Luxury hotels slowly making a comeback in Tokyo

Two international luxury hotels are slated to open next year.

According to a JLL report, there were originally no plans for luxury hotel openings in Tokyo in 3Q22. Though the opening date has yet to be announced, Tokyo’s second EDITION Hotel is slated to open in Ginza in 2022, following delays since the spring of 2021.

In addition, two international branded luxury hotels, Bulgari Hotel and Aman’s Janu, are scheduled to open in 2023 along with several luxury hotels by domestic hotel operators, indicating a resumption in the supply of luxury hotels in Tokyo.

Here’s more from JLL:

Tokyo’s luxury hotel revenue per available room (RevPAR) marked an increase of 57.1% y-o-y to JPY 17,459 as at September 2022. While the average daily rate (ADR) has yet to recover fully, improved occupancy rates have contributed to the improvement of RevPAR.

With regards to the hotel investment market, strong investment momentum continues to be seen, supported by an enhanced hotel trading performance and positive expectations post-pandemic. Large-scale hotel transactions, mainly driven by global investment funds, are also accelerating.

Outlook: Recovery expected with easing of restrictions and weaker yen

Japan fully opened its borders on 11 October and the nationwide travel subsidiary program, similar to “Go-To-Travel” in 2020, was launched on the same day. It is expected that the weaker Japanese yen will not only attract inbound travellers but also Japanese travellers keen on a reasonably-priced domestic trip, especially when combined with the travel discount program.

Several large-scale and portfolio hotel transactions are expected in Q4 2022 and beyond. In addition to the recent depreciation of the Japanese yen, the debit financing environment in Japan is attractive to investors against the backdrop of globally rising interest rates. It is expected that hotel transaction activities will accelerate in Japan over the next 12 months.

Note: Tokyo Hotels refers to Tokyo's luxury hotel market.

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