Japan prime for resort influx

Japan is getting strong international attention for resort development. The interest is understandable: As noted in late July, Japan is seeing a resurgence in its property segments, and hotels are being viewed as one of the most attractive asset classes to foreign investors. It's also being aided by a weak yen and relaxed visa requirements that are helping spur a record number of foreign tourists. Japan broke its tourist record last year with 13.4 million international arrivals and spending by foreign visitors to Japan soared more than 43 percent in 2014 from the year before.

Yesterday, Starwood Hotels & Resorts Worldwide announced the Sheraton Hokkaido Kiroro Resort, the first Sheraton ski resort in Japan, the brand’s re-entry in the northern region of Hokkaido, and the first Tribute Portfolio hotel signed in Asia Pacific. 

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Bloomberg, meanwhile, is reporting that Hoshino Resort Co. may grow its new chain of hotels in Japanese cities to as many as 20. The luxury-resort operator first bought four such properties last month. “We’ve identified about 30 to 40 cities around Japan as possible locations,” President Yoshiharu Hoshino said in an interview in Tokyo. The 109-year-old company would like to expand into places like Hakodate in the Hokkaido prefecture; Sendai, north of Tokyo; and the western city of Kobe, he said Wednesday.

Hoshino Resort is widening its offerings beyond luxury and hot-spring retreats outside metropolitan areas as overseas visitors to Japan soared 47 percent in the January-to-July period based on Japan National Tourism Organization figures. Hoshino has expanded the company to 32 hotels across the nation after inheriting the business from his father with just one hot-spring resort more than two decades ago.

Hoshino Resort bought hotels in the cities of Kanazawa, Toyama, Hiroshima and Fukuoka for about 40 billion yen ($334 million) in August. The executive declined to say how much he would spend on expansion.

Milial Resort Hotels also announced this week that a new property—the Tokyo Disney Celebration Hotel—is slated for a June 2016 opening in the Shin-Urayasu area near Tokyo Disney Resort. The $25.1 million Tokyo Disney Celebration Hotel will be redeveloped from the existing Palm and Fountain Terrace Hotel by Brighton Corporation. In preparation for the new hotel, the two buildings of the Palm & Fountain Terrace Hotel will close separately; the Fountain Terrace Hotel will close on February 27, 2016 while the Palm Terrace Hotel will close on June 1, 2016. 

The 702-room hotel will be the fourth Disney hotel to operate in Japan alongside the Disney Ambassador Hotel, Tokyo DisneySea Hotel MiraCosta and Tokyo Disneyland Hotel.

According to a statement, the new hotel is necessary as the existing Disney properties already have a high annual occupancy rate of more than 90 percent.

But perhaps the biggest developments are yet to come: Several companies with large-scale resorts in Las Vegas are eyeing Japan as an emerging destination. As Fox Business noted last month, MGM has been vocal about wanting to build a resort-casino in Japan—a market that could rival Macau as a lucrative Asian gambling destination. Wynn Resorts Ltd., Las Vegas Sands Corp. and Caesars Entertainment Corp. have also all expressed interest in investing billions in casino-resort projects there. 

But Japanese lawmakers first would need to legalize casinos, a prospect that appears no closer to happening after several years of debate in spite of supporters arguing that Las Vegas-style entertainment could boost tourism and revenue.

Building casinos in Japan would be more expensive than elsewhere, with higher costs for labor and construction materials, Bumazhny said, but the expected revenue could be bigger than other Asian markets, such as Singapore. And, of course, there is the question of how a highly populated island nation that values nature would take to 3,000-room Las Vegas-style resorts.