The hotel construction rush around Japan Competition intensifies, and occupancy rates are splendid

The hotel construction rush around Japan
Competition intensifies, and occupancy rates are splendid

In December of 2016, APA Hotel, which develops the hotel industry, saw the grand opening of its "APA Hotel & Resort Tokyo Bay Makuhari". The hotel is located close to the popular event venue Makuhari Messe and Makuhari Seaside Park. While the central tower (1,001 rooms according to APA Hotel's announcement, as are the following figures) and West wing (500 rooms) had already been opened, this time the new 506 room East wing was added. This lead to the birth of a hotel with 2007 rooms in total. This makes it the second biggest in Japan in terms of room numbers, behind the Shinagawa Prince Hotel which has roughly 3,600.

At time of writing in February 2017, APA Hotel is the largest business hotel company in Japan, with over 420 locations nationwide. In preparation for the 2020 Olympics, they have rapidly increased the number of rooms available. Further, they plan to increase the total number of rooms from approximately 70,000 to 100,000 by 2020.

It isn't just the business hotel industry that is causing this construction rush. Seibu holdings, who hold the Prince Hotel brand, opened their high class "The Prince Gallery Tokyo Kioicho" where their former Akasaka Prince hotel once stood in July of 2016. In that same month the particularly Japanese style and high class HOSHINOYA Tokyo (Luxury resorts by Hoshino Resorts) opened in the very center of Tokyo's office district, causing quite a stir.

Further, outside of Tokyo top level foreign hotel companies such as Hilton, Marriott, Starwood, and Hyatt plan to or are considering opening hotels in popular tourist destinations such as Kyoto, Osaka or Okinawa.

The main reason this hotel construction rush won't stop is the increased number of foreign tourists to Japan. In 2016 the number of tourists increased by 21.8% compared to the previous year to 24.039 million (According to the Tourism Board). From 2014 and 2015, the rate of increase grew significantly. While the government has set a target of "40 million in 2020!" with regards to foreign tourists, if the current pace remains as is this number will be reached by 2019. Also, the Bank of Japan's ultra low interest rate policy has pushed hotel construction to further heights.

The hotel construction rush around Japan Competition intensifies, and occupancy rates are splendid

Considering this, accommodation is predicted to be far below demand. According to the Ministry of Land, Infrastructure and Transport, 2016 saw a sudden rise of 2.1 times the amount of ryokan and accommodation construction area to 1.96 million ㎡. This trend appears to remain even now. As a result, while the room shortage in Tokyo was roughly 4000 rooms in mid 2016, it seems this has almost been resolved as of January 2017 (According to the Mizuho Research Institute).

Nonetheless, -the occupancy rate of accommodation facilities in Tokyo and Osaka in 2016 exceeded 80% in 2016 (According to a Tourism Agency survey). This figure includes weekdays and the off season, meaning even Japanese citizens have to search on a number of booking sites to find available rooms on weekends. For those planning to come to Japan without using a tour company, it seems it might be prudent to ring a few hotels or ryokan before booking a popular restaurant.

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