Why you don’t see a lot of luxury hotels in Japan 

They have high-end ryokans and inns instead, which are luxurious in their own right.

According to Five Star Alliance, there are only a little over 50 luxury hotels listed in Japan. This is a stark contrast to Western countries and even Hong Kong and Singapore that have a lot more luxury hotels throughout the country. 

Savills says this trend is no different when analysing at a city level – cities like New York and London have more than three times the number of luxury hotels than Tokyo does. Hence, investor interest in higher grade hotels with larger guestrooms remains underserved. The supply in this category has been limited, and the demand appears stable with upside potential.

Here’s more from Savills:

There are plausible reasons as to why Japan has a significantly smaller number of luxury hotels. For instance, Japan is home to a large number of high-end ryokans, traditional inns, which are luxurious in their own right, but are not technically classified as luxury hotels. They tend to be located far from city centres, and especially in the case of ryokans, sometimes lack some luxury amenities. 

The Japanese hospitality market has traditionally been dominated by strong, large local players. Nevertheless, the relative lack of luxury hotels in Japan has caught the attention of international players, and some have seen the pandemic as a chance to enter or expand in the Japanese market. While many luxury hotels have not recovered to pre-pandemic occupancy levels, some players anticipate high levels of pent-up demand for travel, and expect tourism revenue in Japan to continue growing.

Many well-known international brands have already started opening luxury hotels in Japan. For instance, in late 2020, The Tokyo EDITION, Toranomon, was opened, and the Marriott will keep expanding its footprint with The Tokyo EDITION, Ginza in 2022. These hotels are also part of Mori Trust’s Luxury Destination Network vision. 

Indeed, the Marriott has been active in Japan, and also plans to see the first Marriott Hotel opened in Nagasaki with Kyushu Railway in 2023. In addition, Japan’s first Bvlgari Hotel is scheduled to open in 2023, occupying the top seven floors of Tokyo Midtown Yaesu. Furthermore, Hilton has also capitalised on this momentum with the opening of Roku Kyoto, LXR Hotels & Resorts in late 2021, and has announced the first Waldorf Astoria hotel in Osaka. 

Some domestic players in the resort hotel industry have also been expanding their footprints. For instance, Hoshino Resorts has been rapidly developing its Kai brand by acquiring two resorts in 2021, and has plans to open two more in 2022. Elsewhere, Hiramatsu Hotels opened a new branch in Nagano in 2021, following a new opening in Kyoto in 2020. Indeed, these franchises seem confident in their branding, and appear to have stronger balance sheets than many other hotels despite the pandemic.