Message from the President

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To our shareholders:

We would like to thank you for your support and patronage. Let me report on the status of our business in FY2021 and our initiatives in FY2022.

Regarding our performance:

Having the declaration of a state of emergency issued repeatedly throughout 2021, the tourism industry continued to suffer due to the challenging business environment. To rebuild a strong business foundation in this environment, we developed a business plan and diligently worked to advance our business according to its three main strategies: 1) review business portfolio; 2) reinforce structural reform; and 3) strengthen management structure. We also tried to be creative to meet new needs of our clients, for instance, developing new services/products including in-room dining experiences at Hotel Chinzanso Tokyo and Hakone Kowakien Ten-yu, and supplying for remote-work demand at WHG business. We maintained our operation with the highest priority on the safety and security of our clients and employees, and also continuously made efforts to cut expenses and managed labor cost. As a result, we were able to reduce our fixed operating costs by 13%, 5.4 billion yen, compared to FY2020. Group-wide results were 28.4 billion yen, increased by 1.7 billion yen compared to FY2020; operating loss was 15.8 billion yen, an improvement of 4.7 billion yen compared to FY2020; and ordinary loss was 16.5 billion yen, an improvement of 4.3 billion yen compared to FY2020. Substantial operating loss was improved by 7 billion yen compared to FY2020, after taking it into account that the fixed expenses occurred during the temporary closure period were listed as extraordinary losses in FY2020. The net profit, which belongs to our parent company’s shareholders, was 12.6 billion yen, increased by 35.1 billion yen compared to FY2020 as a result of listed extraordinary income, which included sales of assets.

Our growth strategy for the future:

We sold assets to strengthen our financial stability in 2021. In addition, to fortify the financial status further and also to push our growth strategy for the future, we obtained a fund in the amount of 15 billion yen by issuing class A preferred shares with DBJ Food&Beverage/Hotel Support Fund Investment Limited Partnership, which was constituted and funded by Development Bank of Japan, a government-affiliated financial institution. As a result, our own capital ratio recovered back to 25.4%, a level of pre-COVID 19, as of the end of 2021. Also using the fund, we progressed our Hakone Kowakien redevelopment plan, part of the growth strategy in our business plan, and started rebuilding Hotel Hakone Kowakien. We intend to enhance the attractiveness of whole Hakone Kowakien area and increase revenues from Resort business by concurrently improving dining experiences and activities at Hakone Kowakien Yunessun. Furthermore, we are working towards our sustained growth throughout the company, making efforts such as reinforcing culinary and service technique as well as various programs at Hotel Chinzanso Tokyo to increase the value of Chinzanso brand, and improving operational productivity and emphasizing sales promotion and differentiation strategy for the hotel chains in WHG business. Starting in April 2022, Fujita Kanko will be listed in The Tokyo Stock Exchange (TSE)’s Prime Market, a new market segment after TSE implements its market restructure. Coinciding with the change, we intend to further reinforce our corporate governance, and also work on our initiatives such as reducing food waste and plastics to achieve the SDGs through our business in the long run as it is a crucial social responsibility.

Regarding our initiatives in FY2022:

We expect that the difficult business environment will continue in 2022. However, we aim to improve our performance by progressing our business plan, especially focusing on improving both added values and productivity throughout the company. To be specific, we will launch a new membership program, THE FUJITA MEMBERS, in April as a part of enforcing marketing initiatives. We target to expand domestic market penetration by creating products and offering opportunities based on members’ activity data. As for Hotel Chinzanso Tokyo, which will celebrate its 70th anniversary in November, we will offer high value-added products/experiences that only Hotel Chinzanso Tokyo can offer, such as “Tokyo Sea of Clouds,” highlighting its one-of-a-kind garden, for which the hotel has been enforcing its maintenance. For the corporate side, we will overhaul our Human Resources system for the first time in 24 years in order to motivate our employees, energize the organization, and create an environment that allows our employees to pursue their expertise and special skills. We believe it will lead to improving overall quality of our first-class service and cuisine even more, and reinforce our advantages. As for our performance, we had to take it into consideration that the recovery of inbound market had been slow, and therefore, we projected 39.8 billion yen in sales and 6 billion yen in operating loss. Although the business environment continues to be uncertain, we intend to expand our sales and improve productivity with enhanced sales force and marketing. We aim to reach increased revenues and profits by approximately 10 billion or more year over year.

FY2022 projections:

Based on this business environment, we concluded to pass a dividend for common shares in FY2021. We sincerely apologize for not meeting our shareholders’ expectation. We are committed to rebuild a strong business foundation. I would like to once again thank our shareholders for their support and patronage and ask for their continued support in the future.

Yoshihiro Ise
Representative Director and President,
Executive Officer
Fujita Kanko Inc.

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