In February 2015, private investment firm Bain Capital Partners (BCP) bought a 100 per cent stake in Japanese hot springs and hotel operator Ooedo Onsens Holdings, in a move to capitalise on tourism ahead of the Tokyo 2020 Olympic Games.

Ooedo Onsen Holdings runs the Ooedo Onsen Monogatari chain of hot springs and hotels – including 23 onsen inns and six onsen theme parks across Japan, which employs 3,000 people and attracts 50 million customers a year. The business is on a strong growth trajectory, with sales increasing about 30 per cent year-on-year and a projected turnover of JPY35bn in 2015.

One of the leading private equity firms in the world, Bain Capital was co-founded in 1984 by Mitt Romney – later a presidential candidate in the US. A subsidiary of the company, Bain Capital Ventures, is also a backer of spa software company Booker.

“This is a very scalable business­­­,” said David Gross-Loh, managing director, Bain Capital. “...Ooedo Onsen has enormous growth potential, both in existing branches and through expansion. There’s a lot that Bain Capital is equipped to help with, including looking at the cost base and finding ways to improve it, looking at pricing, and looking at how we attract and retain customers.”

Bain has started building out the pipeline of new sites, and has identified and conducted due diligence on 17 new sites over the past few months. It has also built and implemented a strategy to drive growth, profitability and market share.

“This covers a few areas – pricing, marketing, and cost optimisation – to ensure we are effectively allocating our resources,” said Gross-Loh.

The company has also added to the existing management at Ooedo Onsen, and continues to do so; currently, it is looking for a chief acquisition officer to help with the expansion.

With the 2020 Olympic Games set to take place in Tokyo, Bain is keeping its eye on the prize.

“If you consider that the number of tourists travelling to Japan grew from 6 million in 2004 to 13 million in 2014, then you can already see the scale of the opportunity,” said Gross-Loh. “In 2020, Japan expects to receive 20 million visitors.”

For more on Bain Capital’s plans with Ooedo Onsen Holdings, see Spa Business Q1 2016.