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Improved economy helps Japan hotel performance
September 4 2013

Japan’s improved economic situation coupled with the 25% decrease of the Japanese yen during the first quarter led to improved hotel performance in the country.

Highlights
  • “Abenomics” have helped lead Japan’s recovery.
  • During the first seven months of 2013, Japan saw nearly 6 million overseas visitors.
  • The Japanese government hopes to bring the 2020 Summer Olympics Games to Tokyo.
     

REPORT FROM JAPAN—Despite setbacks caused by major natural disasters, Japan remains a lucrative market for hotel investment., The country benefits from a consistent flow of global travelers and an improved economic situation, sources said.

“Abenomics,” the economic policies advocated by Prime Minister Shinzo Abe, which were formed at the end of 2012, have helped lead Japan’s recovery. This recovery has helped to increase economic and leisure activities, according to Kaori Yamaguchi, regional director and director of global sales for Preferred Hotel Group in Japan. In addition, the 25% decrease in the Japanese yen during the first quarter of 2013 assisted in the recovery.

The relaxation of travel visa requirements from countries such as China, Thailand and Malaysia has been a boon to hoteliers, said Megumi Ishida, business development manager in Japan at STR Global, sister company of Hotel News Now.

The number of overseas visitors to Japan in the first seven months of 2013 reached nearly 6 million, a 22% increase compared to the same time last year, according to the Japan National Tourism Organization.

Year-to-date July, Japan hotels saw a 3.8% increase in occupancy to 78.9%, a 6.6% increase in average daily rate to 11,793.04 yen ($118.82) and a 10.7% rise in revenue per available room to 9,309.98 yen ($93.80) when reported in local currency, according to data from STR Global. However, when converted to U.S. dollars, both ADR and RevPAR showed year-over-year declines because of the weakening of the Japanese yen.

Development
Preferred has 13 properties in operation in Japan, two of which were added to its member portfolio during July under the Summit Hotels & Resorts brand: The Kyoto Tokyu Hotel and Nagoya Tokyu Hotel. Preferred’s Yamaguchi highlighted hotel performance at the company’s member hotels in Tokyo, which saw occupancy and average rates climb 5.5% and 4%, respectively, when compared to the same period last year.

“Moving forward, we plan to focus on seeking partners in secondary Japanese cities where we currently do not have hotels and further enhance our relationships with our existing members to bring their sister properties into the Preferred Hotel Group family,” Yamaguchi said.

Ascendas Hospitality Trust is also looking to add to its Japan hotel portfolio. The Singapore-based business and property trust has one hotel in the country and hopes to acquire hotels in business centers such as Tokyo, Osaka and Fukuoka, according to a Bloomberg.com article.

“Japan looks interesting at the moment, as far as macro environment is concerned,” said Tan Juay Hiang, CEO of Ascendas Hospitality Fund Management Private Limited and Ascendas Hospitality Trust Management Private Limited. “If ‘Abenomics’ works out well, Japan will enjoy growth which is important to the hospitality  business.”

Japan-based Hoshino Resorts is also expanding its traditional Japanese hotel accommodations known as Ryokans, according to Ishida. In 2014, the company will begin construction on Hoshinoya Tokyo, which will have 84 Ryokans, or traditional Japanese inns that symbolize the country’s culture.

The property is expected to open in 2016.

Other notable hotel projects:

  • There are three global luxury hotel brands opening in the Tokyo market by next year: the 237-room Tokyo Marriott Hotel opening in December; the 164-room Andaz Tokyo by Hyatt; and the Aman Tokyo Hotel.
  • Osaka and Kyoto are areas of focus for new development. In June, the InterContinental Hotel Osaka opened. In addition, the 360-room Osaka Marriott Miyako Hotel will open in spring 2014.
  • The Ritz-Carlton Kyoto will open in February 2014, and 186-room Four Seasons Hotel Kyoto will open in 2015.

Market performance
The Japanese government is investing heavily in Tokyo, Yamaguchi said, adding the city hopes to host the 2020 Summer Olympic Games. In addition, the Japan Tourism Agency launched the “Visit Japan” campaign in 2003 in hopes of increasing overseas visitors to 25 million by 2019, she added.

Hiroshima is another market full of investment opportunities, according to STR Global’s Ishida.

“This market is getting popular for international travelers because when you look at TripAdvisor, it has been ranked in a high position,” Ishida added. “Hiroshima is famous for manufacturing, so corporate business is good there as well. That is why Hiroshima has achieved one of the biggest RevPAR percent changes in 2013.”

According to data provided by STR Global, RevPAR at Hiroshima hotels increased 11.4% to 6,672.19 yen year-to-date July when compared to the same period last year.

Fukuoka is another market that showed impressive growth in 2013, Ishida said, adding that travelers from South Korea, China and Taiwan often venture to the city by ferry.

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