Fears of a shortage of accommodations ahead of the Tokyo 2020 Olympic and Paralympic Games are quickly becoming a thing of the past as companies ranging from apparel brands to wedding service providers jump into the hotel business.
Coupled with expected expansion of the minpaku private lodging market as a law setting rules for the nascent service takes effect in June, there is now fear of an oversupply of accommodations, which could trigger a price war.
According to real estate market research firm CBRE K.K., the number of hotel rooms in eight major cities, including Tokyo, Osaka and Kyoto, is expected to total 330,000 as of the end of 2020, up 32 percent from the end of 2016.
A number of major Japanese and foreign hotel chains and non-hotel operators are planning to open lodging facilities amid the continued influx of foreign tourists into the country. The number of foreign visitors to Japan hit a record 28.69 million in 2017 from 8.61 million in 2010.
One example of a newcomer is major apparel company Stripe International Inc., which in February opened a hotel and store in Tokyo’s busy Shibuya shopping district.
“We want to tap into the demand among foreigners with this hotel and its Japanese-style interior design,” said Naomi Shinonaga, the company’s creative director who handled the project.
Wedding service provider Take and Give Needs Co. has also opened a lodging facility in Shibuya, while outdoor gear provider Snow Peak Inc. has established a facility in Yokosuka, Kanagawa Prefecture.
Ryohin Keikaku Co., operator of the Muji chain of household goods stores, is planning to open a hotel in Tokyo’s posh Ginza shopping area by spring 2019.
Meanwhile, the minpaku market is expected to expand further with e-commerce company Rakuten Inc., travel agency JTB Corp. and railway operator Keio Corp. venturing into the sector.
Yasuyuki Tanabe, the Japan manager for U.S. online home rental service Airbnb Inc., said the new law regulating services involving paid accommodations in private homes will “provide momentum to the expansion of the private lodging market” in the country.
Airbnb has tied up with Recruit Holdings Co., which provides housing information, in an attempt to secure a large number of dwellings.
The moves in the hotel and private lodging industries prompted Mizuho Research Institute to state in late January that “there will be no dearth of hotel rooms in 2020.”
Major cities aren’t the only ones where the hotel business is expanding.
The city of Beppu, Oita Prefecture, famed for its hot springs, hotels and resorts, is one example. Local and international hotel chains are expanding as foreign tourists flock to the area renowned for sights like the “Hells of Beppu,” a series of colored and super-hot natural pools.
Tourist numbers dipped in 2016 after nearby Kumamoto was hit by major earthquakes that April, but they recovered to a record level in 2017. South Koreans have driven the 130 percent increase in non-Japanese travelers staying in Beppu over the past five years.
InterContinental Hotels Group is one of the businesses looking to take advantage of this. The venture it runs jointly with All Nippon Airways is scheduled to open an 89-room luxury hotel next year.
“Beppu is one of the world’s most famous hot springs resorts, but it didn’t have a luxury hotel of international fame,” said Hans Heijligers, the CEO of ING ANA Hotels Group Japan. “The wealthy Japanese market is very attractive, and inbound tourism is also booming.”
Elsewhere in Beppu, luxury chain Hoshino Resorts is building a hotel and Oedo Onsen has refurbished an older property. The current boom is going to increase the number of hotel rooms in the city to 5,030 in 2019 from the current 4,400, according to the Beppu City Ryokan and Hotel Association.
With five matches for next year’s Rugby World Cup scheduled to be played in the neighboring city of Oita, those rooms may be needed.
The largest hotel in the city isn’t worried about the new investment and new competition.
“It’s an attractive town, and we welcome it. We can make money if they come and make it even more attractive,” said Koichi Sasaki, general manager of Suginoi Hotel and Resort, which has 647 rooms. The hotel has had an occupancy rate of 100 percent since 2014, and is currently renovating its conference space.