APPD Market Report Article


September 4, 2023

Kuraudo Ohashi, Executive Vice President Head of Advisory, Japan


JPY 46,883


International demand shows steady recovery

  • With the exception of Chinese visitors, the number of visitor arrivals to Japan continues to recover since the border restrictions had been fully lifted since 29 April. As at YTD June 2023, Japan welcomed more than 10 million international arrivals for the first time in four years, recovering to 64.4% compared to the same period in 2019.
  • The accommodation demand in Tokyo is measured by the number of visitor nights. According to the latest statistics, Tokyo saw 1.8 times more visitor nights as at YTD April 2023 as compared to the same period in 2022.The ratio of international visitor nights marked 38%, recovering to the same level as the average foreign traveler ratio in Tokyo in 2019.

Three 4- and 5-star hotels totalling 732 rooms opened in 2Q23

  • Three new hotels opened in 2Q23. The Bvlgari Hotel Tokyo (97 rooms) opened its door on 4 April and a luxury and an upscale hotel totalling 635 rooms opened in a newly-built mixed use complex “Tokyu Kabukicho Tower” on 19 May. Over the course of 2023, three international brand hotels, namely, Jenu Tokyo, The Tokyo Edition Ginza, and Hotel Indigo Tokyo Shibuya, will open.
  • Several other luxury hotels such as JW Marriott and Fairmont are planned in 2025 and beyond, indicating that the appetite of international hotel operators to expand their hotels in Tokyo has not waned.

Operating performance continues to exceed pre-pandemic levels

  • Tokyo’s luxury hotel revenue per available room (RevPAR) marked an increase of 12.0% as compared to the same period in 2019, reaching JPY 46,883 as at YTD June 2023. The occupancy rate recovered to 79.8% compared to the same period in 2019, and furthermore, the average room rate (ADR) was +40.4% compared to the same period in 2019, resulting in an improvement in RevPAR.
  • As for the hotel investment market, strong investment momentum continues to be seen, supported by improved operational performance and expectations for future hospitality demand.

Outlook: A full-fledged market recovery is anticipated

  • Domestic demand increased in 2Q23, the first summer holiday season since the lifting of the pandemic restrictions. Although the recovery of inbound demand is expected to continue, the lifting of the ban on group travel to Japan by the Chinese government is essential for further recovery. Recovery in demand is anticipated to continue to support the hotel industry performance in 3Q23 and beyond.
  • Active hotel transactions are expected to continue in 3Q23 and beyond. In addition to the recent depreciation of the Japanese yen, the debit financing environment in Japan remains attractive to investors despite the backdrop of rising interest rates globally.

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

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