Seibu Group, which also has interests in other sectors such as railways and agriculture, restructured its hotel holdings in April 2022, creating two divisions — hotel operator Seibu Prince Hotels Worldwide and asset-holding company Seibu Realty Solutions.
Australia-based Stay Well Holdings is the management division of the firm, and Prince Hotels & Resorts is the umbrella for seven sub-brands that include The Prince and Park Regis and a series of independent ryokan spa-style resorts.
The restructuring to more of an asset-light model is intended to future-proof the firm, but it is a major step for a company with a history spanning more than 100 years, said Yoshiki Kaneda, director and executive managing officer.
“We are not planning to be a completely asset-light company, given the amount of assets we hold. We will continue taking balance and strive to emphasize the merit of being both an owner/operator and an asset-light company,” he said.
Kaneda said the firm has benefited from strong leisure demand, but restructuring was needed to achieve a more durable business model.
“The main reason why we incorporated an asset-light strategy is its tolerability against risk. Other global operators have shifted to asset-light after facing some sort of crisis. We thought it was the right time to shift our model,” he said.
In February, Seibu sold 31 of its hotels to Singapore sovereign-wealth fund GIC for approximately 1.1 billion euros ($1.33 billion).
Kaneda said GIC was chosen as a long-term business partner and more sales will be strategically considered. Another reason for a more asset-light strategy is to aid smoother growth of its system network, he added.
“This should allow our expansion both in Japan and internationally. Our target of 250 hotels should not be focused on the number of hotels but the quality of each hotel we are opening. It is true that we ambitiously want to expand our network, but the quality is more important.
“We want to work with quality owners and build quality hotels with these owners. As for international expansion, our focus is Asia-Pacific, given that Prince’s head office is in Tokyo and StayWell's head office is in Sydney,” he said.
Seibu Prince Worldwide has a portfolio of 49 hotels in Japan, and the Prince Hotel Ocean Ginowan, Okinawa, most recently opened in April. Internationally, development focus is on its The Prince Akatoki and Park Regis by Prince brands.
“Those brands feature Japanese-ness in both the design and service element. We offer Japanese aesthetics and the attention-to-detail service in every touch of the hotel whether it’s in guestroom design or in restaurant concept. Both brands are not designed particularly to target Japanese guests, but the target clientele is international travelers who seek a different concept from other global brands and locals who want to enjoy a Japanese brand in their city,” he said.
“Key target cities are not the ones with big Japanese populations, but the cities that are open to international guests and are favorable to Japanese culture,” he added.
Late Return
Japan has been slower than other countries to end COVID-19 restrictions, which has delayed the hotel industry's recovery there.
Kaneda said the Japanese government faced a dilemma in controlling COVID-19 and the subsequent boosting of international arrivals.
“[Prince Hotels has] enjoyed the benefit of having resort properties during this time, thanks to our strong domestic demand, but our city properties were suffering. We have found ways to operate the city properties more efficiently during this time. Now that the county is open and lots of international guests are arriving, we believe we are now able to yield revenue much more efficiently than before,” Kaneda said.
That shift in demand also has led executives to rethink the company's ryokan properties, he added.
“Yes, we are interested in having many more luxury ryokans under a specific brand. When there are opportunities in international markets, we would like to export that brand. We believe that high-quality Japanese hospitality would attract a lot of demand globally,” he said.
With the reopening of the Japanese border coupled with a currently weak currency, the yen, Kaneda said he expects rooms demand will return to pre-COVID-19 levels in 2023.
“Conventions business will not go back to [those] levels, as the way we think about gathering has changed,” he said.
Prince Hotels also aims to drive demand from the younger generations and those seeking leisure activities.
“There is no focus on a certain category for us, but we will need to have more hotels that are favored by younger generations,” Kaneda said.
“The demand for outdoor sports such as golf and ski has already recovered to pre-pandemic levels. We expect that inbound business, specifically from Asia and Australia, for ski resorts has a huge potential to grow due to the quality of snow and hospitality in Japan.”
He added that Prince Hotels is aiming to become “one of the leading hotel operators in Asia-Pacific within 10 years.”