Opportunity knocks in Tokyo's hotel boom
There's a clear and present reason for the upswing in construction. The Japan National Tourism Organization says a record 31.2 million people visited Japan last year. That's up 8.7 percent on the previous year. That rapid increase in inbound tourists is driving Tokyo's hotel construction boom.
Of the hotels scheduled to open by 2020, 45 will be in Taito Ward, home to many sightseeing spots, such as Senso-ji Temple in Asakusa. Another 36 will be in Chuo Ward, where the high-end brand shops and department stores of Ginza attract millions of shoppers annually. And 29 will spring up in Minato Ward, home to Tokyo Tower and the Roppongi entertainment district. All told, over half the hotels scheduled to open by 2020 will be in the three most popular tourist hotspots
And there's an unexpected twist -- the current boom has seen companies that have previously had nothing to do with the hotel business venturing into the sector.
Among them is Hinokiya Group, a developer of custom-built homes that's branching out as the housing market contracts because of Japan's declining population. Last April, the company opened a hotel in Tokyo's Arakawa Ward, close to Asakusa and with easy access to Narita Airport, as part of its diversification strategy.
Hinokiya has an eye on the family travel market. Most Japanese hotels offer rooms for one or two people. Very few have rooms big enough to accommodate a family. Hinokiya's new hotel has 19 rooms, all suitable for four to six people. The rooms are furnished with tatami mats and have a Japanese-style interior so guests can immerse themselves in the local culture.
They are also equipped with a simple kitchen so guests can cook together without going out, and beds rather than traditional futons.
A family of five from Australia were visiting Japan for the first time. After three nights at the new hotel they came away satisfied, praising the size of the room and the separate dining area.
Hinokiya President Akira Kondo says the company expects an increasing number of families from other parts of Asia. He says the group plans to build family-friendly hotels in places popular with tourists, such as Asakusa, Ueno and Kyoto, using its expertise in building Japanese homes.
Other businesses jumping into the hotel market have different motivations. Stripe International, a women's clothing and cosmetics specialist, opened a high-end hotel in Tokyo's Shibuya district early 2018. Its goal is to build brand recognition outside Japan for its 'koe' marque.
Elements from Japanese gardens and tea houses have been incorporated into the rooms to add a sophisticated touch. There is also a clothes store as well as a restaurant under the koe label inside the hotel, meaning guests are immersed in the brand.
Nightly rates run from about 50,000 yen to 250,000 yen, or about 450 dollars to 2,200 dollars, making it expensive by Tokyo standards. The hotel says most of its guests are tourists.
Creative director Naomi Shinonaga says the aim is to create a synergy and convey a strong brand message through the restaurant, shop and entire hotel. She says the goal is for guests to take the brand and concept with them when they leave Japan.
Ryuji Sawada, a real-estate and hospitality specialist at PwC, says more and more companies are expected to make a foray into the hotel industry from other sectors. He says that on the back of the rapid increase in tourism, many firms are keen to enter the industry and use their real-estate expertise.
He also points out that as the needs of visitors evolve, businesses with no experience in hotels, such as apparel makers and eateries, are seeing opportunities to grab a slice of the inbound tourism market through their established strengths.
As we approach the home straight in the race to the Olympics, some unexpected runners are in with a chance as they bid for success in Tokyo's cutthroat hotel business.