Nov. 11, 2003 - OSAKA, Japan -- Hankyu Corp. said Tuesday it will establish a company by May to oversee the operations of two hotel chain-operating subsidiaries. 

Hankyu, one of the major railway operators in western Japan, will arrange for the new supervisory firm to acquire all the outstanding shares of the two -- Hotel New Hankyu and Dai-ichi Hankyu Hotels, both headquartered in Osaka -- with an eye to merging the two firms eventually, it said. 

The new supervisory company will end up overseeing a wide range of hotels, from relatively inexpensive hotels for accommodating mainly company employees on business trips to ritzy hotels. 

The establishment of the single supervisory firm will enable Hankyu to eliminate some 100 of the employees who have been performing supervisory duties for the two subsidiaries. The workforce cut will enable the remaining hotel group to cut back on its expenses by 500 million yen a year. 

Hotel New Hankyu has run a total of six hotels in five prefectures including Kyoto and Hyogo. 

Dai-ichi Hankyu Hotels has run a total of 32 hotels in domestic and overseas locations including Miyagi Prefecture, Guam and Saipan. 

Including the 38 hotels in the two chains, the Hankyu group as a whole runs a total of 44 hotels with annual operating revenues coming to 82 billion yen in the business year to March 31, 2003. 

Hankyu President Kazuo Sumi said at a news conference Tuesday, "We would like to secure the status as one of the top hotel chains in Japan both in name and reality." At present, Hankyu has a 50.15 percent equity stake in Hotel New Hankyu. 

As part of the proceedings leading to establishment of the envisioned supervisory firm, Hankyu will make Hotel New Hankyu into a wholly owned subsidiary by exchanging one Hotel New Hankyu share for 0.65 Hankyu share, it said. 

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