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 the first half of FY2023.

Regarding our performance:

Japan National Tourism Organization (JNTO) announced that as for inbound market, which is our core client segment, the number of international visitors to Japan during the first half of 2023, January through June, recovered to 64% of those from the same period of pre-pandemic 2019. The demands in domestic travel also continued to recover as the COVID-19 related restrictions loosened and the Japanese government downgraded COVID-19 category from two to five, to the same category as common infectious diseases. Under the circumstances, the average room rate as well as occupancy rate in all units’ accommodation business grew significantly, and also the number of customers in wedding and banquet businesses increased, compared to the same period of FY2022.

As for WHG business, the number of inbound travelers increased in destinations with international airports such as Tokyo and Kansai region. Although such growth has not been seen in some regional cities, the business has grown steadily in the second quarter of FY2023, compared to the first quarter. Among properties in Tokyo, two properties particularly exceeded the performance: Shinjuku Washington Hotel and Hotel Gracery Shinjuku, which reopened in March. This year, we celebrate the 50th anniversary of our first directly operated Washington Hotel, and the 15th anniversary of Hotel Gracery’s inception. We are holding anniversary events and aiming to increase the brand values looking ahead for the next 50 years.

As for Luxury & Banquet business, Hotel Chinzanso Tokyo’s performance/sales in all business divisions including accommodation exceeded the results from the same period of FY2022. We continuously aim to increase the brand value and added value, and plan to further tend the garden and implement new designs/effects to commemorate the 145th anniversary since Aritomo Yamagata, a statesman, founded the garden as his estate.

As for Resort business, due to increased inbound travel, Hakone Kowakien Ten-yu’s occupancy rate on weekdays improved. In addition, due to our initiatives to increase per person spending, which include sale of high value-added products such as upgraded restaurant menus, it increased by 22.8%, compared to the same period of FY2022. Also compared to FY2022, Hakone Kowakien Yunessun gained more customers, contributed by our programs such as a successful collaboration with an animation movie.

Accordingly, group-wide results were 29.1 billion yen, increased by 10.8 billion yen compared to the same period of FY2022; operating income was 1.9 billion yen, increased by 5.7 billion yen; and ordinary income was 2.5 billion yen, increased by 6 billion yen, both compared to the same period of FY2022. The quarterly net income, which belongs to our parent company’s shareholders, was 3 billion yen after accounting for extraordinary incomes occurred by the sale of Hotel Toba Kowakien’s site.

Regarding redevelopment of Hakone Kowakien:

After several years of construction, Hotel Hakone Kowakien opened on July 12th this year on the site of its former hotel, which had been closed in 2018. Hakone Kowakien Yunessun also went through a massive renovation and evolved itself as an attractive amusement complex. These are part of Hakone Kowakien redevelopment, a project that we launched in 2014 and diligently making progress for - along the way prior to opening Hotel Hakone Kowakien, we obtained Horaien, a renowned tsustuji azalea garden; opened Miyama Furin, an accommodation facility; and mainly targeting upper-middle consumers, opened Hakone Kowakien Ten-yu, which guest rooms all have private outdoor hot spring bath. We also acquired to maintain the business of Mikawaya Ryokan, a traditional inn founded 140 years ago and a national registered tangible cultural property building. We operate a wide range of accommodations/facilities on our Hakone resort complex so that we are able to meet the diversifying needs in accommodation and tourism. Hakone Kowakien has always tackled challenges brought by the changing social issues and clients’ needs. We are determined to keep improving the area’s attractiveness.

Regarding the second half of FY2023 and revised business forecast:

Based on the situation with the positive progress pushed by recovering demands from domestic travelers as well as a rapid growth of international visitors, we have revised our business forecast for the second half of FY 2023 and FY 2023. As for our accommodation business, based on the advance reservations, we anticipate that the average room rate will increase. As for wedding and banquet business, we plan to reduce its workforce. Therefore, to the numbers in our previous forecast, we have added 800 million yen in sales and 300 million yen in operating income for the second half of FY2023. Based on the performance in the first half of FY2023, we have also revised a group-wide business forecast for FY2023 accordingly. The revised forecasts are: 62 billion yen in sales, increased by 1.2 billion yen; 4.8 billion yen in operating income, increased by 1.1 billion yen; 5.3 billion yen in ordinary income, increased by 1.8 billion yen; and 5.9 billion yen in net income, which belongs to our parent company’s shareholders, increased by 1.8 billion yen.

At last but not least, I would like to mention that since COVID-19 infection first being reported in January 2020, our life has changed drastically and the tourism industry has experienced a huge impact. Traveling and meeting people, which we had taken for granted before the pandemic, were restricted for a long period of time. However, we have seen a big steady step in recovery at last. Traveling is a necessity for people to gain new experiences and discover new values, a strong desire that will never disappear. We are determined to contribute to creating “rich and contented society” through providing “healthy relaxing places” and “warm hospitality and services,” as our corporate credo states, and we are committed to building sustainable growth. 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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