• Japan ramps up supply ahead of Games

Japan Hotel Reit said that it expected to see “some impact” from the supply of new hotels as the sector expanded ahead of the 2020 Olympic Games, due to be hosted in Tokyo.

The news came as the country prepared for a new tourist tax, as well as an industry-wide organisation, both aimed at raising funds to improve existing bed stock and infrastructure.

At Japan Hotel Reit, revenues were up 15.2% in 2017. The company said that its six hotels run under Accor flags saw the highest increase in revpar for the year, up 3.2%, against a 2.3% increase across the estate. The Reit has a total of 44 properties, with a focus on leisure areas. The group has a broad mix of brands, including Hilton and Marriott International as well as Accor. The estate is split with 41% limited service, 35% full service and 24% resort hotels.

Japan Hotel Resit said that the number of inbound visitors had increased at a faster pace than the government’s target of 40 million in 2020 and 60 million in 2030, with close to 29 million visitors last year, a 19.3% increase on the prior year. The group said that demand for domestic travel had been stable, rising by 0.8% on the year.

The Reit illustrated the increase in supply, particularly in Tokyo and Osaka. Across Japan, supply was expected to grow by 4.2% this year, then 2.4% and 1.3% in the subsequent two years. In Tokyo, this year the city was expected to add 10.1%, followed by 5.6% and 2.7%. Osaka was forecast to see 9.8% growth this year, then 8.8% and 5.1%.

The group said that its prime investment targets remained full-service hotels and resort hotels, that had high barriers to entry due to operation and management know-how, capital outlay and locations.

The Reit said: “In addition to stable domestic leisure demand, due to the government policy to promote tourism nation, the number of inbound tourists, mainly from Asian countries, is continuing to rise.

“Amid such growth expectation for Japan’s tourism and hotel industries, although there is some impact by supply of new hotels and minpaku (private lodging for a fee), demand for accommodation is expected to continue steadily, driven by domestic and inbound leisure demand.”

The performance of Japan’s hotels has continued to build, with figures from STR for the year-to-date September last year showing 2.6% revpar growth. The only fall was in Osaka, pulled down by mid-tier hotels.

According to the country’s tourism authority. demand had continued into this year, with visitor numbers up 9% on the year for January. South Korea and China were the leading source markets.

The global operators have been eager to hoist their flags during the country’s expansion, with Marriott International announcing the opening of its first property in the country under the W brand, opening in Osaka in 2021.

Owned by Sekisui House, a long-standing partner of Marriott International, the 27-floor, new-build hotel will include 337 rooms and suites. “In 2020, Japan will capture the global spotlight, welcoming nations from around the world to the country on a grand scale for the 2020 games. This is a great build up to the launch of the first-ever W in Japan,” said Anthony Ingham, global brand leader, W Hotels Worldwide.

Marriott International also announced the debut of its Moxy brand in the country, with the opening of the 205-room Moxy Tokyo Kinshicho hotel in Tokyo.

While new hotels proliferated, a consortium of 60 Japanese companies was expected to set up a fund to invest in rebuilding and refurbishing existing hotels in the country. According to the local press, the group included Bank of Tokyo-Mitsubishi UFJ, Japan Airlines and homebuilder Sekisui House as well as 30 regional banks. Around 20 hotel operators will serve in an advisory capacity.

In addition, from April 2019 Japan, visitors will pay a Yen1,000 (USD9.40) tax on leaving the country, which will also be used to upgrade existing hotels and fund infrastructure and promotion. “We plan to allocate funds to policy programs that are forward-looking and cost-efficient and turn Japan into a country which people across the globe would want to visit,” said prime minister Shinzo Abe.

HA Perspective [by Katherine Doggrell]: The 2004 Olympics in Greece was seen as a coming home for the event and almost two third of Athen’s hotel rooms were renovated, according to the ETOA, anticipating a swarm of muscle-bulging athletes and those who would admire them. In the event of the event there were accusations of profiteering, threats of strikes and occupancy in Athens reached 61%. Some blamed the hosting on the subsequent financial crisis. The 2004 Olympics is now used as a cautionary tale when pushing for your city to host the Games.

Cities have learned to constrain their enthusiasm, but there is no denying the temptation. This has, for the Japanese government, been driven by the need to jumpstart what has been something of a glum period for the country’s economy. Growth in GDP for the fourth quarter was 0.5%, falling from 2.5% in the third quarter.

It won’t be as simple as build it and they will come. Japan suffers from staffing supply issues, owing to a tradition of lifetime employment. This being Japan and not Hampstead, there is a solution. H.I.S. is planning to build eight more android-staffed Henn na Hotels in the country after opening its latest, in Tokyo, in February. From RoboCop to RoboBellhop.

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