A hot-spring town with 1,300 years of history, Kinosaki Onsen in Toyooka City, Hyogo Prefecture, is often listed among the top hot-spring resorts in Japan. An important part of Kinosaki Onsen’s appeal is the distinct charm of each inn and shop. But each of these facilities operates on a small scale. Also, given Japan’s nationwide population decline, ideal staffing levels have been hard to maintain. Challenges like this were behind the adoption of an innovative strategy that boosts Kinosaki Onsen’s capacity to compete with other hot-spring resorts.

Digital Transformation

The Kinosaki Onsen initiative is an example of “digital transformation”, also known as “DX”, which has been a hot topic in Japan in recent years. DX introduces digital solutions in situations where people and paperwork were once the “analogue” norm. By automating tasks and generating valuable data, DX boosts the efficiency and profitability of business operations. Moreover, by reducing the need for human labour, DX also contributes to the long-term sustainability of the town as a tourist destination.

Kinosaki Onsen positions itself as a distributed hotel. “The train station is the front entrance,” explains TAKAMIYA Hiroshi, a representative of the Kinosaki Onsen Tourism Association. “Then the main street is the lobby, the inns are guest rooms, the bathhouses are guest bathrooms, and the souvenir shops are concession stands.”

At the time of the pandemic, all the Kinosaki Onsen inns were forced to close, dealing a heavy blow to the local hospitality industry. It was then that the next generation of inn managers in Kinosaki Onsen began to consider in earnest new ways to strengthen the town’s competitiveness via DX. The forum for these discussions was the Kinosaki Onsen Business Administration Research Association or Nisei-kai, which is composed of inn successors up to the age of 45 years old. Nisei-kai plays a significant role in boosting community vitality.

In 2022, Nisei-kai’s DX discussions culminated in the establishment of the Toyooka Tourism DX Promotion Council. Bringing together representatives of the municipal government and local businesses, the council went on to launch the Toyooka Tourism DX Platform.

Key initiatives

Digital solution: a custom-built community-wide Property Management System (PMS) facilitates real-time sharing of accommodation booking data. This PMS offers various benefits:

1. Reflection in data-driven pricing
2. Cost reduction and productivity improvement through appropriate allocation and management of resources (closing or reducing number of staff on days with low demand, etc.)
3. Data-based measures (DMO placement of targeted advertising, etc.)

A valuable DMO: Data is meaningless if its value as information cannot be harvested, and so relevant guidance is provided by Kinosaki Onsen’s Destination Management Organization: Toyooka Tourism Innovation (or Toyooka City DMO). The DMO improves stakeholder interpretation of raw data by issuing monthly reports and holding explanatory meetings.

“We can now verify facts and make decisions based on objective evidence,” says ICHIMAN Kenji, Administrative Leader of Toyooka Tourism DX Promotion Council.

Looking to the future

The next step for the Toyooka Tourism DX Promotion Council will be to add new features to the regional tourism app. Possibilities currently under consideration include digital bathhouse admission tickets, bathhouse congestion status monitoring[AF1] , and discount coupons. The aim is always the same: to increase the number of Kinosaki Onsen fans by contributing to guest convenience and satisfaction.

“We will continue to take time to explain the benefits to businesses that are not yet signed up,” says ICHIMAN. “Our DX journey has only just begun.”

Sharing data, collaborating closely, and focusing on the needs of visitors and local businesses: Kinosaki Onsen has demonstrated an approach that many other communities can realistically replicate.

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At a glance

Kinosaki Onsen’s Data Utilization to Enhance its Competitiveness