Tokyo’s Imperial Hotel, the luxury inn that counts Marilyn Monroe among past guests, raised room rates last year to levels it last charged before the bubble economy imploded in the early 1990s. A surging yen now threatens those gains.
With signs of spending from foreign tourists starting to wane as a result of the stronger currency, the hotel is looking to boost wedding banquets and turn those younger guests into repeat clients, said Hideya Sadayasu, president and general manager of Imperial Hotel Ltd.
“I am worried that if the yen continues to strengthen we may see a brake on visitors coming to Japan,” said Sadayasu, 55. He added that the currency impact is “big” because it can also weigh down domestic share prices, which makes consumers tighten their purse strings.
The Imperial opened in 1890 as the first grand hotel to accommodate foreign visitors at a time when the nation was modernizing after two centuries of self-imposed isolation.
Monroe’s visit in February 1954 during an impromptu honeymoon with her husband, retired New York Yankees star Joe DiMaggio, caused a sensation, and she had to greet crowds from a balcony in the hotel to appease those wishing to see her.
After raising basic room rates by 10 to 15 percent last year, the Imperial currently charges ¥35,000 to ¥37,000 a night on average, approaching the average that prevailed in the late 1980s, according to Sadayasu. The hotel’s profit rose 2.1 percent to ¥1.04 billion in the first quarter.
Internationally, and disregarding room size, Tokyo’s average room rates are still lower than in other major global cities like New York, London, Paris and Hong Kong, according to data cited by Savills PLC in a report this month. The average in New York in the 12 months to the end of June was $255, compared with $165 in Tokyo, the data show.
Still, the impact from the 18 percent rise in the yen this year is already becoming apparent in falling domestic department store sales, declining spending per tourist, and slowing visitor growth to Japan.
Average spending per foreign tourist dropped 9.9 percent to ¥159,930, according to the Japan Tourism Agency, while the percentage decline among mainland Chinese visitors was even bigger at 23 percent, the data show. The number of visitors to Japan last year rose 47 percent to a record 19.7 million. The government is targeting 40 million tourists by 2020, when Tokyo will host the Summer Olympics.
Sadayasu said his Tokyo hotel wants to keep a 50-50 balance between overseas and domestic visitors, because alarming one-time events, such as the collapse of trading house Lehman Brothers Holdings Inc., can trigger a sudden drop-off in numbers.
“The impact of the stronger yen is large,” said Kouki Ozawa, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “It makes it harder to raise prices and lowers occupancy rates. Guests that might have stayed four nights now stay only for three due to budget constraints, for example.”
The benchmark Topix share index has fallen 15 percent so far this year as the yen has strengthened. Falling stock prices make domestic clients less likely to use a hotel and wealthy guests may opt to stay in a standard room rather than a suite in such an environment, according to Sadayasu.
The hotel, rebuilt since Monroe’s visit and now in its third iteration, still offers a Marilyn Monroe Breakfast for an added charge of ¥1,100 to guests who book under a special ladies plan.
The same room service breakfast requested by the Hollywood icon comprises pan-seared lamb, crisp Melba toast and rich roasted coffee. Famed U.S. architect Frank Lloyd Wright designed the second Imperial Hotel, the one in which Monroe stayed.
A rebuilt Imperial Hotel opened in 1970 and has lost some of its glamor compared with newer overseas hotels that have cropped up in recent years, such as Peninsula Hotels, Mandarin Oriental Hotels and the Shangri-La. With over 900 rooms, the Imperial is far larger and offers a broader array of restaurants and facilities, including a Shinto shrine.
After spending ¥18 billion on a major refurbishment in 2010, the Imperial plans to renovate suites to cater to visiting foreign VIPs ahead of the Tokyo Olympics, and to attract wealthy Asian clients.
Sadayasu, who has been with the hotel for over 30 years, working in different roles from bellboy to head of limousine services, says he is determined to fight off challenges and keep the hotel’s legacy running.
“My mission is to pass it on to the next generation.”
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.