Resorttrust develops and operates membership hotels, runs members-only medical examination club, and sells hotel and medical club memberships to affluent households. As of May 2021, it operated 51 hotels, of which 40 were members-only. The company’s member count reached 186,000, giving it the top share of about 80% in the Japanese membership resort industry.
At the company’s mainstay resort hotel series XIV, one type of membership (rights to 26 nights a year in a room jointly owned by 14 members) costs about JPY20mn. Membership gives the member the right to use the company’s services (paying a “registration fee”) and fractional property ownership. Most members are around 60 years old, and about 90% are owners of medium-sized companies or professionals such as doctors with a net worth of JPY100mn or more. According to the company, most customers buy memberships to use the resort facilities (not to resell for capital gains) and more than 80% of new members are referred by existing members. Resorttrust has increased the number of resort hotels, leading to a membership CAGR of 2.1% over the ten-year period between FY03/11 and FY03/21.
Resorttrust aims for the members-only medical examination club to provide members with safe and reliable diagnostic testing using advanced medical equipment such as positron emission tomography (PET) and computed tomography (CT) scanners. Members currently pay JPY3.0mn to join and annual dues of JPY552,000. Medical examination club membership has grown at a CAGR of 14.2% over the ten-year period between FY03/11 and FY03/21.
Segments: Membership (39.7% of sales and 97.0% of operating profit in FY03/21), Hotel and Restaurant (36.0% of sales and an operating loss of JPY6.2bn), and Medical (23.9% of sales and 26.8% of operating profit).
Membership segment revenues come from registration fees, property fees, and other fees such as golf course charges. Revenue from registration fees and property fees are calculated by multiplying the number of memberships sold by the registration fee or property fee per hotel membership. Registration fees are booked in full as sales at the signing of a contract, while property fees for unopened hotels are only booked under sales when the facility opens.
Hotel and Restaurant segment revenues come from food and beverages sales, hotel room revenue, hotel shops and amenities sales, revenue from administrative fees, revenue from security deposit deduction, and other income. Food and beverage sales, hotel shops and amenities sales, and room revenue vary with the number of guests.
In the Medical segment, Resorttrust sells memberships to HIMEDIC medical centers (which it also manages) and also operates a senior life business (a fee-based nursing care facility for seniors), a medical services corporation (to support its medical exam business), and an aging care business (which develops and sells products such as health supplements and cosmetics). Segment sales are comprised of registration fees and annual dues from HIMEDIC members, deduction of security deposits, and revenues from its senior life business, medical services corporation, and aging care business.
In FY03/21, Resorttrust reported sales of JPY167.5bn (+5.3% YoY), operating profit of JPY14.7bn (+26.2% YoY), recurring profit of JPY17.6bn (+41.4% YoY), and a net loss attributable to owners of the parent of JPY10.2bn (net income attributable to owners of the parent of JPY7.1bn in FY03/20).
The company revised its full-year FY03/22 forecast in November 2021. The revised forecast calls for sales of JPY153.0bn (-8.7% YoY), operating profit of JPY8.0bn (-45.6% YoY), recurring profit of JPY9.6bn (-45.6% YoY), and net income attributable to owners of the parent of JPY7.0bn (net loss of JPY10.2bn in FY03/21). Compared to the previous forecast, the company revised its sales forecast downward by JPY5.2bn, while raising its forecast for operating profit by JPY1.0bn, recurring profit by JPY2.9bn, and net income attributable to owners of the parent by JPY2.3bn. The company expects sales to fall short of the previous forecast due to restrictions in operating its hotels and restaurants following the issuance of a state of emergency. On the other hand, it expects profits to surpass previous forecasts as sales of hotel memberships and medical memberships were strong and as it anticipates to book non-operating income such as subsidies.
In May, 2021, the company updated its previous medium-term business plan “Connect 50.” Covering the three-year period of April 2021 to March 2024, it targets sales of JPY190.0bn in the third year (CAGR of 4.3%), operating profit of JPY20.0bn (10.8%), recurring profit of JPY20.0bn (4.3%), and net income attributable to owners of the parent of JPY13.0bn. The company expects conditions for businesses targeting the general public to stay tough, and seeks to roll out group initiatives that harness the strengths of its membership business model and continue to revise its cost structure.
Shared Research sees the company’s strengths as a solid membership base of high net-worth individuals, a short period to recoup investments, and predictable customer traffic and operating costs. Main weaknesses are the aging of existing members pushing down facility occupancy rates, Japan’s declining population sapping growth, and volatile reported earnings due to the method of booking property fees (see the Strengths and weakness section).
|Gross profit margin||80.8%||81.0%||81.7%||85.0%||82.8%||82.0%||79.6%||76.5%||84.9%||77.4%|
|Operating profit margin||9.9%||11.4%||12.9%||13.3%||13.1%||9.4%||10.7%||10.5%||7.3%||8.8%||4.4%|
|Recurring profit margin||9.5%||12.3%||14.3%||16.8%||13.7%||10.3%||11.7%||10.9%||7.8%||10.5%||4.2%|
|Per-share data (split-adjusted; JPY)|
|Shares issued (year-end; '000)||51,706||51,706||103,411||106,015||108,519||108,159||108,521||108,521||108,521||108,521|
|EPS (fully diluted)||57.9||74.6||84.6||108.7||112.8||95.1||102.0||106.4||61.3||-|
|Dividend per share||20.0||27.5||31.0||43.0||46.0||46.0||46.0||46.0||40.0||30.0||30.0|
|Book value per share||628||687||758||964||1,019||1,068||1,130||1,191||1,194||1,079|
|Balance sheet (JPYmn)|
|Cash and cash equivalents||30,949||57,842||61,849||95,880||53,208||45,278||35,770||31,389||21,663||59,062|
|Total Current assets||95,914||114,012||113,907||158,323||147,250||151,430||146,094||135,754||125,296||152,856|
|Tangible fixed assets||102,032||99,601||119,967||153,784||156,884||155,824||170,600||180,001||193,748||176,366|
|Investments and other assets||33,763||37,104||63,781||75,372||98,954||103,959||93,744||73,862||71,208||68,801|
|Total current liabilities||37,610||35,186||48,532||61,595||81,794||95,778||106,153||70,764||67,192||100,777|
|Total fixed liabilities||132,657||145,529||170,810||224,466||213,119||207,447||190,096||198,611||200,649||185,673|
|Total net assets||64,883||73,145||81,418||104,769||112,515||118,379||125,190||132,050||132,991||120,791|
|Total interest-bearing debt||28,735||40,462||49,507||83,474||76,715||67,774||63,596||46,662||39,573||66,383|
|Cash flow statement (JPYmn)|
|Cash flows from operating activities||19,657||21,338||24,773||22,057||2,616||26,249||8,456||16,674||19,096||22,981|
|Cash flows from investing activities||-15,546||-15,958||-33,747||-71,837||-33,824||3,881||-7,282||-2,057||-8,247||-13,577|
|Cash flows from financing activities||-3,351||11,447||22,221||60,359||-8,624||-15,593||-9,177||-23,198||-13,364||22,012|
On November 10, 2021, Resorttrust, Inc. announced a revision to its full-year FY03/22 earnings forecast.
In light of recent earnings results, the company expects sales to fall short of the previous forecast, but for each profit category to exceed the previous forecast. Compared to its assumptions for the previous forecast, the company faced stricter restrictions in operating its hotels and restaurants following the issuance of a state of emergency. On the other hand, the company upwardly revised its forecast for each profit category as sales of hotel memberships and medical memberships were strong and as it expected to record non-operating income such as subsidies.
|(JPYmn)||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||Q1–Q3||Q1–Q4||% of Est.||1H Est.||% of Est.||FY Est.|
|Gross profit margin||94.8%||72.9%||75.9%||77.4%||83.5%||86.9%|
|Operating profit margin||-||11.6%||11.8%||8.8%||2.5%||6.7%||4.6%||5.2%|
|Recurring profit margin||-||12.9%||13.3%||10.5%||4.0%||8.9%||4.8%||6.3%|
|Gross profit margin||94.8%||64.7%||81.8%||82.8%||83.5%||90.0%|
|Operating profit margin||-||17.3%||12.1%||-||2.5%||10.8%|
|Recurring profit margin||-||18.4%||13.9%||0.9%||4.0%||13.6%|
|Hotel and Restaurant||8,614||25,143||45,710||60,322||15,131||34,382|
|Total segment profit||-884||9,980||15,350||14,707||920||5,132|
|Segment profit margin||-||11.6%||11.8%||8.8%||2.5%||6.7%|
|Segment profit margin||38.7%||34.2%||34.9%||34.5%||23.6%||30.2%|
|Hotel and Restaurant||-2,347||-3,181||-2,650||-6,165||-925||128|
|Segment profit margin||-||-||-||-||-||0.4%|
|Segment profit margin||11.5%||13.4%||14.4%||15.8%||10.1%||12.4%|
|Hotel and Restaurant||8,614||16,529||20,567||14,612||15,131||19,251|
|Total segment profit||-884||10,864||5,370||-643||920||4,212|
|Segment profit margin||-||17.3%||12.1%||-||2.5%||10.8%|
|Segment profit margin||38.7%||33.5%||37.0%||32.6%||23.6%||38.7%|
|Hotel and Restaurant||-2,347||-834||531||-3,515||-925||1,053|
|Segment profit margin||-||-||2.6%||-||-||5.5%|
|Segment profit margin||11.5%||15.1%||16.2%||19.7%||10.1%||14.7%|
|Membership segment total||11,200||26,100||41,200||54,300||15,700||37,900|
|Membership segment total||11,200||14,900||15,100||13,100||15,700||22,200|
|(JPYbn)||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||Q1–Q3||Q1–Q4||% of Est.||Est.|
|Membership segment total||11.2||26.1||41.2||54.3||15.7||37.9||54.3%||69.8|
|Sanctuary Court Takayama||-||-||-||-||1.8||20.5||50.5%||40.6|
|The Kahala Hotel & Resort (Hawaii)||0.2||0.3||0.4||0.6||0.2||0.2||40.0%||0.5|
|XIV Rokko SV||-0.5||-0.4||0.1||1.4||3.5||4.6||69.7%||6.6|
|Membership segment total||11.2||14.9||15.1||13.1||15.7||22.2|
|Sanctuary Court Takayama||-||-||-||-||1.8||18.7|
|The Kahala Hotel & Resort (Hawaii)||0.2||0.1||0.1||0.2||0.2||-|
|XIV Rokko SV||-0.5||0.1||0.5||1.3||3.5||1.1|
|Membership segment total||5,700||42,000||55,200||66,500||11,800||20,900|
|Hotel membership total||9,100||21,700||34,600||45,600||12,600||31,000|
|Deferred hotel membership sales||-3,600||-||-||-||-800||-9,500|
|Realized earnings on hotel membership||-||20,100||20,100||20,100||-||-|
|Membership segment total||5,700||36,300||13,200||11,300||11,800||9,100|
|Hotel membership total||9,100||12,600||12,900||11,000||12,600||18,400|
|Deferred hotel membership sales||-3,600||3,600||-||-||-800||-8,700|
|Realized earnings on hotel membership||-||20,100||-||-||-||-|
|(JPYbn)||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||Q1–Q3||Q1–Q4||% of Est.||Est.|
|Membership segment total||9.1||21.7||34.6||45.6||12.6||31.0||53.8%||57.6|
|Sanctuary Court Takayama||-||-||-||-||1.5||17.4||50.6%||34.4|
|The Kahala Hotel & Resort (Hawaii)||0.1||0.1||0.2||0.3||0.1||0.1||-||0.2|
|XIV Rokko SV||-0.5||-0.3||0.1||1.3||3.1||4.1||68.3%||6.0|
|Sanctuary Court Takayama||-||-||-||-||-0.8||-9.5||-||-18.8|
|Membership segment total||9.1||12.6||12.9||11.0||12.6||18.4|
|Sanctuary Court Takayama||-||-||-||-||1.5||15.9|
|The Kahala Hotel & Resort (Hawaii)||0.1||-||0.1||0.1||0.1||-|
|XIV Rokko SV||-0.5||0.2||0.4||1.2||3.1||1.0|
|Sanctuary Court Takayama||-||-||-||-||-0.8||-8.7|
In the case of memberships to resort hotels that have not yet opened, approximately 10% of the membership price is booked under sales in the Hotel and Restaurant segment as a security deposit. About 40% of the membership price is booked to sales under the Membership segment as a registration fee when the contract is signed. The remaining 50% is booked to sales under the Membership segment as a property fee once the hotel is opened. In the case of existing resort hotels, after taking out 10% for the security deposit, 90% of the membership price is booked as sales under the Membership segment. In other words, in the case of hotels that have not yet opened, after subtracting the property fee (50% of the membership price), the remaining 40% of the membership price is booked to sales under the Membership segment as a registration fee.
|Real estate sales||-832||27,779||33,562||38,541||4,496||4,814|
|Real estate, % of total sales||-26.8%||73.9%||67.8%||64.5%||41.0%||25.4%|
|Operating profit margin||38.7%||34.2%||34.9%||34.5%||23.6%||30.2%|
|Real estate sales||-832||28,611||5,783||4,979||4,496||318|
|Real estate, % of total sales||-26.8%||82.9%||48.8%||48.5%||41.0%||4.0%|
|Operating profit margin||38.7%||33.5%||37.0%||32.6%||23.6%||38.7%|
|Sales by format (cumulative)||FY03/21||FY03/22|
|Security deposit deduction||878||1,756||2,634||3,511||1,012||2,025|
|Sales by format (quarterly)||FY03/21||FY03/22|
|Security deposit deduction||878||878||878||877||1,012||1,013|
|Hotel operations: number of rooms||FY03/21||FY03/22|
|Hotel operations (cumulative)||FY03/21||FY03/22|
|Customer spend (JPY)|
|Hotel operations (quarterly)||FY03/21||FY03/22|
|Customer spend (JPY)|
|Food and beverages sales||1,554||7,779||15,795||21,020||5,052||11,505|
|Lodging fee sales||1,213||5,314||10,221||13,367||3,127||7,562|
|Hotel shops and amenities sales||409||1,423||2,986||4,310||754||1,716|
|Revenue from administrative fees||2,126||4,247||6,570||8,895||2,357||4,724|
|Security deposit deduction||878||1,756||2,634||3,511||1,012||2,025|
|Operating profit margin||-||-||-||-||-||0.4%|
|Food and beverages sales||1,554||6,225||8,016||5,225||5,052||6,453|
|Lodging fee sales||1,213||4,101||4,907||3,146||3,127||4,435|
|Hotel shops and amenities sales||409||1,014||1,563||1,324||754||962|
|Revenue from administrative fees||2,126||2,121||2,323||2,325||2,357||2,367|
|Security deposit deduction||878||878||878||877||1,012||1,013|
|Operating profit margin||-||-||2.6%||-||-||5.5%|
|HIMEDIC contract value (JPYmn)||1,300||2,870||4,650||6,920||2,200||3,680|
|HIMEDIC number of contracts||558||1,222||1,988||2,961||977||1,622|
|HIMEDIC average contract value (JPY'000)||2,330||2,349||2,339||2,337||2,252||2,269|
|HIMEDIC contract value (JPYmn)||1,300||1,570||1,780||2,270||2,200||1,480|
|HIMEDIC number of contracts||558||664||766||973||977||645|
|HIMEDIC average contract value (JPY'000)||2,330||2,364||2,324||2,333||2,252||2,295|
|Senior life number of rooms||2,100||2,100||2,097||2,097||2,097||2,095|
|Senior life occupancy||86.7%||87.3%||87.9%||88.3%||87.2%||88.4%|
|Medical service – Corporations||993||2,549||4,216||5,905||1,749||3,676|
|Medical service – Corporations||993||1,556||1,667||1,689||1,749||1,927|
|(No. of memberships)||Q1||Q2||Q3||Q4||Q1||Q2||Q3||Q4|
In 1H FY03/22, customer attraction and hotel occupancy rates in the Hotel and Restaurant business were affected by restrictions related to the fourth government declaration of a state of emergency and its extension, as well as other measures to prevent the spread of COVID-19. Likewise, in the Medical business, the number of new tenants at senior residences was lackluster. However, the Membership business saw robust sales of membership for Sanctuary Court Takayama—newly opened in June 2021, and existing hotels. Sales of medical memberships were also robust as the need for medical exams as society deals with COVID-19 has become apparent.
Membership sales were strong, with contract value surpassing both 1H FY03/21 results and 1H projections in the full-year FY03/22 forecast. On the other hand, the environment for hotel operations remained challenging, and unlike in 1H FY03/21, when the company booked deferred real estate revenue in a lump sum following the opening of a hotel, it booked no such revenue in 1H FY03/22, which resulted in lower sales and profits.
Due to the application of the revised Accounting Standard for Revenue Recognition, sales in 1H were reduced by JPY1.1bn while both operating profit and recurring profit were down JPY1.1bn.
Evaluated operating profit reflects the exclusion of gains on the sale of unopened properties in the Membership segment, one-off accounting factors, and the effects from the new revenue recognition accounting standards being applied from FY03/22. On this basis, evaluated operating profit was JPY10.0bn in 1H FY03/22, up from a loss of JPY704mn in 1H FY03/21. In 1H FY03/22, the deferred profit (real estate profit from unopened properties) correction was JPY3.8bn, while the correction for the effects from the implementation of the new revenue recognition accounting standards was JPY1.1bn. In terms of the difference between operating profit and evaluated operating profit in 1H FY03/21, the deferred profit (real estate profit from unopened properties) correction was minus JPY7.1bn and the correction for extraordinary losses booked as a result of fixed costs incurred on the closure of facilities in line with the state of emergency declared by the Japanese government was minus JPY3.5bn.
|April 2021||Launched new course sales at HIMEDIC Yamanakako Club|
|June 2021||Launched membership sales at Sanctuary Court Takayama, a membership resort hotel|
The company revised its full-year FY03/22 forecast when it announced its results for 1H. Compared to the previous forecast, the company's revised forecast projects sales that are JPY5.2bn lower but also includes higher projections for operating profit (+JPY1.0bn), recurring profit (+JPY2.9bn), and net income attributable to owners of the parent (+JPY2.3bn). Performance in the Membership segment was better than the company had expected, but the company anticipates sales will fall short of its previous projections due to restrictions on hotel and restaurant operations caused by factors such as state of emergency declarations. The company predicts profits will exceed its previous estimates due to strong sales of hotel and medical memberships.
Sales in 1H achieved 50.0% of their corresponding projection in the company's full-year forecast, while operating profit reached 64.2%, recurring profit 70.9%, and net income attributable to owners of the parent 77.3%. In comparison, 1H sales in FY03/21 reached 51.5% of their full-year result while operating profit achieved 67.9%, recurring profit 63.2%, and net income 55.8%.
Membership sales were robust for membership in Sanctuary Court Takayama opened in June 2021 and existing hotels. On the other hand, while the company booked real estate revenue in a lump sum following the opening of a hotel in 1H FY03/21, it booked no such revenue in 1H FY03/22, which resulted in lower sales and profit.
Sanctuary Court Takayama (Takayama, Gifu Prefecture) is scheduled to open in March 2024 with a total of 121 guest rooms. There are two membership types, one offering 20 nights per year (room ownership shared by 18 members) and one offering 10 nights per year (room ownership shared by 36 members).
The membership period is 50 years, with fixed-term land lease rights from the opening of the hotel.
Occupancy days not already scheduled for use can be exchanged with other members. Occupancy days can also be exchanged for use at the XIV and Baycourt Club locations.
Floating reservations without loss of rights: Reservations are possible (only for membership hotel rooms) for which there are no reservations at least one month prior to the planned date of use. Members with 20-day memberships can stay up to ten days in a month on this basis while members with 10-day memberships can stay up to five days in a month, with neither seeing a loss of their occupancy days.
The impact of the adoption of the revised Accounting Standard for Revenue Recognition was a reduction of JPY367mn in sales and a reduction of JPY111mn in segment profit.
Contract value in the Membership segment was JPY42.2bn (+43.5% YoY). The spread of COVID-19 caused restrictions on the company’s sales activities in 1H FY03/21, and membership contract value decreased accordingly. Contract value in 1H FY03/22 improved YoY in reaction to this year-ago decline. Contract value for unopened hotels was JPY20.5bn (Sanctuary Court Takayama). Yokohama Baycourt Club was open in 1H FY03/21, and the company had no unopened hotels during this period. 1H FY03/22 contract value for opened hotels was JPY17.4bn (including XIV Rokko Sanctuary Villa and XIV Yugawara Rikyu), down from JPY26.1bn in 1H FY03/21.
The company launched Sanctuary Court Takayama membership sales in June 2021. The company has secured 1,680 of 4,356 offered contracts. This is the first of the company’s hotels to have a 50-year fixed-term land lease (traditional membership-based hotels offer members fractional property ownership). The structuring the contracts this way enables corporate members to treat their memberships as an expense, and the majority of Sanctuary Court Takayama sales are to corporations.
The increase in membership sales can be attributed to contract value secured through the use of digital tools rising from about JPY1.4bn in 1H FY03/21 to about JPY4.1bn in 1H FY03/22. The company uses digital technology to send email newsletters and other materials to prospective customers, monitor customer browsing habits, and engage in sales activities for products in which customers have expressed an interest. This has allowed the company to increase its efficiency in securing contracts.
Contract value from hotel or financial institution referrals was about JPY8.1bn (about JPY3.9bn in 1H FY03/21). Offering group products to customers at its hotels, golf courses, and other facilities contributed to an increase in contracts. The number of referrals from financial institutions also expanded.
As of September 30, 2021, sales inventories in the Membership segment were over JPY60.0bn, about 1.0–1.5 years’ worth (versus JPY43.3bn, or about one years’ worth, as of March 31, 2020). As noted above, sales inventory increased in line with the launch of Sanctuary Court Takayama membership sales in June 2021.
Sales in the Membership business were JPY20.9bn (-50.4% YoY), despite an increase in membership contract value. In 1H FY03/21, the company booked a lump sum of real estate revenue that had been deferred until the opening of Yokohama Baycourt Club. However, the company had no real estate revenue of this nature in 1H FY03/22.
The company generated sales of JPY17.4bn from unopened hotels (no sales from unopened hotels in 1H FY03/21), with the impact from deferring a portion of membership revenue from unopened hotels until their opening at -JPY9.5bn (no such impact in 1H FY03/21), leaving total sales from unopened hotels (after subtracting deferred revenue) at JPY7.9bn (no sales from unopened hotels in 1H FY03/21).
Total sales from already opened hotels were JPY13.6bn (-37.3% YoY).
The company reported no realized deferred earnings from opened hotels (versus JPY20.1bn in 1H FY03/21).
Evaluated sales exclude real estate sales stemming from unopened properties in the Membership segment and impact from the company's adoption of the Accounting Standard for Revenue Recognition (effective from the start of FY03/22). In 1H FY03/22, evaluated sales were JPY30.5bn (+38.8% YoY). Total corrections amounted to JPY9.6bn (versus -JPY20.1bn in 1H FY03/21). The YoY increase in evaluated sales was attributable to strong Sanctuary Court Takayama membership sales.
Operating profit was JPY6.3bn (-56.2% YoY). After adjusting for deferred gains on the real estate portion of unopened hotels and other factors, evaluated operating profit was JPY10.2bn (+40.5% YoY). The correction included JPY3.9bn attributable to deferred revenue from unopened hotels and the application of the new revenue recognition standard (the correction for realized deferred revenue from unopened hotels in 1H FY03/21 was -JPY7.1bn). Sales were up excluding impact from the company's adoption of the Accounting Standard for Revenue Recognition, and evaluated operating profit rose as a result of higher sales.
As the government's state-of-emergency declarations and measures for the prevention of COVID-19 spread were released intermittently, the company was forced to shorten opening hours of restaurants and restrict the serving of alcoholic beverages. The number of overseas visitors to Japan and business users did not recover, while the rebound in domestic travel due to progress in vaccination was limited. However, thanks to increasing recognition of hotel operations emphasizing customer comfort and safety, sales and profit increased YoY.
The adoption of the revised Accounting Standard for Revenue Recognition had a positive impact of JPY297mn on sales, but had no impact on segment profit.
Sales by business category are indicated below. In 1H FY03/21, sales at all facilities fell due to requests asking consumers to refrain from unnecessary outings in response to the COVID-19 pandemic. Occupancy rates and sales both improved in 1H FY03/22.
XIV: Sales grew to JPY14.2bn (+38.7% YoY). The occupancy rate was 43.6% (+13.9pp YoY), overnight visitor count was 770,000 (+43.7% YoY), and spending per visitor was JPY18,387 (-3.4% YoY). As of September 30, 2021, the company had 78,946 XIV members (+2.0% YoY), or 21.9 members per room (21.4 members per room as of September 30, 2020).
In Q1 (April–June 2021), the company reported an occupancy rate of 34.3% (+23.0pp YoY). During Q1 FY03/21, the occupancy rate was lackluster because most facilities were forced to close from late April through May due to the first state of emergency declaration issued in April 2020. While still impacted by the effects from the COVID-19 pandemic, the occupancy rate in April 2021 was 76% of its level in April 2019, and the occupancy rate in May 2021 also amounted to 76% of its level in May 2019. The occupancy rate in June 2021 recovered to 81% of that seen in June 2019.
In Q2 (July–September 2021), the company reported an occupancy rate of 52.8% (+4.9pp YoY), showing recovery YoY. During July 2021, the occupancy rate was 95% of what it was in July 2019 (prior to the outbreak of COVID-19). In August and September, the rate incurred impact from a subsequent wave of COVID-19 and fell to 81% of the August 2019 level in August 2021 and to 87% of the September 2019 level in September 2021. In October 2021, the number of new COVID-19 cases began to decline, and the occupancy rate reached 101% of its level in October 2019.
Baycourt: Sales were JPY3.8bn (+34.9% YoY). The occupancy rate was 34.1% (+6.1pp YoY), overnight visitor count was 131,000 (+45.6% YoY), and spending per visitor was JPY31,335 (-0.1% YoY). As of September 30, 2021, the company had 23,553 Baycourt members (+6.2% YoY), equivalent to 28.6 members per room (versus 26.9 per room as of September 30, 2020).
In Q1, the company reported an occupancy rate of 30.6% (+15.5pp YoY). As was the case with XIV, the monthly occupancy rate of the Baycourt series recovered. In Q1 FY03/21, occupancy dropped sharply after a state of emergency was declared by the Japanese government in April. As a result, occupancy rate in April 2020 was 22% of its level in April 2019, in May 2020 it was 25% of its level in May 2019, and in June 2020 it was 58% of its level in June 2019. In Q1 FY03/22, the occupancy rate recovered, rising in April 2021 to 64% the rate shown in April 2019, in May 2021 to 69% the rate shown in May 2019, and in June 2021 to 75% the rate shown in June 2019.
The occupancy rate in Q2 was 37.5% (-3.0pp YoY). Similar to XIV, Baycourt occupancy incurred impact from a re-emergence of the COVID-19 pandemic in August and September 2021. In July 2021, the occupancy rate was 93% of its level in July 2019, while in August it was 73% of its level in August 2019 and in September 75% of its level in September 2019. In October 2021, occupancy was 87% of its level in October 2019.
Trusty: Sales were JPY1.1bn (+25.9% YoY). The occupancy rate was 30.2% (+11.4pp YoY), overnight visitor count was 124,000 (+37.8% YoY), and spending per visitor was JPY8,675 (-8.6% YoY).
Annual membership revenue and revenue from security deposit amortization: Annual membership revenue was JPY4.7bn (+11.2% YoY), and revenue from security deposit amortization was JPY2.0bn (+15.3% YoY). The company earned more annual membership revenue YoY because total membership count of its XIV and Baycourt series had reached 102,499 as of September 30, 2021 (+3.0% versus September 30, 2020).
Overseas hotel sales: Sales generated by overseas hotels were JPY3.3bn (+71.8% YoY), rising along with an increase in occupancy rate. The Kahala Hotel & Resort, located on the Hawaiian island of Oahu, has a fiscal year-end in December. Accordingly, its financial results are consolidated three months later.
During Q1 of the previous fiscal year (locally January–March 2020), the company reported an occupancy rate of 70–80% in January and February 2020 (prior to the outbreak of the COVID-19 pandemic) before occupancy dropped to about 30% in March 2020. During Q1 of the current fiscal year (locally January–March 2021), the occupancy rate was 20–30%.
Overseas hotels were closed in Q2 of the previous fiscal year (locally April–June 2020), but they partially opened primarily for local use in June. In Q2 of the current fiscal year (locally April–June 2021), the occupancy rate of overseas hotels increased, reaching 70% in June 2021 (94% of the occupancy rate in June 2019).
In Q3 of the previous fiscal year (locally July–September 2020), the company continued to restrict operations to primarily local use. The occupancy rate was about 20% in July 2020 and less than 10% in August and September. In Q3 of the current fiscal year (locally July–September 2021), the occupancy rate was about 70% in July 2021. However, it fell to about 60% in August before dropping to approximately 35% in September due to the impact of requests asking would-be travelers to refrain from taking trips to Hawaii.
Other revenue: Earnings from other businesses were JPY4.7bn (+67.4% YoY). In 1H FY03/21, in association with temporary facility closures, the company recorded JPY873mn in annual membership revenue and JPY359mn in revenue from security deposit amortization as extraordinary gains. In 1H FY03/22, they were booked as sales as in typical years.
The segment recorded an operating profit of JPY128mn (versus an operating loss of JPY3.2bn in 1H FY03/21). In 1H FY03/21, fixed costs incurred during periods in which facilities were closed were booked under extraordinary losses. In 1H FY03/22, these fixed costs were recorded as expenses, pushing down profit. However, this was offset by profit growth attributed to a recovery in hotel occupancy rates, mainly at XIV and Baycourt, and higher annual membership fee and security deposit amortization revenues. The evaluated operating profit was JPY128mn (loss of JPY6.4bn in 1H FY03/21) and the correction amount in 1H F03/22 was JPY0mn (-JPY3.2bn in 1H FY03/21 due to fixed costs in line with the closure of facilities being booked as extraordinary losses).
Decrease in opening-related expenses (The Kahala Hotel & Resort Yokohama) recorded in 1H FY03/21: JPY1.0bn
Reversal of fixed costs recorded in 1H FY03/21 during periods of facility closure as extraordinary losses: -JPY3.2bn
Temporary closure of The Kahala Hotel & Resort (Hawaii) and recovery in occupancy rate: JPY540mn
Temporary closure of Trusty facilities and recovery in occupancy rate: JPY580mn
Increase in annual membership revenue and revenue from security deposit amortization: JPY750mn
Recovery in occupancy rates at other hotels: JPY3.6bn
Sales and marketing activities for senior residences were limited due to the spread of COVID-19. However, people began to realize the importance of medical exams amid the pandemic, leading to growth in sales of memberships in the comprehensive medical support club (Grand HIMEDIC Club). Further, annual membership revenue rose due to the increase in membership, resulting in higher sales and profit.
The adoption of the revised Accounting Standard for Revenue Recognition depressed sales by JPY994mn and segment profit by JPY996mn.
Sales by subsegment were as follows:
HIMEDIC business: Sales were JPY9.1bn (+7.5% YoY). Registration fee revenue from members of Grand HIMEDIC Club, a comprehensive medical support club, fell due to impact from the company's adoption of new revenue recognition accounting standards. Meanwhile, the increase in the number of members contributed to an expansion in annual membership revenue.
Impact from the adoption of the new accounting standards for revenue recognition: In regard to new member contract value for Grand HIMEDIC Club, registration fee revenue was previously booked as a lump sum when the contract was concluded, but from FY03/22 will be prorated over eight years as registration fee revenue. This will result in a YoY decline in sales and profit in FY03/22, the first year under the new standards.
HIMEDIC membership contract count was 1,622 (+32.7 YoY), contract value was JPY3.7bn (+28.2% YoY), and registration fee revenue was JPY2.1bn (-7.3% YoY). As noted previously, registration fee revenue declined YoY due to impact from the company's adoption of new revenue recognition accounting standards.
Annual membership revenue was JPY5.6bn (+18.5% YoY). HIMEDIC member count increased to 25,096 (+11.9% YoY).
Corporate medical services business: Sales were JPY3.7bn (+44.2% YoY). In 1H FY03/21, the company temporarily closed its general medical examination facilities from early April through early May 2020 in response to the COVID-19 pandemic (some facilities maintained normal business hours). However, the company reported no such closures in 1H FY03/22.
Senior life business: Sales were JPY6.8bn (+2.8% YoY). The company reported that it was managing 2,095 rooms in senior residences and private nursing homes (-0.2% YoY) and that the occupancy rate for these rooms was 88.4% (versus 87.3% in 1H FY03/21). The spread of COVID-19 resulted in reduced recruitment for senior residences in Q1 FY03/22 (April–June 2021), but the occupancy rate at these residences rose in Q2 (July–September 2021) due to growth in the vaccinated population. As a result, the overall occupancy rate in the senior life business rose YoY in 1H.
Operating profit was JPY2.6bn (+3.1% YoY). While higher sales from HIMEDIC and corporate medical services businesses contributed to profit growth, the application of the new revenue recognition accounting standards depressed profit by JPY996mn. Evaluated operating profit corrected for the effects stemming from the application of the new accounting standards for revenue recognition was JPY3.6bn (+63.9% YoY), with the correction for application of the new revenue recognition accounting standards at JPY996mn (1H FY03/21 correction for booking fixed costs during the shutdown period as extraordinary losses was -JPY325mn).
|(JPYmn)||1H Act.||2H Act||FY Act.||1H Act.||2H Est.||FY Est.|
|Cost of sales||23,422||14,432||37,854||10,048|
|Gross profit margin||72.9%||82.2%||77.4%||86.9%|
|Operating profit margin||11.6%||5.8%||8.8%||6.7%||3.7%||5.2%|
|Recurring profit margin||12.9%||8.0%||10.5%||8.9%||3.6%||6.3%|
|(JPYmn)||FY Act.||FY Act.||Prev. Est.||1H Act.||2H Est.||FY Est.|
|Hotel and Restaurant||80,659||60,322||79,880||34,382||37,618||72,000|