Portfolio Formation Policy
HRR’s basic policy is to form a portfolio with a stable revenue base centering on hotels, ryokans and ancillary facilities that can respond to the travel needs of tourists.
1. Investment properties
In the hotel/ryokan industry which has been commoditized in general, HRR believes facilities that are differentiated from others because of 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.
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 equipment 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 in order 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 overseas properties in which the Hoshino Resorts Group is engaged, HRR will examine individual properties upon their selection for investment.
(1) Properties operated by the Hoshino Resorts Group
HRR believes the securement of stable earnings will be possible by continuously investing in the three brands “HOSHINOYA,” “Hoshino Resorts KAI,” and “Hoshino Resorts RISONARE” operated by the Hoshino Resorts Group as well as in other brands developed by the Hoshino Resorts Group. HRR intends to obtain information on facilities under the three brands and other brands developed by the Hoshino Resorts Group by actively utilizing the sponsor support agreement with Hoshino Resorts Inc. As a result, if HRR decides that a facility is able to generate long-term and stable cash flow, proactive investments will be made.
(2) Properties operated by outside operators
Similar to when investing in properties operated by the Hoshino Resorts Group, HRR believes it will be able to secure long-term and stable cash flow by making appropriate investments that consider “superior know-how and experience“ and “superior equipment and facilities” based on sufficient information collection by the Asset Management Company.
Taking this view, HRR will make proactive investments in hotels, ryokans and ancillary facilities operated by outside operators if it decides secure, long-term and stable cash flow is possible after obtaining the necessary information by taking advantage of the sponsor support agreement with Hoshino Resorts Inc. and the Asset Management Company’s unique networks.
2. Investment Period
HRR, in principle, will acquire hotels, ryokans and ancillary facilities for ownership over the medium- to long-term.
3. Expansion of asset size and promotion of portfolio diversification
(1) Expansion of asset size
HRR aims to enhance profitability through expansion of asset size. Since some of the costs related to HRR’s asset management are not expected to increase commensurately with the expansion of asset size, HRR seeks to reduce the ratio of costs related to asset management to revenue.
(2) Promotion of portfolio diversification
HRR aims to promote portfolio diversification in order to reduce the risk of a significant drop in HRR’s cash flow due to changes in tourism trends, disasters, etc.
The Hoshino Resorts Group operates each facility after categorizing investment target hotels, ryokans and ancillary facilities into three brands. HRR works to stabilize revenue by promoting portfolio diversification through continuous investments not only in single brands of the Hoshino Resorts Group but in “HOSHINOYA,” “Hoshino Resorts KAI” and “Hoshino Resorts RESONARE” as a whole, as well as in properties operated by outside operators.
HRR plans to invest in the three brands of “HOSHINOYA,” “Hoshino Resorts KAI” and “Hoshino Resorts RESONARE” hotels excluding roadside hotels, ryokans and ancillary facilities.