ENVALITH
テルマー湯ホールディングス株式会社 logo

THERMAE-YU HOLDINGS CO.,LTD.

3521・Standard Market・Services

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テルマー湯ホールディングス株式会社 logo
THERMAE-YU HOLDINGS CO.,LTD.3521

Business

Thermae-yu Holdings Co., Ltd. (formerly Econac Holdings) operates a Bathing (Onsen/Spa) business centered on two core facilities: "Thermae-yu Shinjuku" in Kabukicho, Shinjuku-ku, Tokyo, and "Thermae-yu Nishi-Azabu" in Nishi-Azabu, Minato-ku, Tokyo. The company provides integrated bathing, dining, massage, and lodging services, targeting a broad customer base including inbound demand. As a complementary business, it also leases real estate at its Nishi-Azabu-owned building. Originally founded in 1926 as a textile manufacturer, the company has an unusual history, having undergone a full transition into the bathing business in 2015.

Business Model

In the core Bathing (Onsen/Spa) Business, admission fees form the base revenue, while ancillary services such as Food & Beverage / Massage Services and lodging (Nishi-Azabu store) raise the average spend per customer, creating a composite revenue structure. As exemplified by the admission fee increase at Thermae-yu Shinjuku in August 2024, price revisions are also used as a means of improving average customer spend and expanding revenue. In the Real Estate Business, stable recurring income is secured through leasing the residential portion of the company-owned building in Nishi-Azabu.

Company Strengths

Performance improved dramatically from net sales of ¥599 million and an operating loss of ¥178 million in FY2021 (ending March 2021) to net sales of ¥1,981 million and operating profit of ¥341 million in FY2025 (ending March 2025). The company eliminated its long-standing accumulated losses and implemented a year-end dividend for the first time in 56 years, since FY1969 (ending March 1969). The soundness of its financial structure is substantiated by these figures.

In FY2025 (ending March 2025), the Bathing (Onsen/Spa) segment achieved net sales of ¥1,931 million and operating profit of ¥473 million, an operating margin of 24.5%. The disappearance of initial opening costs at Thermae-yu Nishi-Azabu and the admission fee increase at Thermae-yu Shinjuku pushed up the margin. This confirms high profitability as a service business.

The company operates two locations in central Tokyo—Shinjuku Kabukicho and Nishi-Azabu—both areas with high concentrations of foreign tourists. In FY2025 (ending March 2025), the number of visitors to Thermae-yu Nishi-Azabu increased 9.4% year on year, directly benefiting from inbound demand. Rising prices at nearby accommodation facilities also boosted lodging-related demand at Thermae-yu Nishi-Azabu.

ENVALITH's Perspective

In FY2026 (ending March 2026), the company achieved a significant revenue increase to ¥2,694 million (up 36% YoY), but operating profit decreased approximately 10% to ¥307 million from ¥341 million in the prior period. The Food segment recorded a segment loss of ¥18 million, and the realization of M&A effects is expected to take time. In addition, the fact that the financial results report was corrected twice (misstatements in segment information regarding depreciation expenses, goodwill amortization, and increases in fixed assets) indicates concerns about disclosure quality and internal control systems.

The strong performance of the Bathing (Onsen/Spa) segment owes much to external factors, particularly the benefit from increased inbound tourism due to the rise in foreign visitors to Japan. Additionally, the improvement in average customer spending from the August 2024 admission fee increase has already been reflected in the prior period, meaning growth potential is limited absent further price increases. Trends in visitor numbers at Thermae-yu Shinjuku and increasing costs to address facility aging will be key variables affecting future profit margins.

The Bathing (Onsen/Spa) business is concentrated in two locations within Tokyo, accounting for approximately 74% of revenue, creating a structural vulnerability whereby risks such as natural disasters, infectious disease outbreaks, or utility outages directly impact overall performance. Meanwhile, the Food segment posted a loss in its first year (-¥18 million), and the outlook for investment recovery, including goodwill amortization (¥20,522 thousand), remains unclear. The timing of the Food segment's turn to profitability, together with the sustained growth of the Bathing (Onsen/Spa) business, will be the key inflection point for medium-term stock valuation.

Growth Strategy

A two-pronged growth strategy of deepening the Bathing (Onsen/Spa) business and improving customer spend, combined with M&A and diversification to develop new revenue sources

In addition to the admission fee increase (implemented August 2024), the company aims to acquire new customers and raise customer spend through the establishment of a new relax & co-working lounge and the hosting of seasonal fairs and events. It will continue to enhance the value of the facility experience to capture inbound demand.

The Food segment, newly consolidated in FY2026 (ending March 2026), recorded a segment loss of ¥18 million in its first year. Recovering the investment, including goodwill amortization (¥20,522 thousand), through sales expansion and cost efficiency improvements to achieve an early turnaround to profitability is a key challenge.

With the aim of reducing the risk of dependence on the single Bathing (Onsen/Spa) business, the company is promoting entry into new business areas through M&A. The acquisition of the Food segment has already been executed as the first step in this effort. Future additional M&A activity and new business development will be key to growth.

Last updated: July 17, 2026