■ The business details of Relogroup <8876>

2. Employee Benefits Business

The employee benefits business was started with the aim of providing outsourcing services to small and medium-sized enterprises and local companies, which are unable to offer comprehensive employee benefits due to their small scale. Specifically, it offers various life support menu items that assist employees’ lives and working styles, including leisure and lodging options to enrich leisure time, skill enhancement, Physical Examination, child-rearing and caregiving programs, etc. Services are provided at discounted rates to employees working for companies, including prospective employees and alumni. Many companies are adopting the company's services to improve employee satisfaction and strengthen recruitment, collecting a fixed membership fee based on the number of eligible employees. Additionally, customer privilege services aimed at companies utilizing the benefits service menu platform and housing emergency response services leveraging call center know-how are also provided.

The company's employee benefits business has strengths in follow-up systems that satisfy many companies and its nimbleness in meeting requests, and it is currently implemented in about 0.01 million companies. As a result, bases have been opened nationwide, conducting sales proposals tailored to the needs of companies based in rural areas, and continually introducing menu items that are in high demand in various regions, working to expand the menu available to each company. Furthermore, the company publishes the industry's first regional newsletter summarizing services that can be utilized in each of the nine areas nationwide. These meticulous services aimed at small and medium-sized enterprises and local companies are a key differentiating factor from competitors and represent a significant strength of the company. Additionally, ongoing system investments for improved convenience and operational efficiency are also a major strength of the company. Indeed, after the economic downturn following the Lehman Shock, large-scale system investments were executed, continuously improving the system thereafter, significantly enhancing convenience and efficiency, leading to reductions in call center costs and declines in cancellation rates due to higher utilization rates, resulting in apparent effects each term and contributing to increased memberships and high profit growth. The company refers to these successful examples as the 'second growth curve,' highlighting how system investments aimed at growth beyond the employee benefits business have become essential.

With approximately 56 million employed people in Japan, and comparing memberships among four major employee benefits outsourcing service companies, it is estimated that about one-third of workers are already enrolled in one of the employee benefits outsourcing services. Notably, it is said that large companies headquartered in Tokyo and Osaka have an introduction rate close to 90%, making the low introduction rate among small and medium-sized enterprises with fewer than 1,000 employees evident. Therefore, it can be said that the market for small and medium enterprises and local companies, which the company excels in, has significant growth potential. While many rival companies are strongly positioned as part of large Conglomerates, this company has independently targeted small and medium-sized enterprises since its establishment and has actively expanded into rural areas, making its strong position in this high-growth market another advantage. It is expected that this will favor the company's future growth; however, in such markets, due to recent labor shortages and the impact of 'work style reforms,' there appears to be an unprecedented increase in service inquiries. To acquire and retain customers in various markets, related services in the employee benefits business are being strengthened, including comprehensive consulting to support the establishment of employee benefits and customer privilege systems at the Reloclub, and 24/7 residential support on behalf of property management companies and house manufacturers at ReloCreate.

Developing services in hotel management, hotel regeneration, and point-based time share.

3. Tourism Business

The tourism business develops hotel management entrustment services that utilize the membership base of the employee benefits business and the operational know-how of small and medium hotels and inns in local areas, revitalization projects that enhance the value of local small and medium hotels and inns utilizing operational expertise, and a point-based time share business concept that allows families and friends to spend valuable time together freely. A balanced revenue structure derived from hotel and inn operation profits, sale profits of improved facilities, and membership resort operation profits is a strength, based on operational know-how specialized in small to medium-sized hotels and inns, about 30 rooms each, located in local regions.

Many facilities contracted for Operation or undertaking reconstruction usually experience a decline in occupancy rates, especially medium-sized and small hotels and inns in rural areas, which face numerous issues such as a lack of successors, facility aging, delays in adapting to IT and marketing strategies, and securing personnel. When the company undertakes Operation or reconstruction, it improves facility occupancy rates through the group's customer referral know-how, collaborates on procurement across multiple facilities, consolidates operations, manages sales prices and room count based on sales data and demand trends, and utilizes IT, enabling a path to profitability within an average of 90 days. Successful examples of revitalizing these rural hotels and inns have accumulated, consequently contributing to regional revitalization. Additionally, improved cash flow from the revitalization is increasing real estate value for sale, generating capital gains while continuing to develop an asset model for contracted operations. This allows profit assurance without increasing Shareholding Assets. In the points-based timeshare business, memberships for timeshare usage at approximately 50 locations nationwide are sold. While standard memberships tend to be expensive due to including real estate ownership, the company’s offering is relatively inexpensive as it only includes usage rights, which is a significant advantage.

(Author: FISCO guest analyst Nobumitsu Miyata)