On February 28, 2025, APA Group released our consolidated financial results for the period ended in November 2024. We recorded sales of 226 billion yen and ordinary income of 79.6 billion yen, setting sales and profit records for the second period in a row. The direct factors behind this favorable performance include the rapid increase of foreign tourists after the COVID-19 pandemic, along with growing domestic demand for leisure, meetings, and events. Domestic business demand was sluggish, probably because more people have been working remotely and using teleconferencing since the pandemic. However, APA Hotel is at an advantage because our hotels are close to major train stations in urban areas, making them multipurpose facilities for business, leisure, tourism, and other purposes. I believe this is a reason for our excellent performance, and it is why we have been able to draw guests to our hotels while adapting to changing demographics.
　According to the Japan National Tourism Organization (JNTO), 2024 saw a record number of foreign tourists with an estimated total of 37.9 million. This year, the total is expected to exceed 40 million, some of whom will attend Expo 2025 Osaka, Kansai. In my travels to 82 countries, I have been able to experience local cultures and customs while speaking to and exchanging candid opinions with important figures and top-class experts. Based on this, I can say that Japan is the best country for its safety, on-time public transportation, seasonal beauty, picturesque scenery, delicious food, hygiene, long history, and traditional culture. I have long believed that Japan would become a top tourist destination when people across the world came to understand its great qualities. That is why I started our Summit 5 strategy when real estate prices plummeted after the financial crisis. We have decisively purchased hotel properties, mainly in central Tokyo, and have developed and opened hotels according to this strategy.
　People ask me about the secret to APA Group’s success. Put simply, the answer is luck. However, you cannot take advantage of good fortune if you are just waiting for it while doing nothing. To immediately seize opportunities when they arrive, you must cultivate foresight and discernment, imagine every possibility that could occur, and make preparations for them. Because of my father’s influence, I started carefully reading and comparing multiple newspapers when I was in elementary school. If I encountered an unfamiliar word, I looked it up in a library book or The Year Book of the Contemporary Society. That is how I developed my general knowledge, acumen, and foresight.
　My father was the owner of Motoya Woodworking Factory, a business that made ship helms during World War II, then produced paulownia cabinets and other wooden items after the war ended. It grew into a large factory with 100 employees at one point. Unfortunately, my father passed away from tuberculosis when I was in junior high school. As a high school student, I dreamed of becoming an entrepreneur like my father. After graduation, I got a job at the local Komatsu Credit Union and began a correspondence course in the Keio University Faculty of Economics, since it would be essential to understand financial mechanisms while starting and growing a business. I studied finance and economics, including both theory and practice. But even with solid techniques, products, and sales abilities, funding issues can cause a growing company to fail. At one time, I realized that a surprisingly small number of entrepreneurs are aware of this fact.

　Housing was my first business, and the most important key was solving funding issues for home buyers. There were no modern mortgages back then; buyers had to save up half of the home’s price before purchasing. The few loans from financial institutions required principal-equal monthly payments over a period of approximately seven years, resulting in large monthly amounts. As an employee of the credit union, I was one of the labor union leaders, and I held the casting vote when three credit unions merged to form today’s Hokuriku Shinkin Bank. I approved the merger in exchange for a promise that I could leave the bank and receive assistance for starting my own business. I also made the bank offer a long-term mortgage product with equal repayment of principal and interest, which was not yet available at that time. This allowed salaried workers to buy homes with small down payments, creating a smooth start for my business.
　I have my own pet theory about corporate management, which I call the “three stages of corporate growth.” To begin with, a newly formed company works hard to gain profit, pay taxes, and earn trust. If the company takes a prideful stance and implements measures to reduce the amount of taxes it pays on this small amount of profit, future growth becomes more difficult. By earning trust, the company can take out more loans to grow its business. This is “management to build trust,” the first stage in which the company grows and accumulates assets. I call the second stage “building assets,” when the company uses existing assets as collateral to obtain capital at advantageous conditions, thereby obtaining even more assets. Increasing asset value provides greater collateral value, which means the company can procure more funding. The company acquires more assets and debt during this phase. Its assets depreciate over time, resulting in greater book value yield, and it works to repay loans. This leads to the third stage, “self-propagation.” The company becomes able to create its own assets based on its capital, without having to borrow money, rather like its assets are replicating on their own. APA Group has already entered this third stage. Most of our hotel properties are bought and developed with our own money; we do not take out new loans, except for some large-scale hotels.

　APA Group was launched in May 1971 as a housing company, but today most of our sales and profits come from the hotel business. We have gradually changed our business format along with the times, from order-made housing to detached housing development, rental housing, condominiums, hotels, and urban development. This is all founded on a consist ideology: the pursuit of comfortable living spaces. Today’s APA exists because we grasped opportunities for leaps forward during times of economic upheaval, including large-scale infrastructure development during the 1970s, the oil crisis, the burst of the economic bubble in the 1980s, the 2000s fund bubble, and the 2008 financial crisis. It is not easy to pull even with existing companies, pioneering companies, and major corporations when the economy is on an upward trend. However, economic crises can cause great difficulties for companies in existing markets, while creating opportunities for newer companies. Startups that are launched after an economic crisis can continue growing for some time while the economy rebounds, but their true value will be put to the question during the next financial crunch. Many new real estate companies that were started after the end of the bubble economy achieved rapid growth, but lots of them went bankrupt after the 2008 crisis. APA Group has overcome numerous economic crises to build a solid financial foundation.
　APA Group celebrated its 50th anniversary in May 2021 during the COVID-19 pandemic. Although we had positive ordinary profit thanks to measures like selling off luxury rental apartments during the period ended in November 2020, the future was uncertain at that time. Our financial results for the period ended in November 2021 stayed at a low level, but our income and profit were increasing, the company was on a trend of recovery, and it looked like there was an end in sight for the pandemic. Accordingly, I stepped down as Group CEO on April 1, 2022 and took up the post of chairman, entrusting my two sons with the company’s management. I think they have done a great job while working in unique ways based on a good understanding of my business philosophy. APA set new sales and profit records for two consecutive terms as a result, and it seems likely that we can expect to set new records again in this year of Expo 2025 Osaka, Kansai. While it looks like the future environment will provide smooth sailing, I pointed out in my December 2024 essay that foreign hotel chains are beginning to implement multidirectional strategies, rather than focusing solely on the luxury travel market for foreign tourists in Japan. There is no question that a hotel war is imminent with numerous domestic and global hotel companies in many different categories. The Dawn of Gaia, a program on TV Tokyo, ran an episode on December 13, 2024, titled, “Business Hotel War! APA (Japan’s Top Hotel Chain) Versus Marriott (the Global Leader).” The program covered APA Group and described how Marriott, the largest hotel chain in the world, has re-branded and opened business hotels acquired by the foreign KKR investment firm. In addition to overseas players, Japanese companies in many different industries are taking creative measures and expanding into the hotel market based on new concepts.
　One of APA Group’s strengths is our APA Hotel membership program with more than 20 million members. Another strength is that we have our own brand and possess most of the properties for our directly operated hotels. We can quickly attract guests to newly opened hotels thanks to our large number of members, and we pay lower agency commissions when guests book directly with APA. We have higher profit rates than other hotels because we do not pay rent or brand royalties. Most companies operate hotels under lease and management contracts, without owning any real estate. Some companies pay royalties to other brands. This format involves lower initial investment amounts and funding requirements, which lets them expand their chains quickly. However, their profit margins are quite small. By doing business in condominiums and other types of real estate, APA was able to take this profit and invest it in our hotels. We have expanded our hotel chain to the large size it is today over a long period of time by focusing on ownership.

　Today, conditions in the hotel industry are extremely positive for APA Group and other companies. In growing industries, it is a common fact that competition heats up as new players enter the market and existing companies invest actively in the industry. We cannot assume that these positive circumstances will last forever, and there may be times when people once again stop traveling due to pandemics, major natural disasters, wars, or other reasons. Companies cannot prevent these situations on their own, but they can be prepared for whatever may happen. Businesses must strike a balance by taking bold actions while constantly anticipating that difficulties may occur. Even before COVID-19, I told employees that the biggest risks in the hotel industry are pandemics, major natural disasters, and wars in nearby countries. I maintained a calm stance at the beginning of the pandemic, believing that we would have to hold on for two years at most, and that the situation would improve when a vaccine was developed. We had sufficient capital to keep doing business even in the worst-case scenario. APA has been profitable for 53 years and has never recorded a deficit. Three years have passed since we launched the new structure. My hope is that APA will become a company that lasts for 100 years while maintaining the essence of its business and adapting to the changing times.

March 6 (Thursday), 6:00 p.m.