Goldman Sachs leverages golf course expertise in move to rehabilitate Japanese inns.

After becoming one of the biggest players in the Japanese golf business, the Goldman Sachs group is getting its feet wet in hot spring inns.

Since the latter half of 2004, the U.S.-based investment bank has been acquiring financially troubled onsen ryokan, Japanese-style inns featuring hot spring baths.

In November, Goldman Sachs announced it will acquire Komaki Hot Spring Shibusawa Park Co., an Aomori Prefecture onsen ryokan, which has filed for bankruptcy protection.

The company has also been assisting Izumiso, a long-established onsen ryokan in Ito, Shizuoka Prefecture. The facility initiated rehabilitation procedures in January.

The Komaki hot spring posted overall sales of about 8 billion yen for the year ending December 2003. For 10 straight years since 1992, it held first place in Nippon no Onsen Hyakusen, a rating of the nation's 100 best hot springs compiled by Tourism Economy News Inc.

Meanwhile, Izumiso's annual sales are relatively modest at about 800 million yen.

However, the inn, established in 1914, is one of the best-known of the hot spring resorts in Ito, which is popular among people in the Tokyo area.

Goldman Sachs' goal is to revitalize the business performance of the inns and then sell them for a profit.

Analysts say the ryokan business is an attractive target for rehabilitation for two reasons.

It is traditionally low-profit, leaving much room for improvement, and operators can secure cash flow even during restructuring.

Goldman Sachs already owns eight hotels, including the Kobe Meriken Park Oriental Hotel. The company is therefore accumulating expertise in the business.

``We know what hospitality means through our experience in entertaining customers, and we believe we can take advantage of it for rehabilitating onsen ryokan,'' said Masaki Suzuki, vice president at Goldman Sachs (Japan) Ltd.

Based on its golf course operations, the company also has experience in turning around Japanese ventures.

The company entered the golfing business in earnest in February 2003, when failed golf course operator Nitto Kogyo Co. emerged from bankruptcy proceedings as Accordia Golf Co. under Goldman Sachs' sponsorship.

Accordia Golf now manages a total of 78 golf links from Hokkaido to Kyushu, improving facilities and providing various services for golfers.

In 2004, sales of Accordia Golf as well as the number of people using its golf courses grew by 6 to 7 percent from a year earlier. Sales of golf goods at course shops rose 2.6 times over the 2003 level based on an expanded product line.

Goldman Sachs, aware of the sport's costly image, is trying to broaden the range of customers. At its courses, for example, players can forego the luxury of a caddie if they choose, and meals are more reasonably priced than at other golf courses.

Goldman Sachs is also trying to attract more customers by introducing privilege packages for users and a point-card system. Customers acquire points when they use the card. The points can be redeemed for various services.(IHT/Asahi: March 9,2005)