THE ROYAL HOTEL, LIMITED

Business Details

The Group operates a hotel business as a single segment, centered on lodging, food and beverage, and banquet/meeting room rental. In October 2025, the company made Shiba Park Hotel Co., Ltd. a wholly owned subsidiary, adding Shiba Park Hotel (Shiba Park, Minato-ku, Tokyo) and Park Hotel Tokyo (Shiodome, 466 rooms combined) to the Group. Rihga Royal Hotel Osaka joined IHG's "Vignette Collection" and reopened following renewal. The Group's mainstay is full-service city hotels with a balanced revenue mix across rooms, banquets, restaurants, and other services.

Recent Overview

Achieved higher revenue and profit through the full consolidation of Shiba Park Hotel as a subsidiary and operation of the Osaka Expo reception hotel

In FY2026 (ending March 2026), net sales rose 16.3% year on year to ¥29,273 million, operating income rose 27.3% to ¥1,162 million, and ordinary income rose 49.5% to ¥1,189 million, marking an increase in both revenue and profit. The main driver of the revenue increase was the consolidation of Shiba Park Hotel as a subsidiary in November 2024 (the current period marked the first full-year contribution) and its conversion to a wholly owned subsidiary in October 2025. A marked increase in average room rates following Rihga Royal Hotel Osaka's affiliation with IHG's "Vignette Collection" also contributed. On the other hand, net income fell 32.7% year on year to ¥1,169 million due to the reversal of extraordinary gains recorded in the prior period (gain on negative goodwill of ¥1,137 million and gain on step acquisition of ¥344 million). For FY2027 (ending March 2027), the company forecasts net sales of ¥32,000 million, operating income of ¥1,200 million, and net income of ¥900 million.

Key Products

Growth Drivers

• Expansion of lodging demand driven by growth in inbound demand (room division sales up 27.8% year on year)
• Deepening of unified group management and creation of synergies through the full consolidation of Shiba Park Hotel as a subsidiary (October 2025), with both hotels—where inbound guests account for 95% of the mix and North American, European, and Australian guests are the main customer base—contributing for a full year
• Enhanced brand competitiveness and a marked rise in average room rates following Rihga Royal Hotel Osaka's affiliation with IHG's "Vignette Collection"
• Expansion of the domestic customer base as Rihga Members membership surpassed 550,000 (March 2026), with a target of 1 million members by 2030
• Scale expansion through the planned opening of seven hotels from April 2026 onward (Okinawa Chatan, Osaka Namba, Fukuoka Hakata, Kobe Arima, Okinawa Nakijin, Hiroshima, and Hokkaido Chitose)
• Promotion of DX and improved operational efficiency through the introduction of an AI revenue management system and a new PMS (property management system)
• Strengthening of overseas sales targeting Europe, the U.S., and East Asia (outsourcing contracts signed with three REP companies, and a 9-event year-on-year increase in exhibition participation)

Risks

• Profit pressure from rising costs including raw materials, utilities, and labor (labor costs increased from ¥8,441 million in the prior period to ¥10,355 million in the current period)
• Intensifying competition and concerns over oversupply due to an increase in newly opened hotels
• Uncertainty in inbound demand due to factors such as the Chinese government's requests for citizens to refrain from traveling to Japan and instability in the Middle East
• Risk of economic deterioration due to unstable international conditions, including the situation in Ukraine and U.S. tariff policy
• Forecast net income of ¥900 million for FY2027 (ending March 2027), down 23.1% year on year, reflecting a decline in profit levels after the drop-off of extraordinary gains
• Increased initial investment and operating costs associated with new store openings, and a time lag before profitability is achieved
• Persistently high level of fixed personnel-related liabilities, including net defined benefit liability of ¥5,120 million