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From the Olympics Toward Tomorrow
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A change in hotels' competitive awareness
- Small Nagano "ryokan" operators slowly closing down
"Sometimes I talk with my husband, saying that since seeing and hearing so much about the local 'hotel wars' on the TV and newspaper it was a good thing we shut down when we did."
Kesako Nagaoka, who owned a well-known "ryokan" (or Japanese style inn) named "Suehiro-kan"near Nagano Station, decided three years ago to close down. She now lives on a hillside in Nagano City.
The inn was opened one year after the Great Kanto Earthquake of 1923. She ran it for three generations. However, there were 12 Japanese-style rooms, and the toilet and bathing areas were all shared. Eventually the numbers of guests declined and she carefully cared for the regular customers that remained.
A turning point came along with the Olympics. City employees came to view the establishment's facilities the year Nagano won its Olympic bid saying, "We'd like to take a look at the rooms if we may." It appeared as if they were taking a survey of the city's guest housing situation.
The industry, in preparation for the Olympics, began to talk about remodeling and the financing for it. However, she was running the business alone with no one to pass the work on to. "Even if simply the Olympics were to be tough, I couldn't compete. Running a business is not good when you think you can't manage. I thought it was the right time to get out, while I still had my health."
A luxurious chandelier catches the eye on the first floor of Nagano City's newly remodeled "Hotel Kokusai 21."
According to the Prefecture Office of Health and Sanitation there were 191 "ryokan" in 1991 in Nagano City that consisted of mainly the same Japanese-style rooms. In 1996 that figure had dropped by 55 to 136 inns.
The hospitality industry in Nagano has been swept by intense waves of change brought by Olympic opportunities. While small-sale inns continue to close down, hotel chains from outside the prefecture are making advances into the local market and existing hotels are building additions and undertaking large scale remodeling projects. The current figure of 4,741 rooms in Nagano City is 1.5 times higher than it was five years ago. The number of conference rooms accommodating 1,000 or more people also has increased by four.
Guests are now flocking to the new and remodeled hotels. Occupancy at a second-tier business hotel near Nagano Station dropped 14 percentage points in the last five years, from 78.5 to 64.5 percent.
Reservations for weddings have also changed dramatically. The station-front Hotel Metropolitan Nagano was opened by JR Capital in November 1996. As of January, 50 weddings have been held there and existing reservations have climbed to approximately 330. In contrast, Sanno Kyousai Kaikan (Sanno Cooperative Hall) in Okadamachi, Nagano City had been performing 500 weddings a year, but now faces a year "thirty percent below average."
The "Metropolitan" now has eight sales-administrators on its staff. They originally started with only three a little more than one year ago. General Manager Toshihiro Satoh says they have been targeting 15 companies a day, meeting with them to sell meeting space for company year-end parties and the like.
Within the local industry there had been little familiarity with the concept of "sales activities" and developing a clientele. "In Nagano it was as if we brought in customers by breathing. Going out looking for others to stay with us was like dragging the oceans for sea bream and small fish," say administrators at one smaller hotel.
However, some local hotel operators are beginning to say, "the old way of thinking will get us nowhere." One major hotel astonished it's full-time sales-administrators by saying, "we can hire part-timers if all we want to do is simply visit prospective clients."
The competition for clients is becoming tougher. Recently a salesperson from a rival hotel visited one competitor and spoke with the sponsor of a conference being held there, iniviting them to "Come visit us next year," showing that they are on the offensive. Room revenues at full-service hotels consisting of restaurants and meeting space is roughly 30 percent of gross receipts. More than half of all revenue comes from wedding functions, conferences, and related catering services. In expectation of an increasing local corporate and personal clientele, they are placing more emphasis on post-Olympic business.
A local labor group was surprised upon making reservations for a training session at a nearby major hotel. The hotel originally asked 290,000 yen for the meeting space alone, but when the group showed reluctance-- that it was "too expensive," the hotel came down saying, "Well, in that case, 100,000 yen would be fine."
Not only price competition, but meeting the consumer's needs on every occasion have also become somewhat of a focus, even down to the quality and price of lunches served at hotel restaurants. One hotel that underwent complete renovations two years ago is looking for popularity during the lunch hour by introducing lower cost lunches. These "hotel wars" have brought about fundamental changes in management philosophy and competitive awareness.
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Copyright 1999 The Shinano Mainichi Shimbun