Bain Capital buys Japan hotel and spa operator Ooedo-Onsen

The private investment firm that Mitt Romney co-founded is bullish on Japan. Bain Capital Partners has reportedly agreed to buy Japanese hotel and spa operator Ooedo-Onsen Holdings, a move that comes as the country gets set for a tourism boom ahead of the Tokyo 2020 Olympic Games.

The total amount Bain is paying for Ooedo-Onsen, which runs 29 hotels and bathhouses in Japan, was not publicly disclosed; however, Japan's Jiji Press says the deal is valued at an estimated 50 billion yen, or approximately US$421 million.

Bain's acquisition, in fact, wasn't the only one of a Japanese asset by a U.S.-based firm reported today. New York-based Fortress Investment Group also announced a deal to buy the Rihga Royal Hotel Kyoto.

In a statement, Bain said Ooedo-Onsen sales have risen about 30 percent annually since 2007. It is best known for its spa on the man-made island of Odaiba in Tokyo Bay. The firm expects to book revenue of about 35 billion yen for its fiscal year ending February.

The move by Bain comes five years before Tokyo hosts the Olympic Games and shows the resurgence of Japan as a country worthy of large investment. As The Wall Street Journal writes today, "Investors are buying Japanese hotels at the fastest pace since before the global financial crisis, attracted by high returns and strong growth prospects in a booming tourism sector."

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Investment in Japanese hotels by value last year rose to ¥297 billion ($2.5 billion), the most since 2007, according to Real Capital Analytics Inc., a U.S.-based data and research provider. That’s less than half the total seen in 2007, but around nine times the post-crisis low of ¥32.3 billion in 2009.

Also, as HM reported earlier this month, the yen's recent decline is spurring foreign investors to buy real estate in Japan. Case in point: LaSalle Investment Management and sovereign-wealth fund China Investment Corp. partnering up to buy the Meguro Gajoen complex in Tokyo for around ¥140 billion ($1.2 billion).

Foreign investors are taking greater interest in Japan’s property sector following a sharp depreciation in the value of the yen. The currency has lost a third of its value since late 2012, making properties cheaper for foreign investors.

Tourism in Japan is growing rapidly. A record 13.4 million foreign tourists visited the country last year, an increase of nearly a third from a year earlier. The government has set a target of 20 million visitors a year by 2020, when Tokyo will host the Olympics.


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