What the 2020 olympic games means for hotels & tourism in Tokyo
October 7, 2013 / By Frank Sorgiovanni
On the 7th of September 2013, Tokyo won its bid to host the 2020 Summer Olympic Games. It last hosted the event in 1964 and is the first city in Asia to host the Games twice. For any host city, the key advantage of the Olympics is the development of major new infrastructure, from which the city derives benefits long after the Games have completed. With the Japanese economy rebounding from the impact of monetary easing and fiscal stimulus, winning the Games has bolstered optimism that the country will succeed in finally controlling deflation.
Focusing on property, hotels are clearly the major benefactor of the Games due to the direct impact of Olympic-related arrivals and the resulting demand for short term accommodation. The precise impact has historically varied between host cities due to a number of factors including the maturity of the tourism market, the degree of Olympic induced hotel supply and how well the country leveraged the Games for its tourism industry.
However, all host cities share some similar traits. Growth in room supply over the two years leading up to the Games and the Olympic year itself, as well as a decline in average occupancy during the Olympic year is common. Past host cities all experienced a substantial increase in the average daily rate (ADR). Not surprisingly, all cities recorded a decline in ADR in the year after the Olympics.
Movements in hotel performance in the post-Games period have varied as the cities resumed their normal tourism cycle. London recovered well, whilst Beijing and Athens saw revenue per available room (RevPAR) fall substantially in the 2 years following the Games, reflecting an oversupply of rooms. Above average room rates have generally been sufficient enough to offset lower occupancies. London recorded an increase in hotel performance as measured by RevPAR during the Olympic year.
The Games are anticipated to provide a significant stimulus for Japan’s economy. Ultimately the Games will be an opportunity for Japan to develop a new vision for the nation. It will bring economic development, force growth within Tokyo’s infrastructure and most importantly be a boost to the Japanese people.
The country was heavily impacted by the 2011 tsunami and the subsequent Fukushima nuclear disaster. Japan is still trying to move beyond these events. The Olympic Games will help to give the Japanese population greater hope and a chance for the country to show the world its true cultural and economic strength.
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