Pleasure in Every Detail

First, please tell us about your company’s origins, your current scale, and your own role.

Kato Pleasure Group was founded in Osaka in 1962. Today, across the group as a whole, we serve approximately 8 million customers annually, and we have a staff of about 5,000. Our core business is operations within Japan. Our company has an ownership structure, and my father is currently 60 years old and has reached what is called “kanreki” in Japan—the 60th-birthday milestone. I am 36, and the two of us—my father and I—serve as representatives and are responsible for managing the entire group. In Japan, kanreki is regarded as a major turning point, and there is a customary flow of passing the baton to the next generation at that time. This is my third year since becoming president.

In particular, I became president during the COVID-19 pandemic, which was an extremely difficult period in which we suffered a very major blow. In the midst of that, I was entrusted with the mission— in a sense, the challenge—of launching new things from here, which has brought me to where I am now. For a management company of this scale, I think I am probably one of the youngest presidents. However, business succession is extremely important in our business. That is because it takes a great deal of time to build a team and properties from scratch. By inheriting existing businesses and assets and developing them further, new growth is created. In that sense, I believe there is still plenty of room for development in the leisure business as a family business—what you might call the hospitality business.

The existing assets that my father’s generation built are truly high quality. It takes time to create good assets. Our properties have succeeded through what previous generations have accumulated. I believe my mission is to develop what we have inherited more broadly and on a larger scale.

Kafuu Resort Fuchaku Condo Hotel

Please tell us about Kato Pleasure Group’s current business model.

Basically, we are an operations company. However, we promote the idea of being a total-produce company. We have a structure that handles everything seamlessly from the entry point of marketing through planning, development, and operations. We have projects we invest in ourselves, and we also have projects funded by other capital. We operate under various schemes, but in every case, our hallmark is that we are involved responsibly from concept creation through to operations.

As you develop multiple brands, what measures do you take to maintain quality while ensuring brands do not compete with one another?

The foundation of our operations strategy is to manage by area and by brand. Within a single area, we place a variety of price points and a variety of brands, but we are mindful of creating a composition in which they do not cannibalize each other or push against each other. On top of that, we operate as one team. I am the group CEO, and directly under me we have a group COO. In addition, there are COOs who protect each area and brand, and they act as the responsible leaders on the ground. By ensuring quality while delegating approval authority to positions closer to the field, we enable speedy decision-making and action.

Guest Room at the Fufu Tokyo Ginza Hotel 

Please tell us about your resort hotel business, especially your development in Okinawa.

In Okinawa, we operate resort hotels across multiple brands and multiple price points. One of the top-tier properties is Kafuu Resort Fuchaku Condo Hotel. It is a condo hotel that opened relatively early in Japan, and through long-term operations, we feel the value of the facility has increased. Compared to the initial sales period, prices are now at roughly 1.8 to 2 times the former level, bringing significant capital gains to owners. At the time of purchase, it was a property that assumed a yield of around 6–7%, and it was developed about 15 years ago—around the time of the Lehman shock—when value was still low.

In Okinawa City, we operate a casual hotel of around 300 rooms, Grand Mer Resort, which is used by a wide range of customers, primarily inbound visitors. We also operate vacation rentals such as GLAMDAY VILLA OKINAWA NAKAMURA-TEI. There are aspects that make it difficult to monetize through stand-alone operations, but by operating the entire area as a team, we improve cost performance. In addition, we have a brand called GLAMDAY STYLE, which is a separation of a condo hotel we developed in-house. With the concept of an adult resort for guests aged 13 and over, it has a clear positioning despite being small in scale. Near Kafuu Resort, there is also an Okinawan izakaya-style restaurant, expanding the range of options during a stay.

Please tell us about development and renovation outside Okinawa, and your sustainability initiatives.

In the Nago area, we are developing a sustainable business by purchasing existing facilities and renovating them, while also building new facilities on adjacent land. By combining the regeneration of existing facilities with new development, we are increasing the value of the entire area. Currently, the total number of guest rooms across the group is about 907, and depending on the area, we are positioned at a top-class scale in terms of market share.

Traditional Japanese Kaiseki

I’ve heard that in large-scale resorts you often have JVs with partners.

Yes. For example, in our JV, the project owner is responsible for acquiring the land, while we take responsibility end-to-end—from overall design supervision and production through to operations. We emphasize maximizing the experiential value after completion by connecting the concept through to operations.

Please tell us about representative hotel brands and projects.

In Hakone, we operate Hakone Suishoen. We have also worked on projects with high cultural value, such as an art hotel designed by Kengo Kuma. In Atami, we operate Fufu Atami. It is a small luxury hotel with 26 rooms, and Fufu is regarded as one of the highest-tier brands in Japan. In order to maintain the quality of operations, we believe that around 10 facilities nationwide is an appropriate number for expansion.

Last year, the flagship Fufu Tokyo opened, and this year a new 34-room facility is scheduled to open on the oceanfront of the Miura Peninsula. In Ginza, we are advancing a project that expresses the essence of Japan’s resorts in an urban setting. We will install a footbath on the rooftop, and the design connects two 160-square-meter suites with a movable wall, allowing the space to be used as a 320-square-meter area. We envision it as a space that can also be used for special events and hosting distinguished guests. The hot spring water will be transported from Atami, and we will also include a Japanese restaurant and a sushi restaurant.

TsuruTonTan Udon Noodle Brasserie located in Shibuya Scramble Square

Please tell us about your initiatives for regional revitalization.

In Nagasaki, we took over a large facility that we had operated for about 20 years under a designated management system, through a private-sector transfer. It is a facility visited by about 270,000 people annually, and this year we will open one of the largest glamping facilities in Japan. In Kyoto as well, we acquired a large facility that we had operated for many years and are renewing the entire property. In the Osaka suburban area, we were pioneers in opening a glamping facility eight years ago, and this year we plan to open a villa area as well. We welcome about 530,000 guests each year.

Please also tell us about your initiatives in food.

We often develop restaurants in response to the requests of developers and clients, and our strength is that we can do everything end-to-end, from developing the business format through to operations. We can accommodate a wide range of price points, from the 1,000-yen range up to the 50,000-yen class. In D2C and e-commerce, we also sell udon, gifts, and water. In addition, we acquired management control of a sake brewer in Miyazaki with a 190-year history, and we are also advancing product development.

Hakone Suishoen, a Luxury Hot Spring Inn

Please tell us about the Fufu brand’s inbound strategy.

In the luxury market, there are many overseas brands, and for inbound customers, Fufu is still close to an unknown presence. That is precisely why we need to firmly build the brand in a place like Ginza. Our greatest strength is being small-scale. We can provide attentive experiences that major international chains cannot. Through dining, stays, hot springs, and concierge functions, we aim to become a brand chosen for its hospitality. In Tokyo, we will strategically increase the inbound ratio, and in the future we would like to have around 75% of our guests be from overseas.

What is necessary to disperse inbound tourism to regional areas?

Addressing access and transportation—especially mobility options including private jets—is important. Also, whether we are able to provide sufficient information dissemination about ingredients and cuisine that can only be experienced in that region is also a major issue. Nara is a good example: in the past, there were no luxury hotels and the focus was on day trips, but with the arrival of places like Fufu, it is gradually shifting toward travel that involves staying overnight. I believe it is necessary for the entire town to develop not only hotels, but also restaurants and entertainment.

Akazawa Geihinkan

How do you think about the relationship between cuisine and hotels?

Food is one of our major strengths. A team of about 1,000 chefs competes and improves one another, always striving to level up. At Fufu, we change the culinary concept by area—such as medicinal cuisine in Nara and seafood by the seaside—expressing value that is unique to that land. As accommodation prices rise, it is important to provide quality commensurate with the price. In the ryokan-style format with one night and two meals included, we place particular importance on investing in food.

What are the strengths and challenges of being at the top at the young age of 36?

The greatest strength is the physical stamina and energy to be deeply involved on the ground. I personally check everything, from cleaning and cooking to the HR structure. Also, in a business with many long-term contracts, being able to take responsibility with a view toward 30 years ahead is also a major strength. I also feel that being at an age where I can maintain a sense for trends is important in this industry.

How do you think about the balance between direct sales, OTAs, and CRM?

At large facilities, we tend to become dependent on OTAs, but we want to increase direct bookings as much as possible. On the other hand, for acquiring inbound customers, OTAs can be indispensable, so we use them differently depending on the facility. At present, we operate a customer club with about 230,000 registered members, and through CRM we provide benefits and special guidance. This is an extremely important foundation for the group.

Akazawa Geihinkan

Finally, please tell us your personal goals looking toward 2030.

When I became president, I created a 10-year plan and set a goal of tripling sales. At present, we have grown to about twice what it was at that point. However, it is not the case that bigger is always better. It is important to expand scale while maintaining quality by developing excellent leaders. I want to achieve both brand and scale, and develop hotels and restaurants in a multifaceted way. I believe my mission is to continue to carry romance and a spirit of challenge, and to build a company that is also rewarding for our staff. Thank you for your attention.

For more information, visit their website at: https://www.kpg.gr.jp/