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Business Insight


Business Insight

Hotel Business Heats Up

Hot spring resorts around Japan have long been a favorite destination for travelers, but many of the hotels and inns have seen business dry up since the economic downturn of the 1990s.

One bright spot in recent years has been the drastic increase in customers from abroad. Now, foreign entrepreneurs are sensing a business opportunity and buying up properties to serve the new market.

One ryokan, or Japanese inn, a few hours from Tokyo has been in business for near 50 years. It was recently purchased by a Taiwanese company that spent nearly $25 million to renovate the property.

The cheapest weekday rate for a luxury room is $900 a night per person. Still, the rooms have been completely booked by Taiwanese tourists until March next year. One repeat customer is the president of a Taiwanese construction firm, who is planning his eighth visit with his wife. "The inn is so relaxing," he says. "It makes us feel at home. I work hard in Taiwan so I come here to reward myself."

A member of the inn's staff explains its popularity, saying "70 to 80 percent of our guests are from overseas. The number of visitors from abroad is going up. Most of our guests wear themselves out shopping in Tokyo. We want to help them relax while they're here."

Chinese companies are also entering the local hotel business. After visiting a hotel in the hot spring town of Shuzenji, the president of a Chinese travel agency decided to buy it on the spot for $5.3 million. "It was love at first sight," Dingxin Yu says, adding he wants to market the hotel to Chinese tour groups.

The 20-year-old hotel has lost money over the last few years, as the number of Japanese tourists has dwindled. The new owner believes he can turn things around with a complete renovation that will also add 20 rooms.

The day after the deal was sealed, Dingxin Yu assembled the employees to introduce himself. At first, the workers were uneasy, as they weren't used to serving visitors with unfamiliar customs and tastes. But the pep talk helped put the employees at ease. They're now committed to doing whatever it takes to learn how to cater to a new kind of guest.

The trend of foreign companies buying Japanese accommodations is likely to continue. It will present new opportunities for inter-cultural connections between the customers and the people who welcome them.

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