The 6 questions to answer when creating a new brand: How Hoshino Resort Innovates

Hoshino Resort is a pioneering brand in the hotel industry in Japan.

Born into the fourth generation of a family of ryokan (Japanese-style hotels) that have been in business for over 100 years in Nagano Prefecture, Mr Yoshiharu Hoshino broke away from the traditional Japanese business model and separated out ownership to specialise in hotel management. He is a visionary businessman, something rare in Japanese hotels, where many are run as a family business.

The luxury brand of Hoshino Resort is "Hoshinoya". In particular, Hoshinoya Tokyo is the flagship hotel that embodies Mr Hoshino's vision of "urban ryokan service". The brand is also looking to expand globally, with plans to enter North America within five years.

Hoshinoya Tokyo opened in 2016 near the Imperial Palace, with a number of global luxury hotel brands in the vicinity, including Four Seasons and Mandarin Oriental. Perhaps it is a sign of confidence and determination that they chose the most competitive location.

Pure Japanese ryokan vs a ryokan-flavoured hotel

With a history going back over 1,200 years, there are around 40,000 ryokans in Japan. They differ from hotels in many ways, and can be said to offer a concentrated experience of Japanese culture – a ryokan is a place where you can wear a yukata (informal cotton kimono), have two meals for each night's stay (breakfast and dinner), have a large public bath and a tatami room where you can eat, relax and sleep.

While ryokans are attractive to overseas visitors who want to experience a unique part of the Japanese culture, they are often out of their comfort zone as a place to stay for an extended period of time. For example, the dinners served at a ryokan are mainly kaiseki cuisine, usually consisting of eight dishes, and if you have to eat haute cuisine day after day, it is human nature to want to eat a burger.

The beauty of the Hoshinoya brand is that it was able to interpret the ryokan culture in its own way and sink it through its services and facilities for its ‘target’ customers. The fact that the reviews of Japanese and non-Japanese travellers are divided is an indication that the brand segmentation and activation are defined and implemented throughout.

The six essential questions to ask new brands

The creation of a new hospitality brand is a balance between comfort and surprise, persistence and adaptation, data suggestions and the experience and intuition. And we think starting with the following questions helps when creating a new brand.

The customer perspective:

1. how do customers perceive current and future social and cultural trends, and what are their thoughts, desires and dreams about them?

2. how do customers perceive the brand and what are their expectations?

3. what hard products (e.g. rooms and facilities) and soft products (e.g. services and programmes) have been identified to excite the customer and why can we deliver them?

The brand perspective:

1. will the new brand concept contribute to the enhancement of existing brand equity?

2. will the new brand create a unique position within the current portfolio without cannibalism?

3. will the new brand pose any risks and will the risks not outweigh opportunities?

Using the example of Hoshinoya Tokyo, we shall follow the above 6 questions and experience the creation of a new brand one step deeper.

The customer perspective

Around 2013, when the plan to open Hoshinoya Tokyo would have started, the number of tourists visiting Japan was growing annually at a rate of about 25%. At a time when the world was becoming increasingly globalised and standardised in terms of experiences, travellers were becoming more and more interested in experiencing a country's unique culture in inverse proportion. And the truth was that the unique experience was not easy to find in Tokyo nor it was in style to fret in the countryside where one could not speak the language. This was especially true for the wealthy who are willing to pay for what they think is worthwhile.

There was enough of a reason to establish a world-class Japanese luxury brand, which no Japanese hotel brand had ever achieved before. Naturally, the main target of Hoshinoya Tokyo must have been set as non-Japanese tourists. It is not surprising that it is a pilot hotel for a new concept, considering its global expansion plan in the future. And, the value proposition of the Hoshinoya urban ryokan service is 'not a pure Japanese ryokan, but a theme park-like experience of the ryokan concept'.

How did Hoshinoya Tokyo protect and evolve the value of the ryokan experience? The uniqueness of the ryokan culture is preserved in the space where guests take off their shoes in the hotel, and in the hot spring that was drilled 1,500 meters underground. For the comfort of the guests, there is a choice for dinner at the restaurant and in-room, and staff and concierge in the tea room lounge. And for the element of surprise, they have prepared a programme of Japanese old court music, tea ceremony and flower arrangements.

You take off your shoes and walk down the hallway in your socks. It is what you had imagined a traditional ryokan would be, and yet completely different.

Once you are in Hoshinoya Tokyo, you will never want to leave, because here you will find the essence of traditional Japan, which is hard to find in Tokyo. They have succeeded in creating an exclusive space and experience that will become a destination for travellers of this kind.

The brand perspective

Hoshino Resort began its hotel management business in full swing with the revitalisation of the Risonare Yatsugatake resort business. This means that the company has not focused on its luxury hotel brand portfolio from the beginning. Like the Marriott Group's Edition Hotels, the Hoshinoya brand must have been a project to prove to investors the professional capability to manage a wide portfolio of hotel brands.

On the other hand, the issue of brand architecture has emerged as a result of the increasing recall and recognition of the "Hoshinoya" brand recently. Hoshino Resort has sub-brands such as "KAI" (Japanese Auberge in classic hot spring regions) and "OMO" (an urban sightseeing hotel), which are under the master brand strategy of Hoshino Resort. Therefore, it seems that the current challenge is to strengthen the Hoshino Resort brand as an umbrella brand, so that there is no mismatch between brand awareness and expectations. Here, too, there is a balance to be struck between long-term profit growth based on brand equity and short-term revenue growth based on brand awareness.

When you create a new brand, you should truly put customers at its centre, not the other way around as a brand lives and grows in their mind. Ask them what and how they see in the world, and what and how they want your brand to support – and why – first. This is crucial in particular changing values and behaviours going through the pandemic. The next step is to decide on the direction of your new brand together with your brand rationale.

Reference:

Hoshinoya Tokyo

Hoshinoya Resort

Travel voice, 2016

Diamond online, 2021