS
12,081
12,081
12,081
12,081
12,081
12,081
12,081
12,081
Reserves
5,874
5,873
5,873
5,431
5,431
5,431
5,431
5,432
Retained Earnings Brought Forward
9,449
9,447
9,092
4,965
4,854
5,253
5,305
4,356
Treasury shares
-2,347
-2,348
-2,351
-910
-912
-914
-916
-921
Total Shareholder Equity
25,058
25,053
24,695
21,568
21,455
21,852
21,902
20,949
Valuation difference on available-for-sale securities
-2,601
-960
-1,358
-1,460
-265
5,842
5,728
5,952
3
12
Issued Capital
Subscription rights to shares
Foreign currency translation adjustment
Other
Minority interests
Total Net Assets
17
6
-77
-82
310
289
317
146
165
187
204
186
22,767
24,381
23,654
20,253
21,358
27,894
27,774
27,012
2,499
2,317
1,940
1,919
1,937
2,297
2,484
2,850
Interest-Bearing Debt
38,803
41,448
41,470
41,664
40,842
41,613
37,462
44,813
Net Debt
32,183
34,073
33,205
34,703
35,771
36,569
31,518
40,671
Working Capital
Asset characteristics
In the company’s key hotel business, operated by the WHG segment, main investments are in properties. Still, Fujita
Kanko mainly operates hotels under a leasing model, so assets in the WHG segment comprise just over 20% of the total,
versus roughly 44% of sales.
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Segment composition by assets and sales (FY12/15)
(JPYmn)
Assets
% of total
Sales
% of total
WHG
21,475
20.5%
27,979
43.7%
Resort
Luxury&Banquet
43,325
12,338
41.4%
11.8%
26,241
6,494
41.0%
10.1%
Other
27,594
26.3%
3,267
5.1%
Total
104,732
100.0%
63,981
100.0%
Hidden assets
The company’s FY12/14 financial statements list key assets as Hotel Chinzanso Tokyo and Taiko-en in the Luxury &
Banquet segment, and Hakone Kowakien in the Resort segment. The company has owned these historic gardens and
buildings since its founding. Further, as the assets are used as part of operations, there is a minimal likelihood of their sale,
but because they were purchased long ago, book values of the land are low. Shared Research calculates that there is
roughly JPY50bn in unrealized profits.
Fujita Kanko’s land assets (as of end FY12/14)
Properties
Taiko-en
Hakone Kowaki-en
Camellia Hills CC
Noto CC
Other
Total
Book value of land Golf course Land area Book value per sqm* Estimated unit price**
JPYmn
JPYmn '000 sqm
JPY '000
JPY '000
49
49
1.0
641
4,131
25
165.2
434
676
584
1.2
20
3,844
2,450
585
6.6
940
357
1,277
0.7
5,435
15,075
Estimated land market value Estimated unrealized gain
JPYmn
JPYmn
31,409
31,360
10,850
6,719
11,446
10,770
48,849
Note: Land book value includes value of golf courses. Average book value also includes value of golf courses.
Estimates employ real estate transaction data from Ministry of Land Infrastructure Transport and Tourism in neighboring areas (official prices and
prefectural land prices).
However, because there was no land price information available for areas adjoining the Camellia Hills Country Club and Noto Country Club they
were excluded from unrealized profit calculations.
Fujita Kanko’s cultural and historic properties
Hakone Kowakien
The garden contains historic properties and tangible
The site has two registered tangible cultural properties,
cultural properties such as the Three-Story Pagoda, said
Kihinkan and Geihinkan. Kihinkan was built in 1918 as a
to have been constructed in the Muromachi Period,
traditional Japanese-style villa for Baron Heitaro Fujita.
Zangetsu, the former villa of Baron Fujita, the Hannyaji
temple stone lantern and a stone statue of Rakan.
Taiko-en
Fujita Museum (Public Interest Incorporated
Foundation)
Taiko-en can trace its history back to the Amijima palace
The Fujita Museum features Oriental antiquities collected
built along the banks of the Yodogawa by Denzaburo
by Meiji-period business tycoon Denzaburo Fujita and his
Fujita, a leader in business community in the Kansai
sons Heitaro and Tokujiro in the Meiji and Taisho periods.
region in the Meiji era. Rare and unusual stones were
Although there is no capital relationship between Fujita
used to decorate the tsukiyama-shiki kaiyu style garden
Kanko and the museum, the company contributes
(featuring artificial hill and pond) built on a large block of
financially to the foundation that operates the museum
roughly 7,000 tsubo (about 23,000sqm). The historic
and supports its publicity in the interest of highlighting
lanterns and pagodas in the garden were collected from
the Fujita family’s roots and fostering cultural
all over Japan.
preservation.
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Registered tangible cultural property: Three-Story Pagoda
Registered tangible cultural property: Kihinkan
(Hotel Chinzanso Tokyo)
(Hakone Kowakien)
Yodogawa House (Taiko-en)
Liabilities
Following the global financial crisis (since FY12/09), the company refrained from major capital investments, so liabilities
have trended around the JPY35bn level. In FY12/14, net debt declined to JPY31.5bn, partly due to the sale of the Kyoto
Kokusai Hotel. In FY12/15, net debt rose to JPY40.7bn due to major new hotel investments such as Hotel Gracery.
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Cash flow statement
Cash Flow Statement
(JPYmn)
Operating Cash Flow (1)
Investment Cash Flow (2)
Free Cash Flow (1+2)
Financial Cash Flow
Depreciation & Amortization (A)
Capital Expenditures (B)
Working Capital Changes (C)
Simple FCF (NI + A + B - C)
FY12/08
Cons.
4,263
-3,359
904
2,212
3,349
3,096
-400
8,655
FY12/09
Cons.
3,487
-4,786
-1,299
2,027
3,471
5,040
-182
9,272
FY12/10
Cons.
4,317
-2,827
1,490
-601
3,416
FY12/11
Cons.
3,158
-5,015
-1,857
552
3,409
FY12/12
Cons.
3,886
-4,407
-521
-1,371
3,564
FY12/13
Cons.
4,367
-4,643
-276
220
3,495
1,295
5,284
2,947
5,068
-377
5,315
-21
5,170
18
6,861
360
9,081
FY12/14
Cons.
3,663
1,901
5,564
-4,671
3,773
3,609
187
7,726
FY12/15
Cons.
-415
-8,184
-8,599
6,748
4,038
8,160
366
11,864
Cash flows from operating activities
The company’s operating cash flow levels vary before and after the Global Financial Crisis. In FY12/08, operating cash flow
fell by 40% YoY as earnings slumped due to the GFC. Subsequently operating cash inflows have been around the JPY4bn
level. In FY12/15 however, due to a temporary drop in earnings accompanying upfront investments and a decline in
occupancy rates at Hakone Kowakien amid a heightened volcanic alerts, operating cash flows turned negative.
Cash flows from investing activities
The company’s investing cash outflows have hovered around JPY5bn since FY12/09, in the wake of the GFC. In FY12/14,
there were inflows of JPY1.9bn due to the sale of the Kyoto Kokusai Hotel. In FY12/15 there were investing cash outflows
of JPY8.6bn due to investments in its new Hotel Gracery property.
Cash flows from financing activities
The main items in financing cash flows are dividend payments and changes in borrowings. Since FY12/11, the company
has paid a steady dividend per share of JPY4. Total annual dividend payments are JPY487mn.
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FUJITA KANKO ＞ News and topics
News and topics
On January 28, 2016, the company revised its full-year forecasts.
Revised FY12/15 forecasts
▶
▶
▶
▶
▶
Sales:
JPY63.9bn
(JPY63.8bn in previous forecast)
Operating profit:
JPY0
(loss of JPY300mn)
Recurring loss:
JPY200mn
(loss of JPY500mn)
Net income:
JPY0
(loss of JPY500mn)
EPS:
JPY0
(loss of JPY4.17)
Reasons for revisions
In the previous forecast revision (released on November 9, 2015) consolidated operating profit and recurring profit
forecasts were revised up by JPY1.0bn each. Subsequently the company increased room prices in the accommodation
division, primarily in the WHG segment. Further, in the Resort segment Hakone Hotel Kowakien recovered, leading to a
further JPY300mn improvement in operating profit and recurring profit, so the company revised its consolidated
operating profit forecast to roughly breakeven. Fujita Kanko expects consolidated recurring loss of JPY200mn, but for net
income to roughly breakeven due to booking income on the sale of investment securities and deferred tax assets.
On the same day, the company announced the dissolution and liquidation of a consolidated subsidiary and the booking
of deferred tax assets.
As of January 1, 2016, the group implemented internal restructuring to integrate management. It consolidated multiple
offices and companies in the Kansai area (primarily Kyoto and Osaka) to facilitate the flow of staff and attract new
employees, as well as increase efficiency. As a result of the restructuring, all businesses of former consolidated subsidiary
Kansai Airport Washington Hotel Co., Ltd. were transferred to the post-restructuring company, WHG Kansai Co., Ltd.
Kansai Airport Washington Hotel was dissolved on January 28, 2016, and complete liquidation has been targeted for June
2016.
On the same day, the company announced that it had reached a basic franchise agreement with Shinshowa Corp. to
open the Kisarazu Washington Hotel (tentative name) in December 2017.
On November 9, 2015, the company revised its full-year forecasts.
▶
▶
▶
▶
▶
Sales:
JPY63.8bn (JPY64.2bn previously)
Operating loss:
JPY300mn (loss of JPY1.3bn)
Recurring loss:
JPY500mn (loss of JPY1.5bn)
Net loss:
JPY500mn (loss of JPY500mn)
EPS:
loss of JPY4.17 (loss of JPY4.17)
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FUJITA KANKO ＞ News and topics
Reasons for the revisions
As of end Q2 FY12/15, the company had expected a large decline in sales and profits in the Resort segment, but the
downturn was less severe than expected. In the WHG segment, the accommodation division continued to show solid
performance due to a sharp increase in foreign visitors to Japan. In particular, since its opening in April 2015 and full
operation in July, Hotel Gracery Shinjuku (970 rooms; Kabukicho, Shinjuku) has performed well. As a result, an increase in
average room prices in the accommodation division and a reduction in fixed costs in the Resort segment boosted
margins. Fujita Kanko narrowed operating and recurring loss forecasts by JPY1.0bn each from previous forecasts.
On November 2, 2015, the company made an announcement regarding group restructuring (involving mergers,
company splits, and business transfers).
.
On February 13, 2015, the company made an announcement regarding its medium-term management plan titled Fujita
Premium Value Creation 2015.
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FUJITA KANKO ＞ Other information
Other information
History
The company traces its history back to 1869, when Denzaburo Fujita (a native of Hagi, Choshu (now Yamaguchi))
founded Denzaburo Fujita Trading Company. Denzaburo had a strong entrepreneurial spirit and launched a series of
cutting-edge businesses in the fields of mining, civil engineering & construction, textiles and chemicals. In 1881 he
reorganized the trading company and created Fujita Gumi (Group). The group obtained the Kosaka Mine in a
government selloff, propelling the mining business to a new level. In 1937 Fujita Gumi became a joint stock corporation,
which grew in stature to rival the zaibatsu (industrial conglomerates).
After the war, four key mines which were under the Fujita Gumi umbrella including the Kosaka Mine were transferred to
Dowa Mining (changed name from Fujita Gumi in December 1945). The other mines and the Kojima Bay reclamation
project were transferred to Fujita Mining (established in May 1945). In 1948, Fujita Mining spun off its mining division,
establishing a new company which also translates as Fujita Mining and simultaneously reduced capital and changed its
name to Fujita Kogyo. This company was involved primarily in the real estate, railway, and tourism businesses.
Fujita Kogyo launched a series of new tourism businesses including Hakone Kowakien and Chinzanso (currently Hotel
Chinzanso Tokyo). As the tourism division had a solid foundation for future development, Fujita Kogyo decided to spin
out this division. On November 7, 1955, Fujita Kanko was established as a 100% subsidiary of Fujita Kogyo. Fujita Kogyo
merged with Dowa Corporation, which changed its name to Dowa Holdings Co., Ltd., in 2006. As a result, Dowa
Holdings became Fujita Kanko’s leading shareholder.
In 1918 Eiichi Ogawa, the then president of Fujita Kogyo, took over a Japanese-style villa built by Denzaburo Fujita’s son,
Heitaro Fujita, in Hakone Kowakidani and opened a ryokan. Ogawa thought that opening up the gardens and mansions
that had been occupied by members of the zaibatsu and nobility as a haven for the public was socially responsible, and
launched Hakone Kowakien. The spirit of the company’s foundation — creating an enriched society — has become the
company’s basic management philosophy.
Year
Event
1869
Denzaburo Fujita founds Denzaburo Fujita Trading Company.
1881
Reorganized into Fujita Gumi.
1893
Establish Fujita Gumi incorporated.
1945
Fujita Mining established. Company name changed from Fujita Gumi to Dowa Mining.
1948
Hakone Kowakien opened. Fujita Mining changes name to Fujita Kogyo (merges with Dowa Mining in 1957).
1952
Chinzanso opens.
1955
Fujita Kogyo spins off tourism division. Fujita Kanko established.
1959
Taiko-en opens. Hakone Hotel Kowakien opens.
1964
Lists on TSE Second Section (transfers to First Section next year). Shimabara Kanko Hotel Kowakien opens.
1973
Company’s first directly managed hotel Washington Hotel opens in Sapporo. (First Washington Hotel was
opened in 1969 by Washington Hotel Co., Ltd.) Lists on Osaka Securities Exchange First Section.
1992
Four Seasons Hotel Chinzanso (now Hotel Chinzanso Tokyo) opens.
2013
Hotel Chinzanso Tokyo launched. Hiroshima Washington Hotel opens. Sendai Washington Hotel opens.
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2014
Yufuin Ryokuyu opens.
2015
Hotel Gracery Shinjuku opens in April.
Source: Shared Research based on company materials
Major shareholders
Top Shareholders (as of Dec 31, 2015)
DOWA HOLDINGS Co., Ltd
Amount held
31.81%
The Master Trust Bank of Japan , Ltd. (trust account)
7.37%
Japan Trustee Services Bank, Ltd. (trust account)
5.11%
UNIZO Holdings Company, Limited
2.93%
Meiji Yasuda Life Insurance Company
2.50%
Nippon Life Insurance Company
1.82%
Shimizu Corporation
1.53%
ASAHI BREWERIES, LTD.
1.51%
Mizuho Bank, Ltd.
1.50%
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Total
1.50%
57.58%
Returns to shareholders
The company’s basic policy is to distribute earnings to shareholders in line with results, while strengthening the corporate
structure and retaining enough earnings to grow the business. Based on this policy, since FY12/11 the company has paid
a steady annual dividend per share of JPY4.
Corporate governance and top management
Corporate governance
Organization and capital structure
Controlling interests
None
Parent company ticker
N/A
Directors
Organizational type
Company with corporate auditors
Number of directors under Articles of Association
12
Directors' terms under Articles of Association
1 year
Number of external (independent) directors
2
Voluntary committee equivalent to Nomination Committee or Compensation Committee
In place
Number of auditors under Articles of Association
5
Number of external (independent) auditors
1
Independent officers (external directors/auditors)
3
Other
Disclosure of directors' compensation
Full disclosure
Policy on determining amount of compensation and calculation methodology
In place
Corporate takeover defenses
None
Top management
The company’s representative directors are Akira Sasaki and Akira Segawa.
Chairman Akira Sasaki (born in 1950) joined Fujita Kanko in 1970. In 1998 he was appointed general manager of
Washington Hotel Asahikawa. He has subsequently served as general manager and president of many Washington Hotels
nationwide. In 2011 he was appointed executive officer and general manager of the head office, and in 2012 a director
and executive officer of Fujita Kanko. Sasaki was appointed deputy CEO and COO in March 2013. He was appointed
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chairman of Fujita Kanko in March 2015.
President and CEO Akira Segawa (born in 1955) joined Industrial Bank of Japan (now Mizuho Bank) in 1977. In 2005 he
was appointed executive officer in charge of the Nagoya sales division. In 2008 he was appointed managing executive
officer in charge of sales. In 2010 he was appointed a full-time auditor at Dowa Holdings. In 2011 he became a director of
Fujita Kanko. After being appointed as an adviser to Fujita Kanko in March 2012 and serving as vice president, he was
appointed to his current post of president and CEO in March 2013.
Employees
As of end December 2015 the company had 1,270 employees on a consolidated basis and an annual average of 3,580
temporary employees. On an unconsolidated basis, the company had 886 employees and an annual average of 1,611
temporary employees.
Employee statistics as of end December 2014 (unconsolidated):
▶
▶
▶
Average age: 41.3
Average tenure of employment: 18.6 years
Average salary: JPY5.8mn
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Profile
Company
FUJITA KANKO INC.
Head office
2-10-8 Sekiguchi, Bunkyo-ku
Tokyo 112-8664
Phone
Listed on
+ (81) 3-5981-7700
Tokyo Stock Exchange 1st Section
Established
Exchange listing
November 7, 1955 (officially, June 12, 1946)
March 19 1963
Website
Fiscal year-end
http://fujita-kanko.com/
December
IR contact
IR web
Public relations officer, planning group
http://fujita-kanko.com/investor-relations/
IR e-mail
IR Phone
[email protected]
+(81)-3-5981-7703
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Fujita Kanko| 9722 |

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