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Investment Policy

Basic Philosophy

Ever since 2003, when the government’s Japan Tourism Advisory Council devised its “tourism-oriented nation” strategy based on its “nation-building that provides a good living habitat and a good place to visit” plans, various measures have been implemented in Japan geared to causing tourist destinations and the tourism industry to become internationally competitive, and toward realizing the aim of making Japan a tourism-oriented nation that boasts plenty of worldwide appeal. Under such conditions, values of Japan’s tourism resources particularly in terms of its natural beauty, cultural heritage and regional diversity have been frequently identified, and the aim has been to effectively draw on such tourism resources in order to help energize regional economies and generate more employment opportunities.
With respect to the tourism industry, which has such economic impacts, job-generating effects and tax revenue effects, we deem that HRR will be able to contribute to local economies in respective locations and that we will be able to position the tourism industry in key industrial fields which will be beneficial in terms of helping to energize Japan’s economy in this era where the nation’s birthrate is declining and its population is aging.
HRR aims to create a framework that will enable its unitholders to benefit from growth in Japan’s tourism industry through their holdings of investment units, and through such efforts, HRR will work to achieve ongoing gains in unitholder value.

Investment properties

HRR’s basic policy is to form a portfolio with a stable revenue base centering on hotels, ryokans (Japanese-style inns) and ancillary facilities that can respond to the travel needs of tourists.

HRR believes its facilities that are differentiated from others with a superior business model, operating skills, location and such will be able to generate stable earnings and secure steady cash flow over a long-term period.
From this perspective, HRR selects investment properties from the stance of “superior know-how and experience” (whether the business model, brand power, etc. can be differentiated from competitors and whether it is operated by an operator with extensive expertise) and “superior location and facilities” (whether the facility itself is superior as to its location, rarity of the building, etc.)
HRR seeks to flexibly form an optimum portfolio to secure long-term and stable cash flow. After proactively obtaining sales information on for-sale properties operated by both the Hoshino Resorts Group and outside operators and on overseas properties in which the Hoshino Resorts Group is engaged, HRR will examine individual properties upon their selection for investment.

Properties operated by the Hoshino Resorts Group

HRR believes that it should preferably undertake investment in main brand properties, which are operated by the Hoshino Resorts Group, taking above into consideration.
HOSHINOYA, the flagship brand of the Hoshino Resorts Group, aims to provide overwhelmingly extraordinary services that meet global standards, and accordingly HRR believes it is the brand which has caused the concept of small luxury (the “small luxury” concept with respect to facilities refers to those that feature appealing options particularly in terms of cuisine, culture, scenery, natural surroundings, activities available during stays and hot springs. Such facilities focus on providing a high degree of service with a personal touch, along with a small but upscale product mix) to take hold in Japan’s domestic resort market.
Hoshino Resorts KAI, high-end hot spring ryokans, are located in renowned hot spring destinations. Small yet premium quality, they aim to provide special and comfortable overnight stays that enable guests to experience the appeal of local surroundings. HRR believes that facilities under this brand, operating under a hot spring ryokan resort business format unique to Japan, are likely to generate increased use among tourists from overseas visiting Japan as is the case with the HOSHINOYA brand. In addition, the Hoshino Resorts Group maintains a business model for this brand that entails taking over management and operations from existing ryokan facilities that have found it difficult to stay in business, particularly due to financial difficulties and a lack of successors. As such, HRR anticipates further expansion of its pipeline going forward.
Operating under the concept of a resort hotel that offers enjoyment for adults and children, Hoshino Resorts RISONARE strives to act as a brand that is preferred by families, to which end it aims to offer a wealth of activities suitable for each season, along with the appeal of gaining a sense of healing that is distinctive to the resort experience.
HRR believes the securement of stable earnings will be possible by investing in the properties of main brands.

Properties operated by outside operators

HRR believes that the notion of “tourism” can largely be grouped into three types of “resort tourism,” “hot spring tourism” and “urban tourism.”

Tourism type Summary
Resort tourism Tourism primarily focused on staying in a resort area.
Hot spring tourism Tourism primarily focused on recuperating in hot springs.
Urban tourism Tourism primarily focused on enjoying historic townscapes, urban culture (including concerts, art museums and modern architecture), night views, industrial and cultural heritage sites, urban lifestyle culture (eating, shopping) and more.
  • These three types of tourism are defined to pinpoint tourism needs as they uniquely apply to HRR and the Hoshino Resorts Group. Accordingly, HRR makes no representation or warranty whatsoever as to tourism needs with respect to the types as stated.

Securing a long-term and stable cash flow against the backdrop of urban tourism demand in accommodation facilities is possible as these facilities will become the base of urban tourism. HRR believes that investment in these facilities will lead to a continuous increase of unitholder value. In addition, in the hotel/ryokan industry, which has been commoditized in general, HRR believes facilities that are differentiated from others due to a superior business model, operating skills, location and such are the ones that will be able to generate stable earnings and secure steady cash flow over a long-term period. We will therefore select these as target assets for investment going forward.

Overseas properties in which the Hoshino Resorts Group is engaged

Regarding overseas properties with which the Hoshino Resorts Group is engaged, HRR intends to carefully conduct investments by first obtaining adequate information on the country/region of the investment target from macro perspectives such as political trends, demographics and economic growth. With the obtained information, HRR will comprehensively analyze the market where the subject real estate is located, which includes real estate market trends/systems and rules present in the respective country. HRR will also take into account risks that may be derived from investing in properties located in foreign regions including legal, accounting and tax systems; foreign exchange risk pertaining to investments and profit returns, etc. Considering the above, decisions on foreign investments will be made if HRR can expect stable use of the facilities along with long-term and stable cash flow.