St. Regis looking to take Osaka upmarket

by Kazuaki Nagata

In the current state of financial uncertainty, many would think now is not the best time to open a luxury hotel.

But Starwood Hotels and Resorts Worldwide Inc., a U.S.-based hotelier, is confident that its new St. Regis, where the cheapest room starts at ¥65,000, will be welcomed by the upper class market when it opens in Osaka in October.

“These are tough times opening a luxury hotel in Osaka. It’s a challenge, and we recognize that,” Phil McAveety, Starwood executive vice president and chief brand officer, said during a recent interview with The Japan Times attended by other Starwood executives.

Starwood operates the Sheraton, Westin and W hotels worldwide. The hotel market in Osaka has reportedly become more competitive in recent years amid what is believed to be an oversupply of rooms.

According to the health ministry, the number of hotel rooms in Osaka surged to 51,142 in fiscal 2008 from 42,698 in fiscal 2003.

However, “there is always a need for the upper class market,” said Tetsuya Ishihara, who will serve as general manager of the St. Regis Osaka.

Until now the Ritz Carlton was the only luxury hotel in Osaka, and Ishihara argues there is room for the St. Regis as well.

“In terms of luxury hotels, since Ritz Carlton opened 13 years ago, there’s been no new luxury class hotels. So I think it’s a good time to stimulate the market,” Ishihara said.

The 27-story-high St. Regis Osaka, going up in the Midosuji district, will have 160 guest rooms as well as office space.

The standard room rate will start at ¥65,000, and prices for the royal suite begin at ¥160,000.

All guests will be served by butlers, a trademark St. Regis service since its first hotel opened in New York in 1904.

The St. Regis Osaka will aim for a 70 percent occupancy rate in the first year, Ishihara said, declining to disclose sales or profit targets.

Starwood executives say the occupancy goal is possible because the hotel is not all that big.

“This is a relatively small hotel, with the 160 rooms. We’re looking to be an exclusive enclave in the city of Osaka,” McAveety said.

The hotel expects 90 percent of its guests to come from Japan and the rest from overseas.

The Starwood company, meanwhile, is very upbeat about the government’s efforts to boost foreign tourist numbers.

Executives say the global brand value of Starwood’s inns, including St. Regis, will also serve as a draw along with quality service.

“We have a very individual sense of service,” said Paul James, Starwood’s global brand leader in charge of St. Regis.

Because the hotel is not large, it will be easier for employees to help guests with their needs and preferences and provide an individual touch, James said.

“The St. Regis butler service is unique to our brand. There are other hotel brands that have butlers in some hotels,” but there is no brand that has butlers in all of its hotels, he said.

“That’s been part of our heritage since the beginning. We have a deep understanding of how (a) butler can make your stay easier,” James said.

With its quality service and global brand value, experts say Starwood will offer a viable challenge in Osaka’s hotel market.

Travel journalist Michiko Tamaoki, who also covers the hotel world, said St. Regis will spice up Osaka’s upper class hotel market because the Ritz Carlton has been the only player.

“I think there is a market for the upper class in Osaka, and there needs to be competition. When there is competition, the level of service will increase. So in that sense it is good that another global luxury brand is entering to energize the Osaka market,” Tamaoki said.

As for the goal of 70 percent occupancy at St. Regis, Tamaoki said it is achievable, but because the hotel has only 160 rooms, she said employee and maintenance costs may be high.