Business

Marriott-Starwood merger to spark turf war in Japan

by Keiichiro Otsuka

Kyodo

For major Japanese hoteliers, the impending merger between Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc. signifies the opening of a cutthroat turf war with what will be the world’s largest hotel operator in their home territory.

Marriott is poised to expand its business in Japan ahead of Tokyo’s hosting of the Olympic Games in 2020, when the government wants to achieve a target of 40 million foreign visitors a year.

“Japan is a very significant market. We hope to expand hotels in Japan,” said Arne Sorenson, chief executive officer of Marriott International in an interview with Kyodo News. “I think Japanese travel is growing in a way that is very helpful.”

The Tokyo native said Marriott’s growth in Japan has been “very strong in the last three or four years” against the backdrop of a surge in foreign — especially Chinese — visitor arrivals, which hit a record 19.74 million last year.

Marriott has built a foothold in Japan through such local partners as real estate development giant Mori Trust Co., instead of directly running its own hotels.

Its “Ritz-Carlton” brand is very popular with hotels in Tokyo’s Roppongi area, Osaka’s Umeda area, Okinawa Prefecture’s Nago, and Kyoto.

Starwood is also increasing its presence in Japan with its “Westin” brand hotels, including newly opened Sendai and Nagoya facilities, as well as its “Sheraton” brand hotels like the one in Hiroshima.

Marriott and Starwood, which are expected to merge around mid-year, will have a combined 1.12 million guest rooms and 75 million priority members worldwide eligible to receive benefits.

“While we have a competitive edge as far as Japan service is concerned, they are a threat when it comes to their customer bases abroad,” a senior official of a leading Japanese hotel operator said.

Mori Trust is scheduled to launch JW Marriott Hotel Nara in the city of Nara in spring 2020. It will be the first hotel in Japan to open under the “JW Marriott” luxury brand, which is named after John Willard Marriott, founder of Marriott International.

Nara has a number of sightseeing spots such as Todaiji, a Buddhist temple that houses a giant bronze Buddha statue, and is popular with foreign tourists, but remains without world-class hotels.

Nara Gov. Shogo Arai welcomed the move, saying, “This will enable many more kinds of people to stay in Nara, including state guests and other VIPs who have not stayed nights.”

Meanwhile, a “Ritz-Carlton” brand hotel is due to open in the ski resort of Niseko in Hokkaido Prefecture by the end of 2020 with an eye on building an upscale resort that will also have a fitness facility and a hot spring.

The “Marriott” brand is also set to penetrate other parts of the country. Five hotels — in Karuizawa, Nagano Prefecture, Yamanakako, Yamanashi Prefecture, Izu, Shizuoka Prefecture, Moriyama, Shiga Prefecture and Shirahama, Wakayama Prefecture — are to be turned into Marriott Hotels from this year to next.

Major Japanese hotel operators’ responses to Marriott’s business expansion in their country are divided.

Prince Hotels Inc. is among those partnering with Marriott. The Prince Gallery Tokyo Kioicho, which will open on July 27 on the former site of the Akasaka Prince hotel in Tokyo’s Chiyoda Ward, will be a member of Starwood’s classiest “Luxury Collection” brand alliance.

“This will make the Prince Hotel brand better known abroad. Our sales are also expected to rise,” said Victor Katsutoshi Osumi, chief development officer and corporate officer in charge of sales.

Imperial Hotel Ltd., meanwhile, is opting to go it alone.

“Instead of thinking about competition with giant hotel chains, we will try to get better so that we can provide fast and accurate service with typically Japanese delicacy and care, and eventually attract customers who want to stay in Japan,” an official said.

The hotel operator with a long and distinguished history finished refurbishing all the rooms in the Tower Building of its flagship Imperial Hotel in Tokyo in April as it gears up for the Tokyo Olympics in 2020.

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