APPD Market Report Article


February 28, 2022


JPY 13,624


The recovery in domestic demand has become more pronounced

  • With the lifting of the state of emergency on October 1, accommodation demand in Tokyo stayed on a recovery trend in 4Q21, recording an increase of 23% m-o-m in October. As of YTD October 2021, while the volume of inbound guests had not yet recovered, the number of Japanese-guest accommodations in Tokyo recovered to 50% of the same period in 2019.
  • The number of visitor arrivals to Japan in 2021 declined by 94% y-o-y to 246,000. As the borders remained closed to international tourists since April 2020, the number of international visitor arrivals mainly represent business travellers. In November, a wider deregulation began, however, the recent outbreak of the Omicron variant has again tightened the border measures.

No supply of four- or five-star hotels added in 4Q21

  • There were originally no plans to open any luxury hotels in 4Q21. The opening of ‘Edition Hotel Ginza’, which was scheduled for the spring of 2021 but was postponed to the second half of 2021, is now further delayed to 2022, resulting in no new openings of luxury hotels in Tokyo over the course of 2021.
  • As for future supply, the second Edition property in Ginza is scheduled to open in 2022, and Bulgari Hotel and Aman’s Janu are scheduled to open in 2023, indicating a resumption in the supply of internationally branded luxury hotels in Tokyo.

Recovery in domestic demand improves trading performance

  • Tokyo’s luxury hotel revenue per available room (RevPAR) decreased 9.3% y-o-y to JPY 13,600 in 2021. In 4Q21, Average Daily Rate (ADR), which exceeded the pre-COVID-19 level due to the Tokyo Olympics and Paralympics in 3Q21, fell again but occupancy rates continued to rise, which resulted in an increase in RevPAR by 5.2% from the previous quarter.
  • With regards to the hotel investment market, while the gap between buyers’ and sellers’ price expectations still persists, a stronger and gradual investment momentum became apparent, supported by improving hotel trading performance and expectations of COVID-19 containment. The total transaction volume (as shown in the total transacted value) in 2021 was approximately 80% as compared to 2020.

Outlook: The outlook for trading performance remains uncertain

  • Due to the outbreak of the Omicron variant, 34 prefectures, including Tokyo, have been placed under “semi-state of emergency” as of January 2022. With the delay of the reopening of the government’s travel subsidy programme called, “Go To Travel”, which was originally reported to resume at the end of January, a short-term recovery in hotel trading performance is currently not foreseeable.
  • Large-scale or portfolio hotel transactions are expected in 2022 onwards in light of investors’ strong appetite to invest in hotels in Japan, along with an increasing number of investors who strategically plan to restart the hotel investment industry. 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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