By focusing on branding and capitalizing on its know-how in managing and operating hotels, the Solare Hotel and Resort group has built a large portfolio of properties under its charge and a wide variety of hotel brands to its credit, including, Loisir, Chisun and Hotel the M. President and CEO Tadashi Inoue discusses the company’s modus operandi and provides an insight into Japan’s growing tourism sector.
What is your view of the current economic climate at this time and how do you see the outlook for Japan’s domestic economy recovery under this administration?
As everyone knows, Japan’s recession has been lasting for the past 20 years while the revitalization process just started three years ago and the country has yet to fully recover. One of the big methods to influence the Japanese economy has been the depreciation of the Japanese yen. Actually, the scenario itself affected the economy, and currently the slowdown of currencies has caused problems as well. I believe in the future, the foreign exchange rates will be a vital element.
The depreciation of the yen has also directly impacted the tourism sector: last year for instance we saw inbound Chinese tourists increase quite a lot because of the depreciated yen. Chinese tourists account for 25% to 30% of overseas tourists; they are not much concerned about the culture or interested in visiting attractions and touristic spots, but mostly in shopping. Since the beginning of this year, the tourism growth has been slowing down, affected by the appreciation of the Japanese yen. So I believe that in the future, Abenomics will play an important role in bringing back tourists to Japan.
Tourism has been influenced greatly under the Abe administration, especially after they came up with the ‘Visit Japan’ campaign and programs, which have increased the visibility of Japan. Now we believe that the next step is to invest in tourism, as this will be the main point of appeal for visitors.
To what extent do you believe that tourism can become a key economic driver behind Japan’s growth and revitalization?
When talking about tourism in Japan, I think that we should put more emphasis on content – especially on Japanese culture, Japanese history, and all these unique assets and facets that Japan has. This will add value to our tourism industry, and I see this as a key element for the sector’s sustainable growth. We have to think what are the Japanese specificities and develop and articulate policies around them.
Communication is key when it comes to attracting or encouraging more visitors to Japan. What are the key strategies that could be put in place to best market Japan to a global audience?
Up until now, our position has been a submissive one; we are not actively promoting what we are doing. When planning big events in the future I believe that we must not wait for customers; instead we need to be much more pro-active in the market and be prepared to promote our activities.
Secondly, although Japan is not a big country, each different region and destination has its own culture and attractions. The key is not to promote Japan as a whole – we have to think more specifically about these local cultures and promote each region separately.
What in your view is going to be the key behind sustaining the tourism industry’s growth over the long term?
The 2020 Olympics is a huge event, and I think it is a big chance for us. It is a big commercial way of promoting and advertising Japan. The Olympic Games in 2020 will provide us with the opportunity to let visitors know more about our country, and from there we hope that it will become a point where awareness begins to be spread throughout the world. Visitors who come to Japan can learn about our culture and history, and can bring that back to their countries and make Japan well known to other people surrounding them. If this goes well, we can show the world that Japan has the potential to be an attractive destination for everyone.
As a hotel business, we don’t have enough influence over the tourism industry, so what we can do now is do our best to make sure that the customers who stay with us know more about Japan
The Solare Hotel and Resort chain operates in more than five locations in Japan and has one overseas operation in Korea. You manage just under 10,000 rooms in Japan, making you one of the leaders in the sector. What makes the Solare group a premier hotel management company?
First of all, I’d like to mention that Solare is focusing on the operations side – unlike most of the hotels which have their own properties and assets. From upper-grade to lower-grade, we have our own know-how to manage and operate our hotels, and we do it really well. This is the strength of our company. When negotiating with properties owners, we can easily persuade them.
Secondly, we have come up with some of our own specialities, such as branding for example. At the moment in Japan, most of our customers will choose the hotel based on price, but in the future we hope to come up with the best hotel brand in Japan. This kind of strategy is very unique. We change, innovate, add and come up with a new style and new branding.
Most of the hotels develop by putting efforts on how to broaden assets and properties to expand their chains. On the opposite, as I mentioned, we are more focusing on brand strengthening.
Hotel the M Innsomnia Akasaka is set in the Minato district of Tokyo, close to the National Diet Building 
The lobby at Hotel the M Innsomnia Akasaka 
Guest rooms at Hotel the M Innsomnia Akasaka range from around 35m3 to 60m2 
The café at Hotel the M Innsomnia Akasaka stays open 24 hours a day 
Hotel the M Innsomnia Akasaka’s café at serves Kyoto’s Unir specialty coffee brand 
The Loisir Hotel Naha is just a 10-minute drive from Naha Airport and its spa features a natural hot spring 
A deluxe twin room with bay views through a wide picture window at the Loisir Hotel Naha
In terms of branding, you have a variety of different brands, such as Loisir, which you are trying to push internationally. How do you choose what works best?
We have a large number of rooms for Loisir in Korea and in Japan, but we are operating in different ways according to the locations. In Japan for instance, we have five outlets, whereas in Korea we have only one.
How do you see the group’s expansion? Is it something you take on single-handedly as the Solare group or do you search for partnerships?
We don’t have any plans to do direct operations in other countries currently, due to differences in culture and labor. We intend to keep the domestic market as our main source of profits, as we want to raise our own brand’s popularity and not pursue high profits from overseas. However, when considering going abroad and when tackling overseas markets, the only way we see it is through partnership and franchising. Then we think of joint ventures and partnerships for our group.
In the case of our Korea operation for instance, we are working through a partnership. In the past we also collaborated with Mariott and worked together with foreign partners for our hotel operations. In the future, if the owners want to use the international branding for the hotels, then we can think about that. Domestically, in Japan, we don’t have this kind of chance.
What kind of new opportunities is the Solare group focused on at the moment?
In terms of locations, we will continue to focus on Tokyo and major cities, which is where we have more chances in the future to come up with new hotels. I think this is a growing area. In regards to adding more stars to our hotels, I must say that it is very hard to provide a full service, especially for the property owners, as they don’t want to take risks. Moving forward, we are concentrating more on developing small-sized hotels and coming up with the new brand line-up.
One of the issues that we are faced with in the hotel industry is the shortage of labor. Due to Japan’s population decrease, hotels are finding it difficult to recruit staff.
How do you see your positioning in the Japanese market today?
We now operate 57 hotels and own about 9,600 rooms and we think that we have a comfortable position on the market, and therefore we are not looking at expanding our physical space for now; this is not important for us at the moment. What we are concerned more is about the uniqueness of what we can provide. As Solare, we hope to show this uniqueness rather than continuously increase the numbers of rooms.
What would you like to convey as a final message regarding tourism in Japan?
Japan is located on an isolated island, and therefore not many people know much about us. We hope that more and more visitors will come to experience Japan, to know about our kind and friendly nature. And we also hope to provide service excellence to our visitors.
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