Kiraku founder talks about Japan's Atona ryokan brand

CHICAGO, TOKYO – Earlier this week, Hyatt Hotels Corp. and Kiraku Inc. announced that the first three Atona ryokans will open in Japan in 2026 and stated that its first Atona Impact Fund had closed, securing an initial $64 million to actively invest in Atona ryokan development projects.

First round investors include affiliates of Hyatt and Kiraku, as well as Japanese construction firm Takenaka Corp. Kiraku and Takenaka have already partnered to restore a heritage sake brewery in Nagano. Kiraku operates from bases in Kyoto and Tokyo, overseeing projects across Japan.

The fund is aiming for a final target of $128 million to invest in unique and untapped quality assets.

Atona brand imaging

The first Atona hot springs ryokans will open in Yufu, Yakushima and Hakone, Japan. Properties will typically have 30 to 50 guestrooms and will feature restaurants with open kitchens and bars showcasing seasonal ingredients.

The Atona brand (a combination of two old Japanese words that means ‘me and you’) was announced in 2022 under a joint venture between a Hyatt affiliate and Kiraku, “a Japanese company dedicated to preserving valuable assets for future generations.” It marks Hyatt’s first brand originating in Japan.

Hotel Investment Today reached out to Kiraku to learn more about the ventures plan and received these written responses from Kou Sundberg, founder and chief executive officer.

Hotel Investment Today (HIT): How many Atona properties does the joint venture want to develop beyond the initial three?

Kou Sundberg: We expect to open our first Atona properties in Yufu, Yakushima and Hakone in 2026 or beyond, and are also actively looking to expand in other regions.

The locations for Atona ryokans are determined based on multiple perspectives, including the richness in natural resources such as hot springs and the local landscape, and the unique stories rooted in the people and culture of each locale. We are focusing on limited properties that will deliver truly unique and authentic experiences to both foreign and local guests.

Much of Japan’s tourism boom has been centered around major cities, and the wealth of natural and cultural splendors in regional Japan remains unknown to much of the world. There is an absence of active institutional capital in regional Japan due to lack of market information as well as access to potential assets. We believe that herein lies considerable unrealized value, and the Atona Impact Fund will serve as a unique bridge between the ever-growing global interest in Japan and the untapped potential of Japan’s local treasures, creating long-term value for various stakeholders.

Kou Sundberg

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The excitement surrounding the Atona brand will support its growth and expansion. Additionally, with Japan’s rising popularity of foreign visitors and the government’s goal to attract 60 million foreign visitors by 2030, we see strong potential for the Atona brand to grow across Japan.

HIT: Who is the majority investor of the fund, or can you break out percentages among the initial first three investors?

Sundberg: We are unable to disclose the details at this stage regarding the relative investment between the affiliates of Hyatt and Kiraku as well as Takenaka Corp.

HIT: What is the projected percentage return for fund investors?

Sundberg: We are unable to disclose this information. The Atona Impact Fund presents a rare opportunity for institutional capital investment into quality assets in regional Japan.

Much of Japan’s tourism boom has been centered around major cities, and the wealth of natural and cultural splendors in regional Japan remains unknown to much of the world. There is an absence of active institutional capital in regional Japan due to lack of market information as well as access to potential assets.

We believe that herein lies considerable unrealized value, and the Atona Impact Fund will serve as a unique bridge between the ever-growing global interest in Japan and the untapped potential of Japan’s local treasures, creating long-term value for various stakeholders.

HIT: What is the projected ADR for the first three Atona properties?

Sundberg: Affluent travelers are eager to visit Japan and are willing to pay for experiences that can only be found in the country.

Our strategy will be to maintain an appropriately high price range while remaining competitive, rather than focusing on occupancy rates. Each Atona ryokan will have between 30 to 50 rooms, and the ADR is expected to be over 100,000 Japanese yen (US$630-plus). However, this may change, depending on trends in the exchange rate and inflation.

HIT: Are these all new-build projects or are some conversions of existing buildings?

Sundberg: The three Atona ryokans in Yufu, Yakushima and Hakone are new-build projects. The Atona Impact Fund, with a final target size of 20 billion yen (approx. US$128 million), is dedicated to actively investing in development and renovation projects for Atona-branded ryokans, which could include greenfield projects and existing ryokans.

HIT: Is Hyatt leading property management?

Sundberg: The Atona ryokans will be managed and operated by Atona Co. Ltd., whose team is led by Satoshi Watanabe, chief operating officer of Atona.

The team is comprised of seasoned professionals in international hotel management and operations, as well as ryokan operations throughout the country, and have a deep understanding of Japanese culture.

In parallel, Kiraku and Hyatt are staying in close collaboration from the early stages of the ryokan development and design, enabling the creation of properties that are not only guest-centric but also operationally efficient.

The joint venture leverages Kiraku's experience in regional business development and private equity investments and Hyatt's expertise in global hospitality.