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TOKYO, JAPAN
HOTEL PROPERTY SECTOR
MARKET REVIEW
TOKYO TOURISM MARKET
The number of foreign visitors to Japan in 2016 was 24,039,000,
an increase by 21.8% yoy. This figure exceeds the highest record
of 19,737,400 in 2015 by more than 4 million. The breakdown of
visitors by country include: China, which increased by 27.6% to 6.37
million, South Korea, which increased by 27.2% to 5.09 million, and
Taiwan, which increased by 13.3% to 4.16 million. All other nations
in the top ten source markets marked yoy increases. Sightseeing
makes up the majority of the purpose of visitors, representing 71.3%
in 2016 (October to December).
The main drivers of growth include: relaxation of visa requirements
for Japan (including easing of multiple-entry visa requirements), a
longer length of stay, and arrival of cruise ships from Asian countries.
Recent relaxation of visa requirements was conducted for India,
Vietnam, Qatar and China in 2016. Multiple-entry visa was also
introduced, requirements were relaxed, and the application process
was simplified. Visitors from Asian countries could better afford
overseas trips due to economic growth and inbound Asian visitors
to Japan increased in the full year of 2016 in spite of a stronger
yen. The rate of increase in visitors was faster than expected, and
it has already exceeded the government’s original target of 20
million people.
The Japanese government has revised their target upwards to 40
million foreign tourist by 2020, and 60 million by 2030. They consider
the promotion of a "sightseeing nation" to be an important engine
of economic growth and have decided to expedite development
of tourist related facilities/systems to improve conveniences of
sightseeing, and also eased regulations on accommodations at
private houses. This revision in the policy was made to support the
growing number of foreign tourists which exceeded their estimation.
According to the survey on the number of tourists who had visited
Tokyo by the Bureau of Industrial and Labour Affairs in Tokyo, the
total number of visitors to Tokyo including tourists exceeded 529
million people in 2015. Among them, Japanese tourists increased
by 2.1% yoy to 516.7 million and foreign tourists increased by
34.0% yoy to 11.9 million. In January and March in 2016, the total
number of tourists who visited Tokyo was 136.6 million (+3.2%), of
which foreign tourists constituted 3.2 million (+24.4%) and domestic
tourists constituted 133.5 million (+2.8%), showing an upward trend
for both categories.
The amount tourists had spent (tourism consumption) in Tokyo in
2015 increased by 7.4% yoy, reaching approximately 5.9 trillion
yen. The spill-over effects onto the economy in Tokyo generated
by the tourism consumption increased by 7.3% yoy, marking a
record high 12.8 trillion yen. During January to March in 2016, total
tourism consumption was 1.4 trillion yen (-3.4%), but that of foreign
tourists was 264.2 billion yen (+6.3%). The increase of foreign Asian
tourists is influenced by the growing GDP of Asian nations.
Therefore, it is expected to continue even after the upcoming 2020
Olympic Games.
HOTEL MARKET PERFORMANCE
Based on the latest data by Japan Tourism Agency, the annual
total number of guests who stayed in hotels in 2016 was 494.2
million, reflecting a decrease of -1.9% yoy. Among them, foreigners
constituted 14.3%, with an increase of 8.0% yoy.
According to the Japan Tourism Agency, in 2016, the top three
nationalities for foreign guests are Taiwan, China and South Korea.
These three collectively account for 55.0% of the total number
of guests who stayed in hotels. In terms of growth rates, China
(yoy growth of 103.3%), South Korea (yoy growth of 115.6%),
Philippines (yoy growth of 107.9%), Hong Kong (yoy growth of
108.2%), Indonesia (yoy growth of 107.5%), Vietnam (yoy growth of
119.8%), and Canada (yoy growth of 108.1%) have shown significant
growth. The order of the top ten countries has changed compared
to the previous year where China emerged top and Hong Kong
has exceeded the United States, but all countries have shown an
increase yoy.
The majority of hotel guests in 2016 were domestic, which
represented 85.6% of total guests. The increase in domestic
travellers was contributed by more domestic flights, economical bus
trips, number of senior age travellers, and online accommodation
reservation, which made travel arrangements easier. Both foreign
and domestic travellers tend to have longer stays and foreign
travellers tend to come in groups, bringing family.
The economy hotel occupancy rates across Japan and Tokyo in
2016 were 74.4% and 83.5% respectively, compared to 74.2% and
85.3% in the same period in 2015. While there was a slight decrease
in Tokyo yoy, it illustrates the relatively steady trend of recent hotel
occupancy rates in Tokyo and nationwide Japan, due to the large
improvement in the recent growth of the Japanese tourism market.
The average daily rate has been constantly growing since 2011.
The KPI index of RevPar (2007=100) for the whole of Japan was
below 80 but recovered to 2007 levels in 2015 at 100. It continued to
growi in 2016, exceeding the 110 range, despite slightly weakened
occupancy rates.
EXISTING AND FUTURE SUPPLY
According to the Ministry of Health, Labour and Welfare, the total
number of hotel rooms in Tokyo in 2016 stands at around 149,000
which represent a year-on-year growth of around 3.8%.
According to industry journals available, it was estimated that total
stock of hotel rooms would reach approximately 111,956 in Tokyo by
2019. Example of expected new hotels are, "Remm Roppongi" with
400 rooms in Minato-ku, Tokyo in March 2017, "APA Hotel & Resort
Nishi Shinjuku 5-chome Eki Tower" with 710 rooms in Shinjuku-ku,
Tokyo in May 2018, and "Higashi Gotanda 2-chome Hotel Project"
with 372 rooms in Shinagawa-ku, Tokyo in Summer in 2018 etc.
Demand for accommodation is growing and according to a
consulting firm in Tokyo, hotel room demand was estimated to
exceed the available stock in 2015 by 320%, and it will further grow
at 480% in 2030.
HOTEL MARKET OUTLOOK
As described above, the outlook for the hotel market in Japan
is favourable. Development of new hotels is increasing and
corporations from other industries such as building maintenance
and restaurant operators are entering the hotel management
business. For midterm prospects, the Tokyo Olympics in 2020 is the
nearest peak for tourism, but looking at the long-term, GDP growth
in neighbouring countries is a key factor. According to a hotel
consulting company in Tokyo, people begin going for overseas trip
when they achieve a GDP per capita of more than US$3,000, and
the number of overseas travellers rapidly increases when US$10,000
GDP per capita is achieved. Among the Asian nations with under
US$10,000 GDP per person, China has exceeded US$8,000,
Thailand is at US$5,700, Indonesia is at US$3,600, and Philippines
is at US$3,000. The tourism industry in Asia is expected to grow in
the near future, and Japan is one of the most favoured destinations
for Asian tourists. Key reasons for tourists choosing to visit Japan
include buying fashion goods, cosmetics, electrical appliances,
dining and seeing historical heritage sites. It is also observed that
Japanese hospitality is very much favoured by tourists, and this trend
will continue in the future when the tourism environment in Japan
would be more refined under the effort led by the government.
As of 6 March 2017
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