APPD Market Report Article


May 31, 2022


JPY 12,707


Accommodation demand decreases due to the Omicron variant

  • Due to the Omicron variant outbreak, Tokyo was placed under a ‘quasi-state of emergency’ for the majority of days in 1Q22 (from January 21 to March 22). According to the latest statistics, the total accommodation demand in Tokyo in January 2022 showed a decrease of 30% from the previous month, illustrating the negative impact from the quasi-state of emergency.
  • The total number of international visitor arrivals showed an increase of 52.0% y-o-y as of YTD March 2022, though it still shows a decrease of 97.4% as compared to YTD March 2020. Since the borders remained closed to international tourists since April 2020, the number of international visitor arrivals mainly represent business travellers and a full recovery is expected to take a while.

No supply of four- or five-star hotels added in 1Q22

  • There were originally no plans to open any luxury hotels in 1Q22. The opening of Edition Hotel Ginza, which was scheduled for the spring of 2021 but was postponed to the second half of 2021, and further delayed to 2022, though the opening date is yet to be announced.
  • As for the future supply, the second Edition property in Ginza is scheduled to open in 2022 as noted above, and Bulgari Hotel and Aman’s Janu are scheduled to open in 2023, indicating a rebound in the supply of internationally branded luxury hotels in Tokyo.

Performance improves y-o-y despite continued challenges

  • Tokyo’s luxury hotel revenue per available room (RevPAR) marked an increase of 54.4% y-o-y to JPY 12,700 in 1Q22, though it shows a decrease of 17% from the previous quarter.
  • With regards to the hotel investment market, a stronger investment momentum began to be seen in the quarter, supported by the improving hotel trading performance and expectations of COVID-19 convergence, therefore large-scale hotel transactions are accelerating.

Outlook: A gradual market recovery is expected

  • The declaration of ‘quasi-state of emergency’ was fully lifted in March 2022, and it is expected that the demand for accommodation will notably increase. The declining tendency toward self-restraint and the shift of demand from overseas travel to domestic travel are expected to enhance the further improvement in trading performance.
  • Large-scale or portfolio hotel transactions are anticipated in 2022 onwards in light of the increase of hotel assets in the transaction market that meet the investment criteria in terms of size or quality. It is expected that hotel transactions will be more active in the next 12 months.

Note: Tokyo Hotels refers to Tokyo's luxury hotel market.

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