APA Hotel founder Toshio Motoya may have initially chosen a fairly conservative niche – budget business hotels – for his hospitality venture, but the Japanese tycoon has signalled broader ambitions in recent times, emboldened in part by Japan’s post-pandemic hospitality surge.
The privately-owned APA Group was founded in April 1971, and currently has a net worth of around 232.2 billion yen. The firm’s business lines include general construction and real estate activities, as well as urban development with a focus on residential, hospitality and leisure, a hotels arm, and a real estate securitisation business.
In April 2022, Toshio Motoya stepped away from the day-to-day running of APA Group, promoting his son, Isshi Motoya, to president and CEO of the group. Isshi Motoya, in turn, has sought to add a digital dimension to the business, while fulfilling the criteria of APA’s five-year strategic plan.
APA Hotel is today regarded as one of Japan’s largest hotel chains, with over 700 properties and more than 100,000 keys. In 2016, the business acquired the Coast Hotels brand in Canada, with hotels in British Columbia and Alberta, as part of its North American expansion plans. APA currently numbers 39 hotels in North America with some 4,500 keys, and is hoping to reach 10,000 rooms there by growing growth in major cities along the Pacific coast, including Seattle, San Francisco, Los Angeles, and San Diego, according to Isshi Motoya. He says that their expansion strategy for the region “is similar to how we expanded in Japan. The idea is to establish Coast Hotels by APA and incorporate the elements of Japanese services that people find attractive.” These elements include Japanese smart toilets, he says. Motoya notes that the firm will successively target growth in “Australia and other English-speaking countries” once its American expansion is fully underway.
Hospitality ambitions
According to Motoya, APA’s broader hospitality ambitions include reaching a 150,000 room tally worldwide by 2027, to meet the targets set out in its 2022 five-year plan. With a significant domestic focus, the plan is based on forecasts that Japan is set to establish itself as one of Asia’s most important tourism destinations. The World Economic Forum reported in 2021 that Japan was top of travellers’ wish-lists, beating out the likes of Spain and France to take the tourism crown. When Japan’s borders reopened after the pandemic, ADRs and RevPAR quickly recovered to reach record highs, while guests explored niches which had previously attracted mostly domestic travellers, such as its agritourism stays, called ryokan, or onsen culture, as well as flocking to the country for medical tourism. In addition, Japan’s counter-cyclical monetary policy has also helped it maintain economic stability, while the weak yen has helped overseas visitors. Japan welcomed 25 million tourists in 2023, reaching 79% of pre-pandemic levels, according to official estimates released in January by the Japan National Tourism Organization. Japan’s neighbours, South Korea, were the biggest contributors to the figures, accounting for some 28% of total arrivals. But visitors from Singapore, Indonesia, Vietnam and the Philippines all surged as well, even as Chinese tourism contracted slightly.
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APA’s recent deals underline its eye for market trends. In December, the firm acquired all shares in Ooedo Onsen Asset Management, the asset manager for the Ooedo Onsen REIT which invests in onsen and spa facilities. Also in 2023, the firm opened an ambitious mixed-use complex in Niigata City, comprising a hotel plus a condominium, developed on land that the firm purchased from Panasonic in 2006. The APA Hotel ＆ Resort Niigata Ekimae Odori is currently the largest mixed-use hotel and residential development in Eastern Japan. Facilities for both residents and hotel guests include an open-air hot spring pool, or rotenburo, as well as a gym and restaurants. The company is planning to develop another 13 similar structures across the country, according to media reports.
Despite the size of APA’s ambitions, most of its rooms have small price tags attached. In line with other Japanese hotel chains, budget properties are seen as a safer bet in the current economic environment, also considering the significant labour shortages facing the hospitality sector. Comments Tetsuya Kaneko, managing director, head of research & consultancy at Savills Japan: “It is very difficult to establish luxury properties in Japan. You need a sizeable land bank, and you need more people with suitable skills. Labour shortages are really making their mark on the sector, so even if the potential clientele is out there, it’s a difficult area to scale.”
Wooing travellers
Motoya in fact notes that APA is “not aiming for luxury clientele… but mid-level budget travellers”, underlining that the group aims overall to create compact but comfortable rooms. “We are efficient when it comes to using space. A hotel with 200 rooms and half the space is more profitable than a hotel with 100 rooms and double the space.” he says. He concedes that the labour market issue has been a significant “challenge” but explains that one of APA’s approaches to solving this has involved expanding its digital capabilities. The APA hotels app, dubbed ‘APA Stay Here’, provides guests with a digital concierge for checking in or out, obtaining local information or making further reservations. Another route to simplifying service processes has been an expanded use of pictograms in hotels to better serve international guests, plus innovations like contactless elevators.
APA’s capacity to woo international guests will also depend on diplomacy and discretion. Founder Toshio Motoya is a self-style essayist and has upset travellers in recent years by what some have dubbed “extreme right wing” views. In 2017, he placed books he had written in every room of the group’s portfolio, which demanded a revision of Japan’s history in the name of reinforcing “Japanese pride”. The texts both denied the Nanjing Massacre in eastern China and the forced recruitment of "comfort women" in Korea. An APA statement said the group refused to remove the books “no matter how many condemnations we receive”. With Toshio more recently taking a back seat, APA may hope that at least a fresh face in the CEO chair suggests that the group is taking more modern approach.