Yoshiharu Hoshino, who owns and runs Hoshino Resorts in Japan, a fourth generation family business, has two dreams. One, to see a day when there’ll be Japanese-style hotels (ryokans) everywhere just as there are sushi bars and two, to write a book about family business management. In this interview with Yeoh Siew Hoon, the avid skier and champion of Japan tourism shares his story of his family business and how he sees the future for Japan and hospitalities. When I spoke with him, he had just returned from a ski trip in New Zealand, a place he’s been five times in the last seven years.
Yoshiharu Hoshino: Transforming a four-generation family business.
Q: I read from Wikipedia that Hoshino Resorts has its roots in 1904 – it was founded by Kunji Hoshino as a forestry business in Karuizawa and opened its first hot spring resort in 1914. Can you tell us something about Kunji?
Kunji Hoshino, my great grandfather, was very successful in the silk business, exporting to US and Europe. He purchased vast tracts of real estate in Karuizawa and started in forestry. Later he developed resorts because the town was becoming famous for politicians and celebrities from Tokyo.
The recession in the 1920s hit his silk business so he sold that and the only business he did after 1924 was resort development.
Kunji’s son was my grandfather and I spent a lot of time with him. My father was good at business but grandpa was the engineer and he was interested in hydraulics, utilising water for the estate and generating electricity. He was interested in developing hot springs, nature and bird sanctuaries. A lot of people liked his ideas but he was not good at producing profit, he was good at spending it on things he liked.
My father was better at producing profit and maintaining the family business – I remember my uncles trying very hard to stop my grandfather from spending too much money.
Q: You took over in 1991 and you rebranded it in 1995 as Hoshino Resorts. What led you to rebrand the company?
Yes, I took over the real estate and two hotels. I didn’t want to do anything else. I studied hotel management before I came back to the family business.
At the time, the thinking was traditional means old. There were so many good resorts and city hotels Hawaii in 1970s and 80s – and for the younger generation, those resorts looked cooler and nicer and something you wanted to copy.
But as I learnt about business, and about Japan, foreigners expect us to be a Japanese hotel instead of cool, western hotel. My conclusion was to take over and convert to cooler, nicer Japanese hotels.
At the time, after Japan’s bubble period, large corporations were doing well and it was difficult for one small hotel to employ good people so between 1991 and 1997, my main focus was on how to become a company which can recruit good workers. One of the changes was the change of name – to set a vision for the future and to reflect that vision.
I had a different opportunity from my father and grandfather. During their time, tourism was a very small business. Today tourism is one of the main industries. They didn’t even think of going outside their town. I had the opportunity to expand outside Japan.
Today, we are a resort operator, not just an owner. We established a REIT listed on Tokyo Stock Exchange, which is growing very rapidly and acquiring properties overseas.
Hoshino-ya Bali in the hills of Ubud
Q: Tell us where Hoshino Resorts is now. How many properties and where do you intend to expand to?
We now have 35 properties and will open Hoshino-ya in Tokyo this year. This will be the first ryokan in Tokyo in 80 years, all the ryokans have disappeared, and we are recreating the concept. Comfortable, efficient, functional – ryokans are very different from Western-style hotels. In Western hotels, privacy is in your room, the outside is public space. In ryokans, privacy is still in your room but outside your room is semi-private spaces.
We have two outside Japan – Hoshino Resort Kia Ora, Tahiti and Hoshino-ya Bali (opening in 2016). We want more hotels outside Japan and I’d like to see more Japanese-style hotels in big cities. New York, Paris, London – they have Japanese automobiles, sushi bars, but no Japanese hotels and I see a market for that. In ryokans, five metres from the entrance, you take off your shoes. It’s a symbol of entering a semi-private space.
In Bali and Tahiti, our hotels reflect local culture but we create a ryokan atmosphere so that it becomes like your home. It is challenging outside Japan to communicate that concept but people are very interested in Japanese culture but if we do it well, it’s something we can transfer and people can learn and enjoy.
Hoshinoya Karuizawa – the roots of the family business.
Q: I see you have an English-language website. What percentage of your customers are foreign visitors? And did you have to do anything to make the ryokan experience comfortable for them?
Hokkaido, with 770 rooms, is the biggest operation and we have 20% foreigners. Kyoto is about 40%, Karuizawa 14% and Okinawa almost zero.
The one change we’ve made is guests can communicate freely with our staff in English. Staying in a ryokan is an experience, we shouldn’t change the basic elements, we want to keep it as authentic as possible.
Q: How did you get Hoshino Resorts ready for the digital world? How much of your business comes direct through your website, or through OTAs?
Digital is becoming bigger and bigger. Japanese guests tend to book direct on our website but foreign guests tend to book through OTAs. The OTA share is increasing but I find there are too many OTAs and it’s very confusing and time consuming. It is important to work with selected OTAs and find a balance between direct and OTAs.
Q: Japan is experiencing an inbound boom right now, and a lot of government emphasis is being placed on inbound tourism. Do you have concerns on whether Japan can cope with this influx?
Staff is the most important aspect and we find hiring staff has become much easier for us. We hire 250-300 graduates every year and we have more than 2,000 fulltime employees.
Japan is ready for inbound visitors but the important thing is how to maintain domestic volume. Japanese are the biggest spenders inside Japan. The population is declining, the number of travellers is declining especially among younger people, 20-30. They are spending so much money on games and smartphones and not travelling like they did 10 years ago.
Q: Ryokans are a deeply traditional business run by families over several generations. There are some who want to open up to foreign guests. What’s your advice to them?
You cannot survive without accepting foreign guests. We should start doing that now.
Q: What do you think is the most misunderstood thing about Japan tourism?
They think our charm is Tokyo, Kyoto and Mt Fuji. There is more to Japan than these places.
Q: Many leaders come to Japan for inspiration. Steve Jobs was a big fan and took many lessons from Japan design and philosophy. What’s the biggest lesson foreigners can take away from Japan?
We live very simply. Sometimes we are very conservative, tradition is so important. Those are our assets. Festivals are very interesting and the younger generation still believes in traditions and festivals especially outside Tokyo. Japan has two cultures – Tokyo and everywhere else.
Q: Is there someone who inspires you currently?
I received the Michael Porter Award in 2014. He’s a Harvard Business School Professor – I like his theories, business strategy, and the idea of promoting clear shareholder value.
Q: A role model you’ve watched and admired.
My grandfather. He was pure, he liked nature and birds. When I develop my business, I always think how would he evaluate it. What would he think about what I am doing?
Q: If you were to write a travel book, what would it be called?
For an international audience, I’d like to write about the unknown charms of Japan, other than Tokyo, Kyoto and Hokkaido.
For Japanese, I want to promote family business management. The last 30 years, working for large corporations was something young people aspired to do. Succeeding in your father’s business outside Tokyo is not the coolest thing but half the value in Japan is created by family businesses which last 50-100 years. Japan and Italy are two countries with the largest number of family businesses. Succeeding in a family business could be a productive and worthwhile thing to do.
It’s challenging running a family business and this is an area we should develop – more professors are doing more research into best family management methods. Large businesses are rational, family businesses are emotional. When you own your company, you sometimes don’t understand the difference between what is company and personal. The benefit is you don’t have to worry about short term profits, more long term vision.
My decision to succeed in 1991 was the right one. I am glad I made it when I was young enough, at 31. It gives you a longer vision, more time – it takes time.
Q: Will Hoshino Resorts go into the fifth generation?
My son is still too young, only 14. Let him enjoy his childhood now.
Note: Yoshiharu Hoshino will be speaking at WIT Japan & North Asia, June 2-3, on his vision for Japanese tourism, his mission to champion the succession and legacy of family businesses and rebooting for the global world. Book your seat here.
* This article first appeared in Travel Weekly Asia, March 2016, edition.