A ¥100 billion diversification into hotels and resorts (1988)

How much of a specialist’s edge can you afford to give up

The heart of this decision is that Haseko, having run into the growth ceiling of being a condominium specialist, chose to step into hotels and resorts — a completely unrelated field — on its own account, armed with the planning and construction skills built in the core business. It could have handed operations to outside specialists; that it refused, on the grounds that others could not be relied on to develop and run things the way Haseko intended, shows the self-reliance of a company proud of what specialisation had achieved.

Yet while the hotel did well in its first year, the speed at which property came to dominate the business mix reveals how heavily the diversification leaned on the bubble economy as a tailwind. The underlying reading — that the condominium market was maturing — appears to have been accurate; but the scale and pace of the investment badly undermined the company’s capacity to absorb losses once the cycle turned. How much of a specialist’s advantage one may safely give up is a question Haseko would have to face again throughout the rebuild that followed.