Tourism surge puts shine on biz hotels, hostels

by Kazuaki Nagata

Staff Writer

With the drastic increase in tourism, the lack of lodging in the nation’s biggest cities, particularly Tokyo and Osaka, is providing a major opportunity for those running two types of accommodations: “business hotels” and hostels.

Japan’s so-called business hotels are known for offering simpler rooms at more affordable prices than typical hotels. While they were traditionally patronized by budget-minded Japanese businessmen, frugal international travelers have caught on and are now among their major patrons in bustling Tokyo.

Hostels, on the other hand, are not familiar to many Japanese but are frequented by foreigners on shoe-string budgets searching for something beyond the ordinary hotel experience.

According to the Japan Tourism Agency, the room occupancy ratio in September jumped to 81.6 percent at regular hotels, categorized as “city hotels,” and 77.6 percent at business hotels. Both are record highs.

“The number of international guests jumped 2.2 times last fiscal year (from fiscal 2013). It’s been growing for the past few years,” said Manager Koji Murata, who oversees Apa Hotel’s metropolitan markets.

Murata said Apa Hotel, part of Tokyo-based Apa Group, Japan’s biggest chain of business hotels, started seeing more foreign visitors after Tokyo was selected to host the 2020 Summer Olympics in 2013.

Murata estimated that 60 to 70 percent of customers are foreign visitors at an Apa Hotel that opened Sept. 30 in Shinjuku’s famous Kabukicho entertainment district.

As Japan is expected to attract more tourists from abroad, Apa Hotel is looking to nearly double its room count to 100,000 from about 57,000 now.

“We expect that Japan will become a major tourism country that will see maybe 30 million or 40 million overseas visitors (annually) in the near future. So we are trying to increase our guest rooms to 100,000 by 2020,” Murata said.

Because business hotels conventionally do not need banquet halls or other large facilities commonly seen at big hotels, Apa can more swiftly build new branches to meet the rise in demand, he said.

In addition, Apa offers free Wi-Fi at all branches and began providing BBC news on guest room TVs last year to give international travelers better value.

The surge in tourism is driving expansion in the hostel industry as well.

Hostels typically offer basic, shared facilities characterized by large rooms with several beds, like a dormitory. They are targeted at students and budget travelers, and cost a fraction of the amount charged by both business and mainstream hotels.

Hostels are common in Europe, where they come equipped with spacious common areas and stylish bars. In Japan, they remain a niche market.

“Japan doesn’t really have those hostels in the first place, so I wanted to run them,” said Yosuke Irie, the head of Tokyo-based startup Emblem Japan Co.

The startup opened a hostel called Emblem Hostel Nishi-Arai in Tokyo’s Adachi Ward on Thursday, targeting international tourists. Situated in front of Tobu Railway’s Nishi-Arai Station, the eight-story hostel has 176 beds. The building was formerly a business hotel before Emblem Japan turned it into a hostel.

The facility has several types of rooms. While the standard room has four beds, some have as many as 12. There are also private rooms with one bed that are akin to business hotels and come equipped with minimal amenities, including a TV, in a minimalist space.

Hostel stays on average cost ¥3,000 to ¥4,000 per night.

Recent travel trends show that hostels have a chance to expand in Japan, Irie said.

More middle-class Asian travelers are looking for cheap ways to get around, and Narita airport now has a terminal dedicated to budget airlines, he pointed out.

“Demand is strong in Japan and there are not many rivals compared with other types of hotels, so I think now is the time,” Irie said.

In three years, Emblem Japan plans to provide 800 more beds, which would mean setting up an additional four to five hostels. It is eyeing popular destinations like Sapporo and Osaka that are a draw for international travelers.

Irie also stressed that hostels can offer experiences most visitors would not be able to have if they stayed at run-of-the-mill hotels.

The spacious common spaces in hostels, for example, allow guests to get to know one other.

Irie also hopes foreign guests will enjoy meeting local residents at the bar and restaurant in its first hostel. Both are open to non-guests.

He said he is asking the local Tamanoi Sumo Stable to encourage its wrestlers to visit the hostel’s restaurant to eat with guests.

Youth hostels, on the other hand, are benefitting less from the tourism surge, except near big cities. Priced especially to encourage young people to travel, Japan had the world’s largest chain of youth hostels in 1974 with 587. But that shrunk over the decades, leaving just 220 youth hostels standing in 2014.

Nevertheless, Tokyo-based Japan Youth Hostels Inc., which promotes their use, says youth hostels situated in busy cities are experiencing a resurgence in popularity of sorts due to the increase in tourism. It said their use by foreigners has grown for three consecutive years.

The organization said the challenge from now is to spread the boom more widely so youth hostels in the countryside can benefit from the trend as well.

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