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Japan Hotel Market Trends

Updates from STR Global's Tokyo Seminar 2015

Tokyo, April 2015 

STR Global recently hosted the annual Japan seminar in Tokyo, to an exclusive audience of just over 100 industry professionals from investment and hotel brands of Greater Tokyo. The event was sponsored by Deloitte Tohmatsu and the Rikkyo University.

The Japan Tourism Trend

With the main focus in Japan being to open up its borders and gain advantage of the increase in global tourism and tourism from Asia, Mr Hiroshi Kurosu, Chief Researcher at JTB Tourism Marketing brought attention to the growth level of Japan’s inbound travel and how it has outpaced the outbound travel of the country, which as resulted in a travel trade surplus for 2014. Japanese travel trends, indicate that senior travellers actively travel to areas within the country. However, since Abenomics declared the increase of the consumption tax in April 2014, the average spending on travel has temporarily dropped.

Mr Kurosu reported that the market is set to transform and the tourism industry is expected to see a change in strategy. The demand for Ryokan, the traditional Japanese B&B outlets, have been dropping since 2010, seemingly due to a lifestyle change of the modern Japanese traveler, in favour of regular hotels. This has, in turn, led to an increase in demand for limited service hotels.

The advent of new brands and lifestyles

In the session “Journalist's Eye - Global Hotel Chains Update”, Mr Kazuhiko Haruguchi, CEO of Office Kaz, gave an informative update on how global hotel chains are constantly making efforts in order to reinvent what they offer to customers. Hotel chains have recently started to introduce new brands to accommodate both existing guest demographics, and to accommodate a number of new types of travellers, a segment which is rapidly expanding.

Lifestyle and boutique hotel brands were discussed as becoming the new up and coming trend, as Mr Haruguchi highlighted the changes in customer profiles, such as the new addition of the ‘bleisure traveller’, which incorporates both leisure and business travel, creating a new value proposition for hotels to capture and attend to.

The effects of hosting the Olympics

With the upcoming summer Olympics taking place in Tokyo 2020, Mrs Megumi Ishida, Business Development Manager at STR Global, showcased the effect and dynamics that a global event typically would have on a market. By drawing parallels from previous host cities such as Beijing and London she eventually raised the question – what can Tokyo and Japan gain and expect from being a host city in 5 years’ time? This is an important question for many reasons, especially when considering that Tokyo today has some of the highest occupancy levels globally and with rates continuing to rise – all against the back drop of limited supply in the pipeline.

London by class during Olympic 2012 games


Hotel Investment Trend

Mr Ryuji Sawada, Partner, Tourism Hospitality and Leisure at Deloitte Tohmatsu, presented the continued increase of deals and transactions in Japan. In 2014, the transaction volume reached the same peak levels as in 2007. Main performers are still domestic REITs and funds, however overseas players have also seen an increase, with companies from China and South Asia in particular. Limited service hotels are reported to have become more popular, in part due to the more profitable yield they can generate in comparison to other assets, moreover Japan is expected to see a increase in its Tourism.

The pipeline is currently very limited because of the high construction cost. However, the upcoming Tokyo summer Olympics and new rulings for earthquake-resistant buildings could change the market, to increase the volumes of renovation. 

The Digital Trend in Japan 2015

Mr Hiroki Jinnai, Industry Manager for Travel at Google Japan, highlighted the recent search trends for Japan on Google at a global level. By dividing Japan-related content into 5 categories and analysing the growth ratio, in 2014 Mr Hiroki Jinnai could report that the category with the strongest growth was food. The most frequently searched keywords in order of popularity being Sushi, Edamame, Sashimi, Ramen and Tempura, with  variations from country to country. Tokyo is the primary city searched worldwide among Japanese cities. Tokyo Disneyland and Tokyo Tower are ranked as number 4 and 5 in related searches to ‘Tokyo’. Tokyo hotels are frequently searched with ‘Tokyo +’. Global brands such as Hyatt, Hilton, Mandarin Oriental and Peninsula are the most popular but Imperial Hotel and Park Hotel are also ranked in the Top 10 searches. In conclusion, Mr. Jinnai highlighted that the Google search results, and STR Global data had very similar weekly trends.

Global hotel performance

2014 was a year of solid growth around the world, reported Mr Jesper Palmqvist, Area Director Asia Pacific at STR Global. Asia primarily saw rate growth from Singapore, the Philippines and Indonesia, which contrasted with the decline of occupancy in Thailand that resulted in a decrease for Southeast Asia. Thailand did however prove its remarkable ability to recover quickly by holding rates strong through adversity, which helped produce a a positive end to the year, dampening the overall poor annual performance.

In global and overseas markets, it is interesting to see investment from Japanese companies which showed strong performance in 2014. Southeast Asia remains one of the key areas of investment, particularly in emerging markets.

Japan performance and outlook

Japan stands out as one of the strongest growing markets globally and this has continued into early 2015.

Occupancy in rates 2014

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