Japanese Hotel Mogul Transforms 100-Year-Old Prison into Luxury Getaway, Plans U.S. Expansion

Yoshiharu Hoshino, the fourth generation of a family that runs ryokans, or traditional Japanese inns, has turned that experience into a successful career in hospitality as CEO of Hoshino Resorts.

He began managing hotels in the 1990s and used his operational talents to revitalize troubled resorts, even bringing one hotel from bankruptcy to profitability in just two years. His distinct approach to management and ability to develop efficiencies within an organization drew the attention of additional investors. In 2005, Hoshino was asked to manage Goldman Sachs ’ hotel portfolio in Japan.

“Our strength is that we’re good at managing small resorts with up to 50 rooms, especially traditional Japanese-style inns outside of big cities, in rural areas, hot spring destinations, and ski resorts,” he said.

Today, Hoshino Resorts has over 60 locations across Asia under five brands: Hoshinoya, hot spring-based KAI, countryside resort hotel Risonare, urban-based OMO, and BEB. Hoshino continues to focus the brand’s expansion efforts on rural areas, which boost tourists to Japan’s lesser-known regions. Most hotel brands open facilities in densely populated urban areas that are already experiencing overtourism. Hoshino feels that the brand’s value proposition is to place off-the-beaten-path destinations on the map while also highlighting Japan’s natural treasures.

Hoshino Resorts plans to open many new resorts in the coming years, including Hoshino Resorts KAI Okuhida, Hoshinoya Lodge Niseko, and Hoshino Resorts KAI Hokkaido, as well as scout a location in North America.

Penta spoke with Yoshiharu Hoshino about his management approach and planned projects.

PENTA: How would you describe the Hoshino management method?

We learn as we expand. Customer satisfaction is the most important KPI we have so we make sure all of our customers are happy when they stay with us.

Yoshiharu Hoshino: [Infrastructure] is important but we need to keep improving after the hotel is open. I allocate a lot of budget for improvements even after the hotel opens. The opening is not the completion of design. We create a stage for the management team and service staff so that there is so much room for them to move around and to create.

What do you think makes Japanese hospitality so attractive?

Japanese hospitality is very different from international hotel brands because we started from very unknown rural areas and in these areas, travelers don’t know what to expect so we have to create a reason for them to come and stay with us.

What do you look for in a destination when opening new resorts?

We don’t actively find new locations, usually owners and developers approach us to come up with a concept. We usually design and manage the hotels after completion. Many prefectures, especially the unknown traveler destinations, are interested in promoting tourism and they approach us. It’s very difficult to get building permits to develop so if we’re working with those prefectures and cities, the process is very smooth. Nature and culture are very important. Each region in Japan has a very distinct culture, so we focus on the culture aspect when we find a new facility. Cuisine is also part of the culture. Japanese travelers usually visit different locations in Japan to enjoy the food.

What projects are you currently working on?

Architecturally, the Nara Prison is a very important building, which is why the government is trying to preserve the registered heritage building. They want to convert it into a hotel or tourism facility. The prison facilities were built more than 100 years ago and will be converted into a luxury hotel in a few years.

Hoshino Resorts is heavily influenced by Japanese hospitality and by the ryokan. How do you think that sense of place will translate when you open in the U.S.?

Hotel chains in Japan tried to establish their business in the U.S. in the 1980s, but it wasn’t successful. When Japanese hotels go to the U.S. market, travelers expect some elements of our culture. We wanted to bring the traditional Japanese hot spring inns to the U.S. I think that’s the approach we should take initially when entering North America.

With the increase of tourism to Japan, especially Tokyo, how does Hoshino Resorts think about sustainability and over tourism especially as it relates to the luxury portfolio?

Delivering information on the local culture and cuisine is important. But more important is nature. Japan is very strong in culture travel that’s why Tokyo, Kyoto and Osaka are very popular. Our natural travel resources have a lot of potential to attract international travelers.

Leave a Reply