Evolution of Work
Since 2023, when the COVID pandemic was coming to an end, I have been visiting each of our managed facilities more frequently than ever before, holding in-depth discussions with staff working on the front lines of customer service about the details of operations and promoting business optimization projects. Making a change in hotel operations affects six elements: profitability, brand power, our ability to attract customers, customer satisfaction, physical and also psychological stress on employees. Making a single change involves trade-offs among these six elements, so deciding on a single change forces you to accept side effects. For this reason, discussing multiple proposals for change simultaneously makes it possible to achieve a balance among the six elements as a whole. The ideal goal is to achieve a high level of balance among these six elements.
Whenever I visit a facility, I always identify the items that need to be considered. Selecting items in this way is important and requires some skill. This is why I make visits in person and take responsibility for this task. Official decisions regarding changes to business operations are made at the annual “KAI Summit,” where representatives from each facility gather, and the items decided upon are positioned as standards for KAI operations. What is important here is to create an environment where participants in the KAI Summit can think about how to achieve overall optimization of KAI operations, rather than acting as representatives of facilities with their own individual circumstances. To achieve this, we decided that participants in the KAI Summit would be staff members who were not general managers of the respective facilities. At the same time, the facilities are not required to adhere to the new standards, which allowed for accurate discussion from the perspective of overall optimization.
My goals over the past three years have been to determine what to stop, continue, or add, to create work shifts that would optimally accomplish new sets of tasks, and to update the number of staff required. This activity has now been completed at all KAI facilities, and the results were confirmed at the KAI Summit held in November 2025. In other words, we were able to reduce the overall number of new personnel required without causing any disruption to operations. This initiative is currently being expanded to the HOSHINOYA and RISONARE brands, and we hope to see results in these sub-brands as well from 2026 onwards.
Evolution of Our Response to Inbound Tourism
The government’s goal for Japan’s tourism industry is to reach 60 million inbound tourists by 2030, at which point the inbound tourism market will be worth 15 trillion yen and the domestic market will be worth 22 trillion yen. It is far from certain whether the inbound tourism market will actually grow to 15 trillion yen, but there is no doubt that the inbound ratio will increase from its current level. Japan aims to have its hot spring culture registered as UNESCO Intangible Cultural Heritage by 2028 at the earliest. Hot spring ryokans, as a means of experiencing hot spring culture, are expected to become an increasingly popular accommodation category in the future, and it will be necessary to adjust the content of services to meet the needs of inbound tourists.
Under our operational optimization project, the majority of additions to the KAI brand have involved a shift to inbound tourism. For example, there was a high demand for vegetarian menus, so we introduced Japanese vegetarian menus for dinner and breakfast. We have also made changes to our operating methods to accommodate the serving of both vegetarian courses as well as regular kaiseki courses for Japanese domestic tourists at the same table. These changes disrupted the balance of the six elements, so the workload was balanced by unifying the two-course Japanese menu into one course that would also appeal to discerning customers.
From 2026 onwards, in order to cater to the demand for extended stays, primarily among inbound tourists, our hotels plan to introduce measures such as providing lunchboxes at lunchtime, strengthening online collaboration with nearby activity companies, and allowing guests to freely choose days when they do not need dinner during extended stays. As a hot spring Ryokan, if KAI can naturally capture the demand for extended stays, not only in the inbound market but also in the domestic market, it will lead to an increase in overall demand for the KAI brand.
KAI plans to open new resorts in 2026: KAI Kusatsu (Gunma Prefecture) in June, KAI Miyajima (Hiroshima Prefecture) in the summer, and KAI Zao (Yamagata Prefecture) in the autumn. Kusatsu consistently ranks highly in hot spring resort rankings and is an essential base for KAI as a hot spring Ryokan brand. KAI Miyajima, which offers a panoramic view of the World Heritage Site Itsukushima Shrine from every room, is expected to attract a high proportion of inbound tourists.
Zao Onsen maintains stable demand from both domestic and international visitors from spring through autumn, but winter presents a challenge. Zao Onsen Ski Resort has decided to join IKON PASS, one of the two major annual ski passes in the North American ski market, from the 2025-26 winter season. As such, inbound demand during the winter is expected to increase. There are only nine ski resorts in Japan that are members of IKON PASS, including Niseko. Two of these are NEKOMA Mountain and Mt. T (Tanigawadake), both operated by Hoshino Resorts. We plan to further strengthen our collaboration with IKON PASS in the future. KAI Zao is located just a one-minute walk from the Zao Chuo Rope Way Station and the ski slopes.
Evolving Guests’ Booking Experience
The introduction of a platform system that will enable the long-planned evolution of guests’ reservation experience is beginning to take place at each Hoshino Resorts facility. As of the end of October 2025, the system had been successfully implemented at all KAI facilities. The new platform itself will not necessarily evolve our service, but it is an essential piece of infrastructure to realize the booking experience we have envisioned. Hoshino Resorts has named its new booking experience service FleBOL (Flexible Booking Online), which was launched in October 2025. FleBOL allows guests to make three changes in three areas: 1) dates, 2) number of guests, and 3) room type.
For example, until now it was difficult for guests to make a reservation unless the dates and number of guests were clearly decided. If somebody wanted to change these after making a reservation, they had to make the request by phone or cancel and rebook, which would result in a full refund and payment for the new reservation. The same applies to changing room types.
With the introduction of FleBOL, we will be able to provide a completely different booking experience. For example, guests can make a reservation once they know the approximate dates and numbers of guests. Then, as the group’s numbers grow, they are easily able to increase the guest numbers online. This also makes it easy to make a room larger or change to a room with an open-air bath. What’s more, if somebody wants to change a one-night stay to a two-night stay, or vice versa, they can now do so easily. The difference in price resulting from these changes is automatically calculated, allowing guests to pay an additional charge or process a refund for the difference. Not only will this dramatically improve the customer booking experience, but it will also increase our work efficiency. These types of booking changes will no longer have to be made over the phone. Instead, the online processes will be carried out automatically without any work by our employees in the background.
As of October 2025, FleBOL is available at all KAI facilities and the LUCY mountain hotel. From 2026 onwards, the system will be introduced to other facilities, and the range of services offered by FleBOL will also be expanded.
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