Tokyo to see a number of new luxury hotels post-pandemic
Most hotel operators have taken a long-term approach in the city and will open new sites in the coming years.
Tokyo did not see any new luxury hotels open in 2Q21. According to JLL, the EDITION Hotel Ginza was originally scheduled for the spring but it has been postponed to the second half of 2021, and has been further delayed to 2022.
"Although accommodation demand is currently sluggish due to the continuing outbreak of COVID-19, international luxury hotel operators have taken a long-term perspective in Tokyo, and several luxury hotels are scheduled to open in Tokyo over the next few years," says JLL.
Here's more from JLL:
Demand for accommodation shows signs of recovery
Demand for accommodation in Tokyo shows signs of moderate recovery as indicated in the increase in the monthly number of guest accommodation from approximately 1.6 million in January 2021 to 2.3 million in April 2021. Though challenges from COVID-19 remain, it is assumed that the demand for accommodation is gradually re-emerging from its bottoming out.
Whilst the borders remained closed to international tourists (since April 2020), the number of international visitor arrivals mainly represent business travellers. The total number of international visitor arrivals decreased by 54% from 1Q21, albeit up by 322% from the same quarter last year.
Sluggish market performance continues for Tokyo Luxury Hotels
According to STR, revenue per available room (RevPAR) of Tokyo’s luxury hotels declined 41.8% y-o-y to JPY 9,668 as of YTD June 2021. However, RevPAR in 2Q21 improved by 170% from 2Q20 when the state of emergency was declared for the first time in Tokyo.
In terms of Tokyo luxury hotel occupancy rates, a moderate recovery trend was observed as of June 2021, with numbers up from the last quarter. On the other hand, average daily rate (ADR) faced downward pressure amid the continuing impact of COVID-19 and suppressed demand, as observed by the monthly ADR which recorded y-o-y decrease as of YTD June 2021.
Outlook: Trading performance to be subdued amid state of emergency
The state of emergency in Tokyo has been extended to August 31, and the hotel market remains challenged during the long summer holiday season which was expected to generate a strong boost in leisure demand. The trading performance is expected to improve when domestic leisure demand starts to resume alongside the wider vaccination rollout and the lifting of the state of emergency.
With regards to the hotel investment market, while the gap between buyers’ and sellers’ price expectations still persists, investor appetite remains strong, and it is expected that activity in hotel transactions will start to resume in the latter half of this year.
Note: Tokyo Hotels refers to Tokyo's luxury hotel market.