Fosun’s Yuyuan to Sell Hokkaido Ski Resort for at Least $236M

A unit of mainland conglomerate Fosun International is planning to sell a ski resort with three onsite hotels in the northern Japanese prefecture of Hokkaido, as Fosun continues to divest assets to ease its RMB 211.9 billion ($29.9 billion) debt load.

Shanghai Yuyuan Tourist Mart, known for developing and operating the retail element of the Yu Garden cultural landmark in Shanghai’s Huangpu district, announced its intention to sell its 99.998 percent stake in the Hoshino Resorts Tomamu for no less than JPY 38 billion ($236 million), with the resort’s hotels – the 200-key Risonare Tomamu, the 535-key The Tower, and the 341-key Club Med Tomamu Hokkaido – included in that price tag.

The company “continues to downsize its business and focus its resources, concentrating its advantages and strategic focus into core industries with strong potential, growth, profitability and synergies,” Shanghai-listed Yuyuan Tourist Mart said in a filing on Thursday.

Yuyuan Tourist Mart is divesting the resort amid heightened interest in Japanese hospitality assets from institutional investors, with acquisitions of hotels in the country having reached a record JPY 500 billion in 2023, surpassing the 2022 total by 240 percent and eclipsing the previous record set in 2019 by 4 percent, according to CBRE.

1,000 Hectares, 29 Ski Runs

Yuyuan Tourist Mart, which counts jewelry and antique retailing, F&B, health and beauty products, and property development among its business lines, said the divestment is still in planning stages, citing uncertainties in overseas markets, exchange rate fluctuations and regulatory environments. The company said it has not signed any formal agreement with potential counterparties and has not finalised pricing for the disposal.

The resort occupies a total site area of over 1,000 hectares and features 29 ski slopes, over 20 restaurants, and various recreational facilities, in addition to the trio of hotels.

Yuyuan Tourist Mart is selling its stake in Xinxue Co Ltd, the holding company which owns the resort and hotels through two subsidiaries – Hoshino Resorts Tomamu Co Ltd and Tomamu Property Co Ltd. Xinxue recorded revenue and net profit of JPY 15.6 billion ($110 million) and JPY 611 million ($4.3 million) in 2023, respectively.

The company acquired the resort in 2015 from Japanese hospitality firm Hoshino Resorts Inc and Matakite BV, a Dutch investment fund backed by an unnamed American investor, for JPY 18.4 billion (then $149 million), months after Fosun finalised its €939 million takeover of Paris-based hospitality operator Club Med to capitalise on the growing number of outbound Chinese tourists.

At the time of the acquisition, the resort’s hotels included only Risonare Tomamu and The Tower, with Fosun and Yuyuan Tourist Mart having launched the Club Med property on the site in late 2017.

The planned disposal has been approved by Yuyuan Tourist Mart ‘s board of directors and audit and finance committee, with the company expecting the sale to positively impact its operating performance.

Asset Sales

The announcement by Yuyuan Tourist Mart comes after the company booked net profit of RMB 2.0 billion in 2023, representing a 45.0 percent decline from the previous year despite revenue having increased 15.8 percent over the same period. In the first quarter of this year, net profit fell 43.5 percent year-on-year to RMB 180.2 million.

HKEX-listed Fosun, which owns a 61.85 percent stake in Yuyuan Tourist Mart, aims to cut its debt by RMB 10 billion annually in the next two to three years, with the company continuing to sell off non-core assets to focus on cash flow-positive businesses, Fosun co-chairman Wang Qunbin said in a March earnings briefing.

With investments spanning tourism, pharmaceuticals, luxury apparel, real estate and financial services, the Shanghai-based conglomerate run by tycoon Guo Guangchang had initiated a flurry of asset sales in 2022 after a liquidity crisis triggered a selloff in the company’s stock and bonds, with proceeds from divestments having totaled at least $6.6 billion in the last two years.

Recent disposals include a 9 percent stake in European insurer Ageas, German private bank Hauck Aufhäuser Lampe, a 5.6 percent stake in Portuguese lender Millennium BCP, and a 5 percent share of Indian drugmaker Gland Pharma. The company is also reportedly weighing the sale of a minority stake in Club Med, as well as the luxury Atlantis resort in China’s Sanya.

Tourism Boom

Demand for Japanese hospitality assets has been driven by a post-pandemic influx of tourists into the country, with the government estimating that 33 million international visitors will arrive in the country this year, surpassing the previous record set in 2019. The Land of the Rising Sun welcomed 3.04 million foreign visitors in May, marking a third straight month of more than 3 million, according to the Japan National Tourism Organisation.

This month, Japan Hotel REIT, a Tokyo-listed trust sponsored by Singapore’s SC Capital, announced plans to acquire two Okinawa hotels and two budget hostelries in Tokyo for a total of JPY 56.2 billion ($350 million), while France-based investment manager AXA IM Alts acquired a Kyoto hotel for JPY 6.8 billion ($44 million).

Japan Hotel REIT was selected by Singaporean sovereign fund GIC in May as the preferred bidder for the Hilton Fukuoka Sea Hawk hotel, while SC Capital had teamed up with Goldman Sachs Asset Management and the Abu Dhabi Investment Authority last year to buy a set of 27 Japanese hotels for $900 million, in the country’s largest hospitality acquisition of 2023.

Last month, New York-based fund manager Fortress Investment Group announced the acquisition of the Phoenix Seagaia Resort in southwest Japan’s Kyushu island, which includes the 743-key Sheraton Grande Ocean Resort and two smaller hospitality properties, from video game maker Sega Sammy Holdings.

That deal came a week after private equity giant KKR announced that it is launching 14 Japanese hotels under Marriott International’s Four Points Express by Sheraton brand, after acquiring the properties last year through its takeover of Japanese hospitality operator Unizo. KKR had also joined forces with Hong Kong’s Gaw Capital last year on the $409 million acquisition of the Hyatt Regency Tokyo in a deal backed by South Korea’s MDM Asset Management.